Last week the EV bubble popped
It’s been a crushing week for the EV industry as the bad news that has been brewing for months was laid bare in the quarterly reports. Across the industry, corporate CEO’s are all admitting that demand is unexpectedly slow, orders are down, and suddenly projects are being delayed “indefinitely”.
Volkswagen admitted orders are down a shocking 50% and they are sacking 2,000 jobs in the software division. Ford posted an operating loss of $1.3 billion for the quarter — meaning they are losing $36,000 for every EV they sell. They face a ghastly full year loss of $4.5b, so not surprisingly, they are delaying battery plants, and plans to expand production. All up they are now holding off on $12 billion in investments.
The head of Mercedes-Benz described the market as “a pretty brutal space”. Harald Wilhelm hinted that some manufacturers won’t survive: “I can hardly imagine the current status quo is fully sustainable for everybody,” he said.
Panasonic has slowed EV battery production was reduced by 60% in Japan compared to the same quarter last year. While its US plants were OK, profit forecasts of the whole energy division were down 15% and depended on US subsidies.
News of cars kidnapping drivers, and airport car infernos have added to range anxiety and crushing interest rates to squeeze the EV bubble til it popped.
The bloodbath has been bad:
EV Skeptic Toyota Chairman Says People Are ‘Finally’ Waking Up to Reality of Electric Vehicles
Epoch Times
Toyota’s chairman and former CEO, Akio Toyoda, told reporters at an auto show in Japan this week that waning demand for electric vehicles (EV) is a sign that people are waking up to the reality that EVs aren’t the silver bullet against the supposed ills of carbon emissions they’re often made out to be.
Peak EV has been reached too soon…
The Ford Chief Financial Officer, John Lawler, tried to put it in the best light he could
Even if EV sales are still growing, it’s far too soon for them to be tailing off. At this early point of the transition — when the EV share of the market is small, and if EV’s are going to take over the world in the next ten years, they should be going gangbusters. The really important narrative, that must surely chill the bones of any EV investor, was that the Chairman of Toyota said: ” People Are ‘Finally’ Waking Up to Reality of Electric Vehicles”. If EV sales growth is already shrinking it suggests the final size of the EV market, barring a miracle discovery, is not very big.
Many of these companies have bet big on EV technology, but they are not turning a profit.
Volkswagen says EV orders are down 50% in Europe
Elecktrek
Meanwhile, Volkswagen CFO and COO Arno Antlitz explained on a media call that EV orders in Europe are down to 150,000. That’s 50% lower than last year’s total of 300,000.
These are crippling losses:
Ford Cuts EV Investment After Losing $36,000 On Every EV Sold In Q3
Dan Mihalascu, InsideEVs
Despite the higher volume, EV losses continued to rise in the third quarter, with the company posting an operating loss of $1.3 billion, up from $1.1 billion in the previous quarter and more than double its loss from Q3 2022.
This means that Ford lost around $36,000 for every electric vehicle it sold in the quarter, surpassing its estimated $32,350 loss per EV in the second quarter. For the entire year, the carmaker expects a full-year loss of $4.5 billion for its EV unit. Why is that, though?
Ford admits that people don’t want to pay more for an EV than petrol and diesel cars:
Ford, GM, and even Tesla are warning about the EV market
Pras Subramanian
Ford said in its earnings report that US EV buyers were “unwilling to pay premiums for [EVs] over gas or hybrid vehicles, sharply compressing EV prices and profitability.”
Even Tesla (TSLA) CEO Elon Musk, perhaps the biggest EV evangelist in the industry, poured cold water on the EV market and general economic landscape. Musk noted on Tesla’s conference call last Wednesday that the company was delaying construction of its upcoming Gigafactory in Mexico due to concerns about global economic conditions stemming from rising interest rates that make financing cars more expensive for consumers, thus crimping demand.
Ford pauses a $12 billion EV investment, after saying electric vehicles are too expensive
Business Insider
Ford has halted billions of dollars in investment in EV manufacturing, warning that customers will not pay a premium for these vehicles. The auto giant announced in its third-quarter earnings call on Thursday that it would postpone $12 billion in planned spending on electric vehicle production and pause some major projects, including the construction of a new battery factory in Kentucky.
There’s a “hornet’s nest of anxiety ” about slowing EV demand
…the decision to scrap plans for more affordable EVs is sure to deepen worries about the future of the EV market in the US and abroad. Tesla’s price cuts, shrinking profit margins, and softening demand has kicked up a hornet’s nest of anxiety about the massive shift to electric vehicles that’s currently underway.
And that anxiety is being reflected in a number of the big player’s moves, including GM’s recent announcements about longer wait times for its upcoming slate of electric trucks and Ford’s move to temporarily cut one of three shifts at the factory that builds the electric F-150 Lightning. –– The Verge
Bad portents: EV’s are taking twice as long to sell
‘Early adopters have adopted’: US carmakers slow EV growth plans
Australian Financial Review
EVs are … lingering longer on dealership lots. Dealers are taking 88 days to sell their entire supply of electrified cars and trucks, compared with 39 days in October 2022, according to Cox. Petrol-powered vehicles, by contrast, are selling in 60 days.
Only one-third of US consumers say the next car or truck they buy is likely to be electric, according to a survey from Yahoo Finance/Ipsos.
Even though sales hit a new record high, the slow-down is upon us:
A record 313,000 electric vehicles were sold in the US in the third quarter, according to data group Cox Automotive. Electric cars climbed to 7.9 per cent of total industry sales in the third quarter, up from 6.1 per cent a year ago, Cox Automotive found.
Even so, the pace of growth is slowing. Year-on-year sales growth for the third quarters of 2021 and 2022 was about 75 per cent; this year the increase was a comparatively cooler 50 per cent, according to Kelley Blue Book, a research company owned by Cox Automotive.
GM’s Trucks and vans slow down too:
GM’s biggest bets are running out of juice
General Motors’ biggest bets on the future — electric vehicles, autonomy and subscription software — are all running into trouble, and now the likelihood of sharply elevated labor costs is raising the stakes even higher.
Electric cars: GM last week abandoned its target to produce 400,000 electric vehicles (EVs) through the first half of 2024, citing slowing demand, continued manufacturing bottlenecks and profitability concerns.
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- The company had already announced it would delay production of its next-generation electric pickup trucks until 2025 to figure out how to make them more profitably. And it recently paused production of its BrightDrop electric commercial vans until next spring.
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Presciently, just before the week of quarterly doom reports came the poll showing 50% of non-Tesla EV owners are thinking of going back to petrol. Tesla loyalty was in the 70% range.
Hat tip to Kim, NoFixedAddress, Graeme#4 and GWPF
Godzilla Image by seanselbie from Pixabay
Tesla Image by Tumisu from Pixabay