The outlook for electric vehicles is looking increasingly polluted, and companies are having second thoughts about their big investments. In October, General Motors (NYSE:GM) postponed retrofitting a $4B factory to scale construction of its new electric pickups — while Ford (NYSE:F) also delayed $12B in EV manufacturing investments last week. This will help both companies save billions, but weaker EV demand could impact whether the expansions will happen at all:
- Despite Ford’s EV shipments rising 44% YoY in Q3, the company lost $1.3B, even as it rolled out Tesla-esque incentives meant to drive skeptical buyers.
- Just 3% of the vehicles that GM delivered in Q3 were EVs — a sign of how insignificant it may be to its overall business performance.
Ford claims that customers in North America are “no longer willing” to pay a premium for an EV, which could be a result of high-interest rates, but might also be from intensifying competition — where Tesla’s cheapest vehicle is still superior in range and cost (CNBC).
The EV culture wars
This just in: apparently, most people don’t want to shell out $43K for a vehicle with 312 miles of range — even with discounts, incentives and tax benefits. But it’s not just competition; the majority of Americans simply don’t trust that electric is ready for primetime:
- 50% of US adults don’t see themselves as likely EV buyers, a figure which has risen since last year, according to Pew Research — mostly blaming the lack of EV infrastructure.
- Support for phasing out new gas vehicles by 2035 has also fallen from 47% in Apr. 2021 to 40% in June 2023 — with more negative views held about EVs by certain politically inclined groups.
Sitting this one out: It’s not just automakers and consumers feeling the EV blues. Hertz (NASDAQ:HTZ) is pulling back on a plan to purchase 100K Teslas by 2022. So far, they’ve only purchased ~35K, citing Tesla’s price cuts impacting their resale prices and high cost of repairs. Last week, Honda also scrapped their plans to build cheap EVs with GM — and it’s unlikely these will be the last to go.
