Why is the expansion plan of the automotive industry slowing down despite the record high demand in the US electric vehicle market?
海角七号
发表于 2024-1-12 19:02:37
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According to the Kelley Blue Book by American market research firm Cox Automotive, sales of electric vehicles in the fourth quarter of 2023 reached a new record, reaching 317000 units, a 40% year-on-year increase. The share of electric vehicles in all car sales has reached a new peak of 8.1%.
But at the same time, the automotive industry is staging a retreat.
On the 11th local time, American car rental giant Hertz announced that it will sell about 20000 electric cars and use some of the proceeds to purchase gasoline powered cars. Earlier, General Motors postponed its plan to invest $4 billion to renovate its electric pickup truck production plant for one year. Tesla has also shelved plans to expand its factory in Mexico.
Has the demand for electric vehicles in the United States reached its peak?
The data is good, but the company's expansion plans are slowing down
According to the Kelly Blue Book, in 2023, 1.189 million new electric vehicles were put into use in the United States. This is the first time that the United States has achieved sales of electric vehicles exceeding one million. Throughout the year, the total share of electric vehicles in the US automotive market will also reach 7.6%, higher than the 5.9% in 2022.
Some car companies are also optimistic. At General Motors' Q3 2023 earnings conference call, when analysts asked about the slowdown in demand, the company's CFO, Paul Jacobson, said, "We don't see this in our current product portfolio... What we see is our customers showing amazing resilience in their orders and continuing to maintain their orders."
But at the same time, sales growth is indeed slowing down. In the fourth quarter of 2023, sales of electric vehicles in the United States increased by 40% year-on-year, compared to 49% in the third quarter. A year ago, the year-on-year growth rate of electric vehicle sales in the fourth quarter of 2022 was 52%. If calculated by sales volume, the sales of electric vehicles in the fourth quarter of last year were only about 5000 units higher than those in the third quarter.
Although General Motors did not see a slowdown in demand, it announced during a earnings conference call that it would abandon its plan to produce 400000 electric vehicles from 2022 to mid-2024 in order to maximize profitability.
Last October, Ford also predicted that due to a "significant compression" in the price and profitability of electric vehicles, and customers unwilling to pay a premium higher than similar internal combustion engine and hybrid models, the company's electric vehicle division would lose $4.5 billion for the year. Ford stated that it will reduce the production of the F-150 Lightning by about half by 2024.
Hertz, which has decided to sell electric vehicles, also stated in a regulatory document submitted on the 11th that "the costs related to collisions and damage (mainly related to electric vehicles) remain high this quarter.". The company expects that replacing electric vehicles with internal combustion engine models will increase net profit by approximately the same amount in the next two years.
Morgan Stanley analyst Adam Jonas commented on Hertz's measures, stating that consumers enjoy the driving experience and fuel savings brought by electric vehicles, but "there are other hidden costs to owning an electric vehicle.".
Price issue
According to the latest data from Cox Motors, the average selling price of new electric vehicles in December 2023 was $50798, down from $52362 in November, with a 3% price reduction. Meanwhile, subsidies for electric vehicles reached their highest point in 2023, accounting for 10.6% of the average transaction price (ATP), compared to less than 2% a year ago.
Despite subsidies, Ivan Drury, Insight Director at American automotive data provider Edmunds, said that car manufacturers, including Tesla, are selling electric vehicles at a loss.
Stephanie Valdez Streaty, Cox Automotive Industry Insight Director, believes that Tesla's leading significant price cuts have shaken the market and posed a challenge to the profitability of all car manufacturers.
According to reports, Tesla's price reduction campaign starting in 2023 has reduced the starting prices of some models in the United States by about one-third, resulting in a continuous decline in the prices of used Tesla and other electric vehicles for most of 2023. According to data from Kelly Blue Book, the price reduction in 2023 has indeed consolidated Tesla's sales champion position in the US electric vehicle market. The company accounts for 55% of the electric vehicle market sales, down from 65% in 2022.
However, although most models in the US market have reduced prices, only two models have a starting price below $40000, namely Nissan's Leaf and General Motors' Chevrolet Bolt, which were discontinued in December 2023. The average selling price of electric cars is also about $2000 higher than that of regular gasoline cars.
Meanwhile, market consulting firm J D. Tyson Jominy, Vice President of Data and Analysis at Power, believes that the local content rules of the Inflation Reduction Act (IRA) have reduced the number of electric vehicles eligible for tax credits, thereby having a negative impact on sales. The lack of affordable car models also discourages consumers.
According to the US Department of Energy and the Internal Revenue Service (IRS) of the US Treasury, the number of electric vehicles eligible for the IRA's maximum clean vehicle tax credit of $7500 in 2024 will be reduced from 35 to 14. Electric vehicles from brands such as Audi, BMW, Cadillac, Ford, and Volkswagen will all lose their eligibility for tax credits.
Ritika Mankar, a research strategist at investment consulting firm BCA, told First Financial reporters that overall, the US electric vehicle market is an ideal market for sellers because its competitive landscape is not very dispersed and sales prices are often high. In the US market, Tesla accounted for 45% of electric vehicle sales in the first nine months of last year, while General Motors, Volkswagen, BMW, Hyundai, Ford, and Toyota all accounted for around 5% of sales.
For the 2024 US electric vehicle market, the Cox Automotive Economics and Industry Watch team predicts that the market share of electric vehicles will increase to 10%. But the growth of electric vehicles will continue to slow down, and in the next year, there may even be the first quarterly sales decline in over three years.
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