Electric Vehicles are Going Nowhere Special

In my December 15^th 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 26^th 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 3^rd, 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 18^th).  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 23^rd).  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.