I would say "childlike" in their naive belief that EVs will save the earth.
Posted on 11/06/2023 3:18:43 PM PST by george76
Electric vehicles hit another sales record—but manufacturers are losing money. Experts blame government interference in the free market.
Though electric vehicles hit another sales record, high production costs and a dwindling new customer base have spawned increasing corporate losses, forcing electric vehicle (EV) manufacturers to scale back on their plans to expand the market. Some experts believe these problems are a result of government interference in the business of industrial policy.
The Oct. 12 report from Kelley Blue Book revealed that sales of electric vehicles hit another record in the third quarter of 2023, accelerating past 300,000 batter-powered vehicles "for the first time in the U.S. market."
With 313,086 vehicles sold, that exceeded the record high of 298,039 sold in the second quarter and was an increase of nearly 50 percent over the year-ago quarter. With year-to-date sales topping 873,00 in September, EV sales are predicted to exceed the 1 million mark around Thanksgiving.
In all, EVs accounted for 7.9 percent of car sales between July and September, a record leap of 0.7 percent over second-quarter numbers.
However, despite the robust sales figures, EVs are now piling up on dealership lots and manufacturers are losing money. After investing billions in the EV market, many manufacturers are sounding the alarm, saying demand is not keeping up with their expectations.
As they head into 2024, many of these companies are scaling back on their once enthusiastic EV production plans.
So, what are the problems lurking behind the record sales figures?
SLOWDOWNS, LOSSES, AND CUTBACKS..
Against the record numbers, sales have not translated into anticipated profits. According to reports, data from Edmunds.com show that EVs, which once sold within 21 days, are now sitting on dealership lots for an average of 65 days.
Business Insider reported that EVs are so hard to sell for Mercedes-Benz that the automaker has "put them on clearance at enormously discounted prices" to get them off dealership lots.
Ford Motor Company's third-quarter earnings revealed rising losses with EVs, posting an operating loss of $1.3 billion, up from $1.1 billion in the previous quarter and more than double its loss from third quarter 2022.
...
As Business Insider reported Oct. 27, Ford is now postponing around $12 billion in future EV investments, including the planned construction of a new battery plant. Ford's Model e lost $1.3 billion, translating to a loss of about $36,000 per vehicle delivered.
Yahoo Finance reported in August that revenues are so bad for EVs that Ford anticipates a loss of roughly $4.5 billion.
Ford, however, isn't the only company tapping the brakes on EV production.
General Motors (GM) announced on Oct. 25 that it is abandoning the goal of producing 400,000 EVs by mid-2024. GM is also delaying plans to retool its Lake Orion plant in Michigan for production of two all-electric pickup truck models, the Chevy Silverado EV and the GMC Sierra EV.
More bad news came on Oct. 25 for those hoping for cheaper EV options. GM and Honda announced the cancellation of their long-planned collaboration to produce a whole range EVs that would cost less than $30,000. The joint venture, announced in April 2022, was supposed to make the cheaper EVs available for markets in North America, South America, and China by 2027.
On Oct. 31, Markets Business Insider reported that Tesla took a $41 billion hit as the EV market continues to lose support. CEO Elon Musk's ownership of 13 percent of Tesla's stock accounts for the bulk of his personal wealth. According to the latest estimates by Bloomberg's Billionaire Index, the world's richest man saw his fortune fall to $193 billion. It's the first time his value sat under the $200 billion mark since early June.
Even Hertz, the car rental company that once imagined becoming the world's premier EV provider, is reconsidering those plans due to tumbling EV resale value and the high cost of collision repairs.
The Verge reported on Oct. 27 that Uber drivers, who rent about 50 percent of Hertz's Tesla EVs, are causing far more damage than they expected.
According to a recent study from CCC Intelligent Solutions Inc., EVs have a higher repair cost than their internal combustion engine vehicle (ICEV) counterparts. Based on insurance claims for small, non-luxury EV brands with front-end damage that were still drivable, EVs cost an average of $4,041 to fix, about 27 percent more than ICEVs.
EV repairs also have a higher percentage of returns to a repair shop by a customer for more work after pickup.
FUELED BY GOVERNMENT ASSISTANCE..
EVs are expensive, too. According to Edmunds.com, the average transaction price of a new EV in April was $64,029. The average transaction price for a traditional gas-powered vehicle was $47,664. However, the early success for EVs sales appears to be is fueled by government assistance.
As the federal government pushes America toward "100 percent, full-electric," Jason Isaac of the Texas Public Policy Foundation suggests it has less to do with "mitigating climate" and more to do with "control."
"I think it was just a political push," he told The Epoch Times. "You had companies that started to get involved in politics rather than their fiduciary duty and now it's backfiring. You're only now starting to hear about the problems because these companies are losing so much money."
"There's a spot for EVs, but it's certainly not 100 percent," he added, suggesting that the only reason why EVs sales were so successful is because "the government is forcing this."
...
"They're forcing this transition on us. It's about control," he said. "They're forcing us to go down this path."
On Aug. 5, 2021, Joe Biden signed an executive order, "setting a goal that 50 percent of all new passenger cars and light trucks sold in 2030 be zero-emission vehicles, including battery electric, plug-in hybrid electric, or fuel cell electric vehicles."
The Inflation Reduction Act (IRA), signed into law on Aug. 16, 2022, provides $394 billion in energy and climate funding, the majority of which comes in the form of tax credits..
Starting in 2023, all purchasers of qualifying EVs became eligible for a tax credit of up to $7,500. Corporations, which receive an estimated $216 billion in tax credits, are the primary benefactor of the IRA. Manufacturers that sell 200,000 qualifying EVs are eventually phased out of qualification for the incentives.
So far, only two auto manufacturers, Tesla and GM, have reached the 200,000 threshold. Tesla hit the 200,000 mark in July 2018, and GM followed in November 2018.
Soon after Tesla's phaseout, demand for EVs dropped, forcing them to cut EV prices by $2,000. After GM lost its eligibility for the tax credits, sales of its EVs slowed so dramatically that the company was forced to lay off 14,700 workers and stop production of both the Chevy Volt and the Cadillac CT6.
In April, the U.S. Environmental Protection Agency (EPA) announced tougher emissions standards for passenger cars and light trucks for 2027. The more stringent requirements builds upon those set by the EPA for model years 2023 through 2026, S&P Global predicts that these standards will push EVs to a 67 percent market penetration and 46 percent of all new medium-duty model years by 2032.
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The Infrastructure Investment and Jobs Act signed into law by Biden on Nov. 15, 2021, authorizes $1.2 trillion for transportation and infrastructure spending, including $7.5 billion to build a national network of EV charging stations, considered to be a critical element in the administration's "plan to accelerate the adoption of EVs" among the American populace.
Two years later, the infrastructure isn't capable of supporting current demand.
According to Codibly, a software company with a mission to "empower the transition" to renewable energy, the current infrastructure is "expensive" and "poor."
The logistics, communication, and agreements that are necessary between the grid, utility companies, and charging manufacturers are inadequate and there are a host of problems with managing the energy drains during peak power-up times.
American Trucking Associations reported in April that a trucking company that tried to charge 30 trucks at a charging terminal in Joliet, Illinois, was shut down by local officials because it would exceed the amount of energy required to to power the entire city. In California, a company that tried to charge a dozen forklifts was also shut down.
A video posted to social media shows an enormous line of Teslas as drivers wait hours for their turn at a charging station in Louisiana. Another video shows cars sitting in California where drivers wait approximately eight hours for their 45-minute charge.
Data from the U.S. Department of Energy shows that California leads the nation in EV sales, accounting for almost 40 percent of all EV registrations.
However, much of California's EV success can be attributed to new rules that essentially force people to buy them.
On Aug. 25, 2022, Gov. Gavin Newsom's office announced that the California Air Resources Board approved the Advanced Clean Cars II rule, mandating that 100 percent of all new car sales in California must be zero-emission vehicles by 2035. The new rule codifies the light-duty vehicle goals set by Gov. Newsom’s Sept. 23, 2020 Executive Order N-79-20.
THE FIVE CS..
Forbes suggested that there are five reasons why EVs are failing in the American market, product unfamiliarity. They include concerns about the distance an EV can go on a single charge, a limited network of charging stations, and high interest rates coupled with the already steep purchase prices.
Diana Furchtgott-Roth has her own list of reasons, which she calls "the five Cs."
Ms. Furchtgott-Roth is an Oxford-educated economist who serves as the director of the Center for Energy, Climate, and Environment and the Herbert and Joyce Morgan Fellow in Energy and Environmental Policy at The Heritage Foundation.
"There are very real reasons why Americans don't want to buy these and it all boils down to the Five Cs," she told The Epoch Times.
"First is cost," she began. "They cost more. They cost $10,000 to $30,00o more than a regular vehicle and most people don't want to spend the extra money. The best selling truck in the United States is the Ford F-150 pickup truck. The Lightning version of that costs about $26,000 more."
Then there's "convenience."
"People just don't want to have to stop on a long road trip every two to three hours to charge their vehicle," she said.
The third is "climate."
"In a cold climate the batteries in these vehicles loose 20 to 40 percent of their charge," she explained, adding, "in very hot weather, they lose some of their charge also. That's why there's only about 530 registered EVs in Wyoming and about 350 in North Dakota."
The fourth is "China."
"People don't want to be dependent on China," she insisted, "policymakers especially. They don't want to be dependent on China for an important component of transportation. China makes almost 80 percent of the world's batteries, and it has a lot of the components and minerals that go into the batteries. If we go 100 percent EVs, we're going to be dependent on China for an important source of transportation."
The fifth on Ms. Furchtgott-Roth's list is "children."
"If you have a lot of children, you can't fit them into an EV because they tend to be smaller," she said.
'THIS IS UNSUSTAINABLE'..
Ultimately, Ms. Furchtgott-Roth believes the market will correct the EV problems naturally.
"When something is unsustainable, it stops, and I think this is unsustainable," she proposed, suggesting that the number of manufacturers scaling back on production is an indication that "It's stopping already."
She also doubts that the goal of making America go 100 percent EV by 2035 will come to fruition.
"I don't think the auto industry is going to manage to stop making the regular vehicles and switch to 100 percent electric vehicles. I just don't see it happening," she asserted, saying, "it's a big mistake for the federal government to get into the industrial policy business and tell people what to buy."
To demonstrate how good market practices succeed, she cited the sales of a Toyota's RAV4 Hybrid, which has an internal combustion engine and a battery that extends the range of the internal combustion engine from 20 to 30 miles per gallon and upwards of 50 or 60 miles to the gallon.
"It's something the government hasn't forced on people," she noted. "They haven't forced Toyota to make it and there's no tax credit to buy it. Toyota doesn't get any big grant to build a manufacturing plant for it, but these things are selling. They're selling because the company has identified a demand and is making the products that people want to buy."
An example of how the market deals with a bad product, she said, is the iPhone and the Blackberry.
"First there was the Blackberry. Then Apple decided they could do that better and they made the iPhone and Blackberry was out of business," she recalled. "It wasn't that the government came in and said you have to make the iPhone and people are going to buy it. Companies are innovative. They identify opportunities for profit and market demand and this is going to happen in the vehicle industry, too."
Ultimately, Ms. Furchtgott-Roth believes the future of the auto industry will be the hybrid, saying "the companies that make the products people want will thrive while those who don't will go out of business."
"Consumers should have a choice of product," she advised. "They should be able to decide if they want to dishwasher that uses more or less water. They should be able to decide if they want a gas or an electric stove. They should have a choice of big cars or small cars, energy efficient or non-energy efficient. They will make the choice and the other ones will go out of business. It's by consumer choice that companies innovate what works and you end up with better products."
“With 313,086 vehicles sold, that exceeded the record high of 298,039 sold in the second quarter and was an increase of nearly 50 percent over the year-ago quarter. “
313,086???
Tesla, alone, sold over 435,000.
I would say "childlike" in their naive belief that EVs will save the earth.
Government ordering companies to lose money will be the normal ,LOL
Just got back from a trip to Calif to see family and friends. The Hertz rental car guy said he could offer great rates on EV's. I told him no way since we were staying in several hotels and would have no reliable way for recharging. He replied, yeah nobody wants them.
Do they really want to kill tourism because this is how you kill tourism.
“the $7,500 federal rebate on them is driving sales at the moment”
Even more so next year when a buyer isn’t getting back what they paid in Federal tax. It’s a pure socialist / welfare play. If you can qualify for the loan you will get $7500 off the top at the Dealership even if you didn’t pay a penny in Federal taxes. And you just know Biden / Obama will threaten those loaning money for cars to look the other way when some schlep with horrible or no credit wants an EV.
Quick Bail out 10.0.
It is Solyndra rit large. The left takes other people’s money (taxes) and hopes the general public does not notice that there are no real ‘market’ for most of this. I often point out to people that every time an EV passes by, we all contributed to the purchase of the EV. After enough times stating this, some people actually ask questions. When I explain, some get angry.
Free enterprise my ass. We live in a CommandAndControl economy, and it’s been running to the ground by commissars with “5 year plans.”
The Soviet Union ran on five your government plans and look how they all ended up
Lose money on each, make it up on volume
Though electric vehicles hit another sales record, high production costs and a dwindling new customer base have spawned increasing corporate losses,
How in the hell does that even make any sense?
The people that want toy electric cars have already purchased them. Now it’s onsies and twosies.
And they’re still plodding right along with the monstrosity Rivian plant in a small
rural Georgia town, where no one but kemp and the POSs on the local
Chambers of commerce want the thing. Will go down as one of the worst deals ever in this country. But the guy who sold the family farm for it got his money.
How will they sell if subsidies are taken away?
If, as the article says, fewer than 1.5 million are sold in a year, it will take about 30 years to cover the market.
I work very closely with several EE’s and they all say the same thing. It would be great, but… 1 of them has an e-bike he rides to work a lot, but he would never get an EV.
Ha...you all forgot the worst of zll...the C6
There is no spare tire in a EV
In the interests of economy and to lower the weight of the vehicle...no spare wheel nor jack is included.
In any case who could wrestle a 75lb wheel off a Tesla...?
My truck has a 75lb heavy duty all weather tire...and it’s as much as I can manage to change a wheel.
You’d be forced to buy the Collision Damage Waiver every time you rented. Imagine a fender-bender resulting in a total loss of the EV.
I loved the article, but Ms. Furchtgott-Roth's Blackberry vs iPhone analogy is almost fiction. This is very common whenever Apple products are discussed. This is largely because of the massive advertising budget that Apple has used to spread myths about their products which fan boys then repeat over and over again..
The iPhone was released in 2007. The Blackberry didn't reach its peak popularity until four years later in 2011 when they had 85 million subscribers. This was approximately 5% of the cell phone market at that time. In 2011 Blackberry had competition from Android phones, Microsoft phones, iPhones, Symbian phones and other proprietary systems.
Apple released the iPhone 4S with Siri in 2011. Apple sold 93 million handsets in 2011 out of a total market of 1.626 billion cell phones. This was approximately 6% of the cell phone market, while Android phones had approximately 50% of the cell phone market at that time which increased to over 80% by 2013.
“Apple became Android's main competitor on the mobile operating system market. However, Android has been the largest player in the market since 2012, and they are forecast to maintain this leadership in the coming years. In the first quarter of 2016, about 84 percent of smartphones sold to end users used Android as its operating system. Android is expected to maintain its smartphone market share of about 85 percent up to 2020, while Apple's iOS is projected to account for 15 percent.”
Sorry I don't have time to format the following data into a table. You can see it formatted properly in the following link.
Mobile Handset Shipments (Millions)
................2009..2010..2011
Samsung 227.1 280.2 327.4
Nokia 431.8 453.0 417.1
Apple 25.1 47.5 93.0
ZTE 27.8 52.9 76.6
LG 117.9 116.7 88.1
Huawei 28.5 32.8 54.5
Alcatel 15.1 30.4 37.5
HTC 10.4 24.3 45.0
Sony 57.0 43.1 34.2
Motorola 55.1 37.2 41.4
RIM 34.5 48.8 51.5
Fujitsu 4.8 5.5 5.7
Sharp 9.4 10.1 7.9
Others 159.6 241.5 346.1
Total 1204.0 1424.0 1626.0
Apple had very little to do with the demise of Blackberry.
Ps...I already installed a power brake system so can stop on a dime with very little effort.
My birthday present to myself (81 years) is a power steering set..installed the oil pump and the garage is installing the gear box and checking the alignment.
Steering is ok on the road...but exhausting maneuvering in the parking lot...left a trail of knocked off side mirrors from little yuppie cars over the years...no plastic body panels on this truck
AKA...pretty much all the people who want them bought one.
Ford hit 15+ as recently as July. It has already dropped over 33%. If it drops to 5, it’s toast. Bailout time. You could buy it, but it would take years for it to go anywhere.
Great story! Thanks, george76
The .07
the 07% increase is not due to increased sales of EV’s but because of a decrease in normal car sales. Fewer people can now afford a new cars so sales are down there. So that makes the EV’s equal a higher percentage of the total
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