Posted November 30, 2023
By Ray Blanco
EV’s Stall Out
Only one year ago, the mass adoption of electric vehicles seemed like a foregone conclusion.
Adoption surged under aggressive government incentives, both for manufacturers and consumers, and as a way for drivers to escape rising gas prices.
Sales for battery-powered vehicles grew 65% in 2022, with car companies tripping over themselves to introduce new EV models as quickly as possible.
But now in 2023, despite adoption for electric alternatives continuing to rise, we’re seeing manufacturers slamming on the brakes.
Ford is postponing $12 billion in spending on electric vehicles and pressing pause on their construction of a new EV battery plant.
General Motors is delaying the release of the EV versions of their Silverado and Sierra pickup trucks by one year. They’re also abandoning their target of producing 400,000 electric vehicles by mid-2024.
Even Tesla is delaying the construction of their gigafactory in Monterrey, Mexico.
This is because, despite EV’s still increasing in popularity, the demand is not matching the investment made by these companies.
EV makers have had to aggressively cut prices, sacrificing profits in order to increase sales growth. But adoption is still slowing.
In order to achieve the lofty goals set by the Biden administration, such as having two-thirds of all vehicles sold in the US be zero-emissions by the year 2032, adoption rates need to dramatically increase - certainly not fall off.
Companies will only be willing to forego profits for so long - and they can only cut their prices so much, with the average price for an EV already dropping by almost $10k so far this year…
Possibly the most damning thing for electric vehicles is that consumers have a better alternative…
A Happy Compromise
“To do two things at once is to do neither” - Publius Syrus
Not too long ago, it seemed like Publius (and Elon Musk) had it right. Nobody would want a compromise, because then you’re just getting the worst of both worlds. Hybrids would become history, all-electric vehicles would be the future.
That seemed to be panning out, with EVs surging past hybrids as America’s favorite alternative to conventional, all-gasoline engine vehicles.
But that narrative has reversed itself in 2023.
With inflation driving down the expendable income available for new vehicles, and rising interest rates driving up the cost of financing, we’re seeing a growing unwillingness for consumers to match the lofty price tags of all-electric vehicles.
Instead, cars and trucks priced under $50k are moving off of lots much faster than vehicles priced above that mark…
Who could have seen this coming?
In what originally looked like a major misstep, the Japanese vehicle manufacturer bet heavily on hybrids while seemingly the rest of the auto world was jumping on government incentives and what appeared to be a boom market with EVs.
But now Toyota is taking a victory lap after reporting Q3 ‘23 profits that were more than double those of 2022, driven by a 41% year-over-year sales increase in conventional hybrids and an almost 90% increase for plug-in hybrids.
Eco-conscious consumers seem content to reduce without totally eliminating their emissions, if it means not having to worry about running out of juice on a long road trip, or more importantly: being able to actually afford their car payments.
In this case at least, it seems that a compromise is the best option.
With that, we’d like to hear your thoughts. Would you be more likely to buy an EV, a hybrid, or stick with a traditional gas vehicle when purchasing your next car? What if price wasn’t an issue? Let us know about this, or anything at email@example.com.