Big 3 U.S. investment postponed due to weak demand for electric vehicles Europe and China also ‘slow down’
As demand for electric vehicles weakened, the Big 3 U.S. automobile companies postponed investments, and investment in electric vehicles in Europe and China also slowed down.
Third-quarter data from the Big Three in the U.S. raised concerns that demand for electric vehicles was slowing, raising questions about their plans to invest tens of billions of dollars to develop new models and build factories, and in recent weeks, GM, Ford Motor Co. and Tesla Motors have reported slowing sales. and announced that it would postpone spending, citing signs of economic weakness.
GM CEO Mary T. Barra told analysts on a conference call last month that the market for electric vehicles “is turning out to be a little bumpy,” and that as a result GM is including battery-powered vehicles in its Chevrolet Equinox SUV. The New York Times reported on the 7th that sales of some new electric models are waiting several months longer than expected to begin.
“E.V.s are still in high demand, but prices have fallen as competition has increased,” Ford CEO Jim Farley told analysts.
Even some models that were once extremely popular are selling more slowly.
Ford said last week that sales of the Ford Mustang Mach-E, which required a major price increase 10 years ago, have declined.
GM and Ford have already invested more than billions of dollars to renovate plants and build new plants to produce electric vehicles, batteries and other components.
The NYT said, “If car manufacturers miscalculate, the consequences can be serious,” and added, “Electric vehicle sales in China and Europe are also growing more slowly than a few months ago.”
Stellantis, the parent company of Chrysler, Jeep, and Ram, among the Big Three in the U.S., has not yet started selling pure electric vehicles in the United States.
"Demand is growing a little bit, but it's not nearly moving to the extent that supply and production are increasing," said CEO Rob Cochran, who owns dealerships in Pennsylvania and Ohio that sell nearly every major car brand, including Ford, Chevrolet, Hyundai and Volkswagen. “It’s not happening,” he told the NYT.
Automakers launched at least 14 new all-electric models last year, stepping up production of other models that were in short supply, inevitably causing some to sell better than others, Cox Automotive reported.
Republican J.D. Conservative politicians, including Senator Vance (Ohio), have proposed withdrawing the Biden administration's support policy designed to encourage the purchase of battery-powered electric vehicles, saying that electric vehicles are destroying jobs in the auto industry.
Automakers have now gotten the message that selling electric cars is different from selling gasoline cars.
“Charging is still an important issue that needs to be solved,” Andrew Cornelia, CEO of Mercedes-Benz’s North American high-power charging division, told the NYT.
Analysts told the NYT that uneven growth is not surprising as electric vehicles move from niche products to the mass market.
Most car owners are still learning about the technology, and automakers and dealers are still figuring out how to best sell to them.
“A lot of early adopters have bought expensive electric vehicles,” said Tom Narayan, global automotive analyst at RBC Capital Markets. “Now we’re at a point where main street consumers are seeing electric vehicles.” .
Ford's latest sales figures show mixed signals.
Ford's Mach-E sales increased only 5.10% in the first month of this year, but sales of its battery-powered pickup truck F-150 Lightning surged 43%.
Analysts analyzed the sluggish sales of the Mach-E as a reflection of competition with Tesla Model Y.
Many buyers were comparing two vehicles of similar size and style, and at the time, Tesla lowered the price of the Model Y so that the cheapest model was $2,500 cheaper than the Ford flagship after federal tax credits, and this was reflected in sales.
The recent conclusion of the United Automobile Workers' strike against the Big Three - Ford, GM and Stellantis - has renewed attention on attempts by traditional automakers to compete with Tesla.
Electric vehicles have played a major role in labor-management negotiations with the UAW, extending at least some union privileges to workers at the new battery plant in a tentative contract agreement.
The deal, on the other hand, increased manufacturing costs while making it much more difficult for Ford, GM and Stellantis to keep up with non-union Tesla.
The survey found that buyers are still interested in electric vehicles but are struggling to afford them.
Cox Automotive said the average price paid for an electric vehicle in the U.S., around $50,000, has fallen significantly compared to last year, but is still too high for many new car buyers, especially as higher interest rates have made monthly car payments more expensive. .
Average interest rates on auto loans are now higher, compared to less than 5% at the start of 2022, according to Federal Reserve data.
Over the past few years, automakers have been pouring money into the automotive market by marketing SUVs aimed at wealthy suburban homeowners.
However, there is still a shortage of cars priced under $30,000 that middle-class buyers can afford.
“A lot of automakers were rushing to get vehicles to market, but now they’re in a situation where they’re not pricing properly in a rising interest rate environment,” Kevin Roberts, director of industry insights at CarGurus, an online auto marketplace, told the NYT.
Some electric car buyers are worried about finding enough places to quickly charge their cars on road trips.
Most automotive surveys have concluded that, after price, charging infrastructure is the number one concern buyers have when considering an electric vehicle (EV).
Public charging is essential for people who live in apartments or cannot install a home charger, and for young people.
“Younger people are more open to electric vehicles than older people, but the lack of charging infrastructure among young people, who typically live in apartments, is a barrier,” said Cochran, a dealer in Ohio and Pennsylvania. “At least two of our customers are “I returned my newly purchased electric car after realizing there weren’t enough chargers near my house,” he told the NYT.
The good news for those interested in purchasing an electric vehicle is that prices will likely continue to fall as automakers add new factories.
Starting in July, dealers will be able to apply a federal tax credit of up to $5,000 when a customer purchases a car. Previously, buyers had to wait to file their taxes to claim the credit.
Charging systems are also improving, albeit slowly. Parts of Tesla's fast charger network, the largest in the U.S., will open to Ford, GM and other brands next year.
Other automakers are making their own chargers. Mercedes-Benz announced last week that it would install at least 55 stations in luxury shopping malls in the U.S. and Canada operated by major real estate company Simon Property Group.