In my December 15th post, I wrote “fundamental sale price drops may require more to be sold than the market can support. I predict that by November 2024 the share of electrics as American vehicles will be higher than it is now, but only about 10%, with a growing consensus that under current conditions they will not be completely or even largely taking over.” Seven-plus months out, how are those forecasts looking?
On May 26th
in Fox Business, we saw how “Buttigieg defends Biden’s EV strategy after
question on how only 8 federal charging stations have been built.” The unfortunately-placed transportation
secretary was asked why, when two years ago President Biden signed a bill
authorizing 500,000 such facilities to be built by 2030 and after one-quarter
of the time since has elapsed, the number completed stands at .0016% of that;
he reiterated the half-million goal and said there was “utility work” to be
done at each, under “a new category of federal investment.” How many have been started? I could find information on ports, overall
stations, and groups of stations with at least one under construction, but not
that.
Another thing
Buttigieg mentioned in the interview above was the necessity of lower electric
vehicle prices. Soon afterward, on June
3rd, the New York Times published “Electric Cars Are Suddenly
Becoming Affordable” (Jack Ewing).” The reason,
though, was not higher sales providing manufacturing economies of scale, but
that “customers have been snapping up used Teslas for a little over $20,000,
after applying a $4,000 federal tax credit.”
That trend started with Hertz’s January-announced sale of 20,000 electric
rental cars, which the market has not yet absorbed. Ewing also mentioned, for new cars, the
effect of “increased competition, lower raw-material costs and more efficient
manufacturing,” but companies choosing to cut prices were pushed by Hertz, as “electric
cars still cost more to manufacture than cars with internal combustion
engines,” and sales would further drop without continuing subsidies.
The lack of
growth has also pushed companies to build “More Gas Cars and Trucks, Fewer
E.V.s as Automakers Change Plans” (Neal E. Boudette, The New York Times,
July 18th). Ford Motor
Company “said it would retool a plant in Canada to produce large pickup trucks
rather than the electric sport-utility vehicles it had previously planned to
make there,” and the day before that, “General Motors said it expected to make
200,000 to 250,000 battery-powered cars and trucks this year, about 50,000
fewer than it had previously forecast.”
Tesla, as well, “has changed its plans because it no longer expects
sales to grow 50 percent a year,” as “its global sales fell 6.6 percent in the
first six months of the year.”
And speaking
of the last company mentioned, “Tesla’s Profit Fell 45% in the Second Quarter
on Weak E.V. Sales” (Neal E. Boudette, The New York Times, July 23rd). Its second-quarter year-over-year revenue
increased from $24.9 billion to $25.5 billion, but its net profit fell from
$2.7 billion to $1.5 billion. That seems
to confirm that its shortfall from lower selling prices is not from lower costs. For the same interval, its number of EV’s
sold dropped 4.8% and their production 14%.
As of an
Experian Automotive Market Trends fourth quarter 2023 report, only 3.3 million
out of 288.8 million American vehicles were electric. Per Edmunds, 6.9% of sales from
January to May this year were the same.
Therefore, it is almost impossible to imagine the year-end share will be
anywhere near 10%, let alone higher. It
looks also very doubtful that, given the news above, EV’s will be “completely
or even largely taking over” – even if a Democrat wins the November
presidential election. Their percentages
may substantially increase, but until then, we must project electric vehicles,
with some geographical exceptions, to remain a small minority
indefinitely. If their manufacturers cut
back and switch to others, and subsidies continue to prop them up, it will mean
little if those in the press say they will predominate. The lack of federal charging stations may, in
the end, be just fine, and customers will get the vehicles they want. That will work.