Tags: automotive | electric vehicle | china
OPINION

Why Automakers Are Backtracking on Their Ambitious EV Plans

Why Automakers Are Backtracking on Their Ambitious EV Plans
General Motors presents its portfolio of electrical vehicles in front of the New York Stock Exchange in lower Manhattan in New York on Nov. 17, 2021. (Samuel Rigelhaupt/AP/2021 file)

Lauren Fix By Friday, 05 July 2024 10:37 AM EDT Current | Bio | Archive

Here’s why automakers are backtracking on their electric car game plans. Is backtracking a mistake and allowing China to take the lead forever? And how doe this affect the car buyer?

You may be surprised that this changing landscape, or backtrack, is occurring. But, ask yourself, eere Americans ever really sold on EVs in the first place? Well, the relatively high cost of EVs, range anxiety, and American consumer preference for hybrids are a few factors to blame.

Americans were never prepared to embrace electric vehicles at the rate predicted by many industry and government “experts.” There was a lot of high-profile noise being made by everyone from Elon Musk to environmental groups, at they quoted EV sales volumes. But when you looked at the change in market share, it was clear the process of going all in, or even mostly, EVs are going to take decades, not years.

My strong sense of this was validated by the iSeeCars study last year, which showed individual markets, meaning cities or states, with more than 7% new EV market share growing much slower than markets below that threshold. It was obvious getting from 3% to 7% EV share was much easier than getting from 7 to 10 percent.

Customers were interested in trying the novel new vehicles. The media was pushing as hard as the government. And getting EV share to 20%, 30%, or more? That was clearly a long ways off.

Could car manufacturers' big EV push backfire and hurt brands like Fords and GMs of the world? Or, is the right questoin: Would they fall behind in innovation and cede this ground to Chinese EV makers?

The Chinese already have every advantage when it comes to EVs. From controlling the global lithium supply to aligning their government and manufacturing sectors to reduce production costs.

The best move for U.S. automakers is to sell Americans what they want right now — gasoline and hybrid models — while developing their own EV supply chains within the U.S. This will allow U.S. car makers like Ford and GM to maintain sales and profit while funding a more measured, and realistic, approach to electric vehicles.

If domestic automakers, and even European and Asian brands selling in the U.S., think a rushed approach to EVs will put them on even ground with the Chinese, they’re going to waste a lot of money learning the hard way. Looking at the financials for most automakers' electric vehicle divisions, and how many electric vehicles are stacking up at their dealer lots. Clearly, this shows they’ve already made this mistake. The only question now is how quickly can they adjust production to reflect true consumer demand.

While other auto makers are backtracking, China isn't even fully betting on EVs. They are snatching up internal combustion engine technology that the left-leaning European brands have foolishly discarded.

Yes, China is hedging its bets. Like all smart countries and companies do. Meanwhile, we have the current Biden administration and the supporters of the Green New Deal trying to force a single solution on American citizens.

Geely, a Chinese car company, is building around 15 internal combustion engine plants in Europe to supply Mercedes, Nissan, Renault, Volvo and others. No one forced the Europeans to abandon this technology, but their loss is China’s gain.

Geely will be supplying an ultra efficient 4-cylinder turbo engine. European car executives thought customers would go fully electric. As we know, customers are not as interested as they expected. After all, the brands had planned to transition away from gas and diesel powered vehicles.

Some brands saw the writing on the wall and predicted correctly. BMW never committed to going all-electric. Nor did Hyundai, KIA and Genesis. They continued to offer multiple choices. Toyota was the most resistant to the transition — and this will prove to be a very smart business move.

The other Germans car companies, as well as GM and Ford, went fully in on electric cars and had future plans to be all electric. Now they are backtracking. This is going to cost them financially in the big picture. Few companies will benefit from the rest of the industry's short sightedness, as already can be seen on their bottom line.

China continues to take more car market share as others. Starting in late 2022, China took over nearly 100% of the Russian car market in a matter of months. Nearly 100% of those cars in turn are ICE (gas) cars; they are not electric or even hybrid. This has been the source of China's biggest export boom in its history, measured less than two full years. They have shot themselevs in the foot, losing all that income.

The question remains: Will companies like Ford, GM, Stellantis, and others that have pulled back investments eventually lose EV market share — and will companies that have kept innovating and spending emerge as the big winners in the eventual EV transformation? We shall see what happens next.

Video Link: https://youtu.be/h2odO0Y3ZAg

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LaurenFix
Here's why automakers are backtracking on their electric car game plans. Is backtracking a mistake and allowing China to take the lead forever? And how doe this affect the car buyer?
automotive, electric vehicle, china
897
2024-37-05
Friday, 05 July 2024 10:37 AM
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