Recently, when asked about the challenges faced by electric vehicles such as sluggish demand in the US market, Toyota Chairman Akio Toyoda stated that the automotive industry is gradually realizing that there is no single answer to reducing carbon emissions.
Although Akio Toyoda has always resisted comprehensive electrification, the current reality is that with the increasing uncertainty of electrification transformation, some multinational automobile companies have decided or are considering extending the production and sales time of fuel vehicle products, while slowing down related investments in the electrification field.
According to Reuters, General Motors plans to extend the production time of its most profitable fuel trucks and SUVs by 10 to 12 years. CEO Mary Barra reiterated during the third quarter earnings conference call that slowing down electric vehicle production helps protect market pricing. Previous attempts to drive the entry-level market will no longer be a future goal for General Motors. General Motors and Honda recently announced that they will abandon their plans to jointly develop low-cost electric vehicles.
Mercedes Benz, which announced in the third quarter of this year that if electric vehicle profits continue to fall below expectations, it may improve the overall return rate through its fuel vehicle product portfolio.
The decline in profits may be a direct factor driving automotive companies to make this decision. General Motors' third quarter financial report shows that although its operating revenue slightly increased, it still hasn't offset the negative impact of weak profitability of electric vehicle products - its net profit for the quarter was $3.038 billion, a decrease of 7 percentage points year-on-year.
Volkswagen also failed to achieve expected profits, with a year-on-year decrease of 7% in operating profit in the first nine months of this year. One of the main reasons for the sluggish growth in demand for electric vehicles is that the number of electric vehicle orders in Europe has decreased from 300000 units in the same period last year to 150000 units. Ford is still deep in losses, with its electric vehicle division Model E operating at a loss of $1.33 billion, more than twice the loss from the same period last year.
The negative impact of the weak growth of electric vehicles is not limited to the main engine manufacturers, and multiple suppliers have expressed dissatisfaction with the market prospects. Panasonic recently lowered its annual profit forecast for its battery business unit to 115 billion yen (approximately $762 million), a decrease of 15%. LG Energy in South Korea has warned that due to a decline in electric vehicle sales, the company's revenue growth will decrease next year.
In the era of gasoline vehicles, multinational corporations have always been in a leading position in the Chinese market, but now they are facing fierce competition from local new energy manufacturers. Domestic car manufacturers are constantly offering lower prices to attract consumers, and competitors have to follow suit. Ford previously announced a maximum 17% drop in its electric pickup F-150 Lightning, and Volkswagen ID.3 also announced a price reduction of 37000 yuan.
However, the ongoing price war has diluted the average profit of the industry. Changing the pricing strategy did indeed lead to a rebound in sales for Volkswagen ID.3, but at the same time, the loss per car sold exceeded 40000 yuan. Ford suffered even more severe losses, with a loss of approximately 270000 yuan per electric vehicle sold in the first half of the year.
In addition, it is increasingly difficult to compete with Chinese independent brands represented by BYD in the market. Arno Antlitz, the chief financial officer of Volkswagen, admitted that the brand may further lose its pure electric market share in the next year or two.
According to the September narrow sense passenger car retail sales data released by the Passenger Car Association, BYD has an absolute advantage with a market share of 34.5%. Specifically in the pure electric field, the global electric vehicle tracking report released by Counterpoint Research shows that BYD already accounted for half of the global electric vehicle sales in the second quarter.
In the overseas market, in addition to the sluggish growth of electric vehicle sales, the tense labor relations caused by the energy transformation have also significantly reduced profits. Workers on traditional production lines participate in strikes to protect their interests, resulting in an average weekly loss of approximately $200 million for General Motors, while Ford claims to have suffered an economic loss of $1.3 billion.
At the same time, car companies are taking on the astronomical task of developing electric vehicles. Volkswagen is one of the more radical transformation companies. The latest five-year plan shows that it will invest 180 billion euros (approximately $192.6 billion) in the research and development of electric vehicle related technologies, an increase of 13% compared to the previous one. To develop related products, Ford plans to invest over $50 billion globally within four years.
Contrary to the expensive and uncertain research and development of electric products, fuel powered vehicles can still bring huge and relatively stable profits, which has prompted car companies to further extend the lifespan of fuel powered vehicles.
Thanks to strong demand for high profit gasoline SUVs, Hyundai Motor's operating profit in the third quarter reached 3.82 trillion won (approximately 2.8 billion US dollars), a year-on-year increase of 146%. According to AutoForecast Solutions' (AFS) forecast of General Motors' production by 2035, the company's fuel trucks and SUVs generate an annual pre interest and tax profit of up to $7.5 billion.