Short lifespan illusions
An imagined slump in fully electric vehicle (EV) sales reflects short-lived illusions of a society-wide osmosis. According to Cox Automotive report on U.S. EV prospects, 2024 Path To EV Adoption, high EV prices and fear of there not being enough public charging units available have taken hold.
Broken down, the study indicates that currently 45% of those intending to purchase a new vehicle within the next 12 months are considering an EV, that becomes 79% in the 2026 to 2028 period and 90% by 2033. For used EVs, in 2021, 62% of Considerers were contemplating an EV, in 2024 that rises to 77%.
Contributing to illusions, legacy automakers have not sufficiently contemplated market entry impacts of affordable Chinese EVs and the competition impacts on median EV prices.
An AutoPacific survey of Americans found that 76% of those under 40 would consider an affordable Chinese EV, across all ages the percentage is 37%.
On charging infrastructure availability, there is a chicken and egg paradigm, since more chargers will become available if there were more EVs on the roads.
Supporting the aforementioned analyses, the Canadian provinces Quebec and BC have impressive government-owned utility charging networks and EV rebates, such that the EV market shares in these two provinces in Q4 2023 were 21.4% each, with Quebec having the largest absolute numbers of EV registrations in Canada.
Thus, baseless osmosis have short lifespans.
There was speed bump, but never a slump. During the first quarter 2024, IEA asserted that global sales EV sales rose 25% compared to the first quarter of 2023. Also during Q1 2024, six of the ten biggest EV manufacturers experienced major EV sales increases for this period with Hyundai and Kia EVs up 56%, Ford EVs 86%.
A slow start up of the production of the new generation of the Tesla Model 3, and GM’s temporary market withdrawal of the well-selling Bolt EV, resulted in a lower rate of EV sales growth, not a dip.
Furthermore, Hyundai and Kia will be able to offer a greater numbers of EVs in North America once their Georgia U.S. plant is completed in October 2024.
In the U.K., a speed bump definitely never happened. EV 2024 sales data up until May illustrates the beginning of the year scored a record 17.9% of the market. Contributing factors are a charging points 15 times more available than fuel pumps; the U.K. phase out of ICE vehicles targeting a 100% ICE ban by 2030; a greater variety of EV choices; many zero emissions zones; and EV tax incentives for companies (fleets).
Summing up, it is anticipated that global EV sales will be up 20% in 2024.
For 2025, IEA predicts EV sales will skyrocket.
Legacy automakers heading for wall
Notwithstanding the inevitable impacts on median EV prices pertaining to less expensive Chinese EVs entering North American and European markets, and the lifespan of myths, many automakers are painting themselves into a corner.
For the moment, this has translated into a rise in sales of plug-in hybrid electric vehicles (PHEVs) and old-style hybrids. In the U.S., hybrid sales grew 53% in 2023, compared with 2022, PHEVs, 46%.
Yet PHEV drawbacks are low electric autonomy ranges, typically under 50 km, combined with many who don’t regularly plug in their vehicles overnight. This means many PHEVs are mostly driven as internal combustion engine (ICE) vehicles.
Should the popularity of such models continue, the result will be a failure to achieve government vehicle emission reduction targets.
GM’s CEO, Mary Barra, acknowledged that one of the hurdles for selling EVs is the lack of charging infrastructure, but has no plans to do anything about it.
At GM, the highly popular and affordable EV, the Chevrolet Bolt, for a time, was the only EV offered before production was shut down. GM claims it is awaiting development of a version equipped with a new Ultium battery, the battery of other GM EVs.
The Chevy Volt, with the Voltec technology for very limited reliance on a tiny internal combustion engine to charge the vehicle, was discontinued.
Meanwhile, the demand for the Cadillac Lyriq EV is going well, but the Chevrolet Equinox EV and Blazer EV market entries are delayed. The Blazer EV delay comes after discovering a plethora of software problems.
In effect, many of the kinks in the GM-LG Energy Solution batteries and GM software too, are significant factors in delays in getting GM EVs on the market.
GM, with nothing to fill the gaps between lost EV sales stemming from the temporary discontinuation of the well-selling Bolt, and delays in the launching of the modestly priced Equinox EV, GM’s overall EV sales decline was of GM’s own doing.
Now, GM is focused on PHEVs for production in 2027.
Similarly, Volkswagen and Mercedes have modified their EV plans.
Mercedes has backed off plans to exclusively sell zero-emission vehicles by 2030. Low sales of the EV, EQS, has put a halt to the development of the MB-EA EV platform, for which billions had been previously committed. The MB.EA Large, intended for EV versions of the S-Class, GLS, E-Class, and GLE, is on hold. Not certain what will be in the cards for the MB.EA Medium for the C-Class and GLC. Mercedes Group CEO, Ola Källenius, stated the transition to EVs will be slower than originally anticipated.
The Volkswagen Group, under the direction of its previous CEO, Herbert Diess, was on the path to remake the corporate image after “Deiselgate”, with a full tilt for planning the introduction of lineups of EVs, the ID.3, ID.4, and ID Buzz, plus a number of Audi EV models, as well as the Porsche Taycan.
The Volkswagen Group now headed by CEO, Oliver Blume, a more traditional manager, and the Volkswagen brand new boss, Thomas Schäfer, have indicated the company will slow down on EVs to better concentrate on PHEVs.
Accordingly, Volkswagen PHEVs coming up are the Passat, Golf GTE and Golf eHybrid.
Ford has cancelled and postponed future EV manufacturing, referring to EVs as “the main drag on the whole company right now.” Ford reported that it had a deficit of $100,000 for every EV sold, translating into its EV division having lost $4.7 billion in 2023 and 2024 EV losses may go as high as $5.5 billion.
Toyota has only one EV on the market, the bZ4X, along with its near twin, the more luxurious Lexus RZ. This, while offering PHEV and hybrid versions of the RAV-4, Prius, Camry, Corolla Cross, Highlander, Venza, Sienna, Tundra and Tacoma, in addition to its Lexus siblings, the NX and RX.
Honda now furnishes Accord and CR-V hybrids and, in 2025, there will be a Civic hybrid.
Mitsubishi has the Outlander PHEV with new PHEV models to come.
It appears legacy automakers have blind spots regarding Chinese EVs priced to be competitive with ICE vehicles, the market share of EV-only manufacturers has been increasing, the costs of critical minerals are down and EV market share is outpacing International Energy Agency assessments for what is required to reach net-zero objectives.
By the time the new PHEV models are on the market, the PHEV era will be over.
Inexpensive Chinese EVs changing paradigms
The North American and European arrival of more affordable and greater diversity of EVs from China will catch automakers in the aforementioned two continents with their pants down. This may happen in much in the same fashion as the impacts on these manufacturers pertaining to the 1970s invasion of Japanese vehicles. Back then, GM and Chrysler (now Stellantis) were saved by government bailouts from the U.S. and Canada.
Chinese EVs at median prices equivalent to, or less than, ICE (gas-powered) vehicles on the U.S. market were described by the Alliance for American Manufacturing as an “extinction-level event” for the rest of the automakers.
Why would one buy an ICE product, when for the same price, one could purchase an EV with significantly lower energy and maintenance costs, while doing the “right thing” for the environment?
This has already happened in China. Hyundai sold an ICE production facility in China, built in 2017 with a capacity of a 300,000 units per year, for 25% of its original cost.
In 2024, EVs sales in China will account for 60% of the global EV pie.
This is where the Biden decision for a 100% tariff on Chinese EV and battery imports come in.
However, Ford, Volvo and BYD have figured out how to circumvent tariffs on Chinese EVs. Ditto on Chinese battery tech eligibility criteria for Inflation Reduction Act tax credits and consumer rebate, plus Bipartisan Infrastructure Law battery production and recycling grants. (For details, click on the preceding link.)
The takeaway
We have all seen this movie before. Too bad “legacy” automakers have short-term memories.
For 2024, 25% of the European estimated percentage of EV sales will be represented by imports from China.
Competition with lower priced Chinese EVs will lower the median EV prices in all markets, surges in North American EV and battery production capacity plus EV charging infrastructure expansion to respond to increasing demand, will bring the consumer fence-sitters on side.
Albeit some of the resistance to EVs comes from those committed to climate action and climate deniers alike. Ironically, the tendency of both groups is to express the same concerns about global catastrophic mining intensity and human rights abuses.
These Armageddon scenarios won’t happen.
First, EV batteries are 95% recyclable, 50% of recycled content can be used for the production of new batteries. The other 45% can be used for energy storage to support intermittent clean energy sources, such as solar and wind.
Second, the emerging next-generation battery, lithium iron phosphate, LFP, does not require cobalt and nickel.
And the third-generation battery, sodium-ion, not yet fully ready for EVs, requires few, if any, critical minerals, mainly the abundantly available, sodium and iron.
Hence, the osmosis myths of the skeptics will collapse, as what typically happens with unfounded beliefs.
The combination of more affordable prices, incrementally longer ranges, greater EV production capacity; 95% EV battery recyclability, technological battery advancements from less critical minerals to few critical minerals along with better reliability, together with significant increases in the numbers of charging points, will ultimately see EVs triumph as the new “normal.”
Even before the upcoming developments, the momentum has set in. The 2024 and 2025 EV sales growth projections are 20% and steep climbs, respectively.
