Although consumer demand for electric vehicles has not materialized as executives expected, vehicle sales are still expected to grow in the coming years.
Andrew Merry | Moment | Getty Images
DETROIT — The buzz surrounding electric vehicles is fading.
The automotive industry has been booming with electric vehicles for years. Automakers have given optimistic sales forecasts for electric models and announced ambitious EV growth targets. Wall Street has boosted valuations of traditional automakers and startups, in part because of their vision for an electric future.
Now that the hype has died down, companies are once again cheering for consumer choice.car manufacturers from Ford and General Motors arrive Mercedes Benz, VolkswagenJaguar Land Rover and Aston Martin are scaling back or delaying their electric vehicle plans.
Even the U.S. electric vehicle leader TeslaChief Executive Elon Musk said at the end of January that the company expected to account for 55% of electric vehicle sales in the country by 2023 and was now bracing for a growth rate that “may be significantly lower.”
Eventually, we will still see a widespread return of more hybrid vehicle offerings – including gasoline-powered cars, hybrids and fully electric vehicles – but adoption will be much slower than previously expected.
Marin Gjaja, chief operating officer of Ford’s electric vehicle division, said in a recent interview with CNBC: “What we see in ’21 and ’22 is a temporary market peak where the demand for electric vehicles really takes off.” “It’s still growing, but it’s far from It’s not growing at the rate that we think it’s likely to grow in 21, 22.”
Ford is significantly increasing production and sales of hybrid models to help ease the transition to electric vehicles for drivers who aren’t ready for an all-electric model. They can also help companies meet stricter federal standards for carbon emissions.
General Motors, the first traditional automaker to go all-in on electric vehicles, plans to launch plug-in hybrid electric vehicles for consumers alongside electric and gas-powered vehicles.Others, such as Hyundai Motor, let, Toyota Automotive Volkswagen may also plan to offer different levels of electrification across its lineup.
“I think a balanced approach is the best approach,” Volkswagen of America CEO Pablo Diess told CNBC last month, adding that he was discussing bringing hybrid vehicles to the United States. The automaker currently sells the hybrid in Europe, but not in the United States.
“These technologies exist within the Volkswagen Group, whether it’s hybrids or plug-in hybrids,” he said. “I think it’s just a matter of time before we get it here.”
To be clear, auto sales are still expected to grow in the coming years, even though consumer demand for electric vehicles hasn’t materialized as executives expected.
U.S. electric vehicle sales hit a record 1.2 million last year Accounted for 7.6% Cox Automotive estimates that of the entire national market. According to analyst forecasts, this proportion is expected to increase to 30% to 39% by the end of this century.
“The market will never transition smoothly to electric vehicles, and we expect the transition to slow as early adopters become comfortable,” said Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions. “Moving to less tech-savvy buyers will slow down the growth of electric vehicle market share in the next few years.”
Electric vehicle goals
In recent years, with the emergence of ESG investing—investments that address environmental, social and governance principles—and Tesla’s rise from niche electric vehicle player to the most valuable automaker, As global market capitalization rose in 2020, the automotive industry largely took notice and began planning its path forward in the field of electric vehicles.
Automakers hope to emulate Tesla’s success, with some promising to offer exclusively electric vehicles in the near future.
These goals include: starAlfa Romeo says its car lineup will be fully electric by 2027. Jaguar Land Rover and Volvo have also said they will be fully electric by 2030. General Motors said it will only offer electric consumer vehicles by 2035, and its brands Buick and Cadillac aim to exclusively offer electric consumer vehicles. Electric cars are five years ahead of schedule. honda cars Its goal is to exclusively sell electric and fuel cell vehicles in North America by 2040. Other more specialized brands such as Lotus and Bentley have also announced exclusive EV targets.
General Motors CEO and Chairman Mary Barra speaks during Electric Vehicle Day on March 4, 2020, at the company’s technology and design campus in Warren, Miss., a suburb of Detroit.
General Motors
While none of the automakers have officially announced changes to their long-term goals, the tone and messaging around their goals has changed significantly. Officials said the company is monitoring consumer adoption, global emissions regulations and electric vehicle charging infrastructure to determine future plans.
Since its first all-electric deadline in January 2021, GM Chief Executive Mary Barra and other top executives have said recently that customer demand will guide its efforts. They insist the 2035 target remains its guiding plan. Cadillac now says it will offer a full range of electric vehicles but will not necessarily end production of all gas-powered models by 2030.
“We now have the best of both worlds,” Cadillac Vice President John Ross said in an interview last month. “We’ll see where it goes in the future, but we remain committed to delivering a complete electric vehicle portfolio by the end of the decade.”
Ford has never said it plans to offer electric vehicles exclusively globally, but it did set a goal of going all-electric in Europe by 2030, the same year that 50% of its sales in North America would be electric, and by In 2026, the profit margin of electric vehicles will reach 8%.The company has since abandoned many of its goals and begun producing hybrid cars (especially trucks) as well as electric vehicles and plug-in hybrids for the U.S.
“We have always taken a free choice approach,” Jia Jia said. “Some of it is to protect ourselves from going too far in one direction because, as we’ve seen, the market is very uncertain right now.”
Ford Motor Co. CEO Jim Farley gives a thumbs up during a press conference in Romulus, Miss., before announcing that Ford will partner with China’s Amperex Technology to build the Marshall, Miss. An all-electric vehicle battery factory on 13 March 2023.
Rebecca Cook | Reuters
Porsche Chief Executive Oliver Blume told Porsche’s annual media event on Tuesday that the German sports car maker is “in a flexible position” when it comes to car manufacturing. He said the company was monitoring EV adoption and regulations but still had a goal of having electric vehicles account for 80% of its global sales by 2030.
“We have to pay close attention… although the growth rate is slower than last year’s plan, we will always be able to respond flexibly,” he said, adding that the company “must see in 2026 and 2027” about a significant reduction in gasoline power. Car Spending Plan.
The broad shift in sentiment has brought more automakers closer to Toyota’s ethos. Under Chairman and former CEO Akio Toyoda, the world’s best-selling automaker has for years argued that a diverse product lineup is the best way to meet all customer needs and meet its goal of becoming carbon neutral by 2050. The right strategy.
The Japanese automaker now expects to benefit from the strategy, which includes hybrids, plug-in hybrids, electric vehicles and hydrogen fuel cells.
“Toyota is almost completely absent from the (battery electric vehicle) market but will gain more U.S. market share than any other auto company this year,” Morgan Stanley analyst Adam Jonas wrote in an investor note last week. Let’s get this straight.” “Electric cars may be the ‘future,’ but they’re currently in trouble. In the U.S., hybrid car sales are growing five times faster than electric cars.”
What happened?
After interest rates surged from early adopters of electric vehicles, fueled by low interest rates and the rise of Tesla, raw material costs soared, making cars more expensive than conventional vehicles.
It’s also clear that the auto industry and the Biden administration have set a target of half of U.S. new car sales Forecasts of electric vehicle sales by 2030 overestimate consumers’ willingness to adopt new technologies in the absence of reliable and ubiquitous charging infrastructure.
The adoption curve for electric vehicles has quickly passed through first adopters and some consumers who are “interested in electric vehicles,” but sales to mainstream buyers have been more difficult.
Cox Automotive said: “As sales have increased, expectations for the growth of electric vehicles in the U.S. market have moved from ‘optimistic to realistic,’ but customer acceptance of electric vehicles has not kept pace.” Its 2024 forecast report.
Cox said available inventory (measured in days of supply) of electric vehicles in the United States has surged to 136 days. By comparison, the U.S. industry-wide supply of new vehicles is 78 days. This data does not include Tesla, Rivian and other automakers that sell directly to consumers rather than through franchised dealers.
“A few years ago, there were ambitious ideas about how electric vehicle sales would evolve, but no one seemed to be considering this path,” said Michelle Krebs, executive analyst at Cox. It’s been a rough ride.” “Now they’re here, so reality has set in.”
The slowing popularity of electric vehicles has led to price cuts or discounts on various models, including the Ford Mustang Mach-E, Tesla Model Y and, most recently, the Nissan Ariya.
Trisha Jung, senior director of electric vehicle strategy and transformation at Nissan U.S. Cut up to $6,000 will “increase the competitiveness of the model and ensure we deliver the best value to our customers.”
What’s next?
There could be a bigger shift in industry strategy for electric vehicles in the coming months, depending on political pressure, including the finalization of the U.S. Environmental Protection Agency’s fuel economy and emissions standards.
The push for electric vehicles by legacy automakers, especially the so-called Detroit Three, is driven by the need to meet federal vehicle emissions and fuel economy requirements to avoid costly penalties.
proposal Currently under review The Alliance for Automotive Innovation, which represents the largest U.S. automakers, said if the Biden administration raises fuel economy standards by 2032, automakers could face more than $14 billion in fines based on the fuel efficiency of their existing fleets.
A separate letter from the Automotive Policy Council to federal regulators last year estimated that such regulations would cost GM $6.5 billion in fines and Jeep parent Stellantis $3 billion. The commission representing the Detroit automakers said Ford’s fines total about $1 billion.
Shifting strategy comes at a cost: Automakers that invest heavily in EV infrastructure and then change direction may face writedowns or higher capital requirements to shore up different production lines. But without consumer sales, they have no choice.
Given that the standards were developed with the rapid adoption of electric vehicles in mind, it’s unclear to what extent hybrids and plug-in hybrids can help automakers meet potential regulatory requirements. But automakers’ product portfolios need to meet federal guidelines to maintain a viable path forward.
An automaker’s fuel economy is based on the entire mix of vehicles sold across its fleet. The better a car’s fuel economy and lower emissions, the higher the automaker’s overall score.
“It all depends on what the final regulations are,” said Matt Blunt, president of the American Automotive Policy Council.
Blunt said the trade group hopes the Biden administration listens to the industry’s concerns and “understands that part of the transition to electric vehicles is enacting sensible fuel economy regulations.”
Biden is reportedly expected to scrap some targets, a key component of his plan to combat climate change, due to slower-than-expected adoption of electric vehicles.
Also coming up is the US presidential election in November. If former President Donald Trump is re-elected, he is expected to scale back or eliminate fuel economy rules, as he did during his first term.
A January reversal of those standards could pave the way for a longer era of gasoline-powered and hybrid models.
Carmakers operating in Europe face tougher requirements Government electric vehicle regulations currently aim to ban the sale of traditional fossil fuel vehicles by 2035. However, regulations have since changed and conservative groups such as the European People’s Party have called for the ban to be lifted.
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