Why EV Sales Are Falling | CNBC Marathon
TLDRThe electric vehicle (EV) market is experiencing a slowdown in sales, with consumers expressing concerns about range anxiety and the cost of EVs. Despite significant investments in EV technology, the market faces challenges such as high repair costs, low resale values, and a lack of public charging infrastructure. Tesla's aggressive pricing has impacted the used EV market, leading to a drop in used EV values. Rental company Hertz, which had a large EV fleet, is grappling with these issues, including the costs associated with accidents and repairs, particularly for Tesla models. However, Hertz remains optimistic about the potential for EVs in the rental market and is taking steps to educate consumers and build out charging infrastructure.
Takeaways
- 🚗 EV sales in the U.S. have slowed down, with vehicles taking twice as long to sell in August 2023 compared to January of the same year.
- 🔋 Consumer anxiety about EV range and charging know-how persists, contributing to the limited mainstream appeal of electric vehicles.
- 💰 The high cost and perceived limitations of EVs are seen as barriers to their wider adoption, despite significant investments in the industry.
- 📉 Tesla has significantly reduced its prices, impacting the resale value of EVs and contributing to a perceived oversupply in the market.
- 🛣️ Long-distance travel remains a challenge for EV owners, with charging infrastructure seen as insufficient and range anxiety still a concern.
- 💵 Economic factors such as high interest rates and inflation have reduced the purchasing power of consumers, affecting the EV market.
- 📉 The average transaction price for EVs is higher than that for internal combustion engine (ICE) vehicles, which impacts consumer decisions.
- 🚦 Government incentives and mandates are pushing for electrification, but consumer adoption is not keeping pace with the supply of EVs.
- 🚧 Supply chain inflexibility and regulatory pressures are causing manufacturers to produce more EVs than the current market demands.
- 🚗 The shift in consumer preference towards plug-in hybrids (PHEVs) suggests a gradual transition towards fully electric vehicles rather than an immediate switch.
- ♻️ There is optimism for the future of EVs, with studies showing that consumers are willing to accept certain trade-offs in terms of charging times and range.
Q & A
What was the trend in EV sales in the U.S. from January to August 2023?
-In August 2023, it took about twice as long to sell an EV in the U.S. as it did in January of the same year, indicating a slowdown in EV sales.
What are the general consumer concerns regarding EVs?
-Consumers generally have anxiety about the range of EVs and the know-how required to use them, which contributes to the limited mainstream appeal of these cars.
What is the current state of investment in the auto industry, specifically towards EVs?
-There has been an unprecedented level of investment in the auto industry towards EVs, with $6.5 billion strictly dedicated to them.
What is the projected spending on commercial EVs between now and 2030?
-Wedbush estimates that spending on commercial EVs should top $1.2 trillion between now and 2030.
How much did consumers spend on electric cars worldwide in 2022?
-In 2022, consumers spent nearly $400 billion on electric cars worldwide.
What is the expected addition of new EVs to the U.S. roads in 2023?
-The U.S. is expected to add 1 million new EVs to its roads in 2023.
What is the total investment committed by automotive companies from 2023 to 2027?
-Automotive companies have committed a total of $616 billion in investments from 2023 to 2027.
Why has the demand for EVs leveled off despite the efforts to build the future of electric vehicles?
-The demand for EVs has leveled off due to a combination of factors including consumer anxiety about range and charging infrastructure, high costs, and a perception of limited utility for long-distance travel.
What steps have been taken by Tesla to boost its EV sales?
-Tesla has significantly slashed its prices to boost EV sales, reflecting a competitive move in response to slowing market demand.
How has the supply of EVs at dealerships changed from January to August 2023?
-The supply of EVs at dealerships increased from about 52 days' worth in January 2023 to between 90 to 100 days in August, indicating a rise in unsold inventory.
What percentage of U.S. vehicle sales did EVs make up through early September 2023?
-EVs made up a record 8% of U.S. vehicle sales through early September 2023.
What is the impact of regional economic factors on EV adoption rates?
-EV adoption rates closely track two economic metrics: pump prices and home energy rates, with higher gas prices and energy costs leading to greater consumer interest in EVs.
Outlines
🚗 EV Sales Deceleration and Consumer Anxieties
The first paragraph discusses the slowing sales of electric vehicles (EVs) in the U.S., highlighting that it took twice as long to sell an EV in August 2023 compared to January of the same year. It touches on consumer concerns regarding EV range and charging know-how, and notes that the mainstream appeal for EVs is not yet fully realized due to their high cost and usage limitations. The paragraph also mentions significant investments in EVs, with $6.5 billion dedicated to them and a projected $1.2 trillion in spending between now and 2030. Despite these investments, the EV market faces challenges such as range anxiety, long-distance travel planning, and a surplus of EVs exceeding demand.
📉 Adjusting to Market Realities: EV Sales and Economic Factors
The second paragraph delves into the reasons behind the softening of EV sales, including the economic challenges of rising interest rates, inflation, disrupted supply chains, and the inflexible nature of the EV supply chain. It discusses the pressures from government mandates for electrification and the long cycle time for automotive manufacturers to adapt from combustion engines to electric. The paragraph also covers the higher transaction prices for EVs compared to gasoline counterparts and the changing profile of the average EV buyer, who is increasingly trading in their existing vehicle for a new one.
🔌 The Challenge of Charging Infrastructure and Standardization
The third paragraph focuses on the transition to Tesla's charging standard, known as the North American Charging Standard (NACS), which has left some vehicles with obsolete charging outlets. It discusses the concerns about charging infrastructure and the government's role in pushing for EV adoption, despite some customer pushback. The paragraph also addresses the regional variation in EV adoption rates, which are influenced by factors such as gas prices and home energy rates, and how Tesla's aggressive pricing impacts the market.
📉 Used EV Market Depreciation and Demand Fluctuations
The fourth paragraph examines the falling prices in the used EV market, suggesting that this could be a deterrent for potential buyers and indicating a possible slowdown in EV demand. It discusses the impact of Tesla's price cuts on the market and the challenges faced by used EVs in terms of resale value and the unpredictability of policy changes and technological advancements. The paragraph also notes the significant drop in used EV prices from September 2022 to October 2023 compared to the overall used vehicle market.
🚘 The Impact of Tesla's Market Dominance on Used EV Prices
The fifth paragraph explores the impact of Tesla's dominance on the new EV market and how it influences used EV prices. It attributes the significant drop in used EV prices to Tesla's initiation of a price war, which led to a shift from used to new EV purchases. The paragraph also discusses the influx of used EVs entering the market as vehicles come off lease, and the new federal tax credits that may have contributed to the decrease in used EV prices.
💰 Understanding Residual and Resale Values in the EV Market
The sixth paragraph explains the concepts of residual and resale value in the context of the EV market. It discusses how Tesla's argument about lower ownership costs for EVs is calculated, taking into account factors like gas prices and maintenance costs. The paragraph also addresses the complexities of calculating the cost to own an EV and the various factors that can influence it, such as insurance, gasoline prices, and electricity rates.
📈 Hertz's Bold Move into the EV Market and Its Financial Implications
The seventh paragraph details Hertz's strategic move to acquire 100,000 Tesla vehicles and the financial and operational challenges it faced as a result. It discusses the company's emergence from bankruptcy, its plans for expansion, and the decision to invest heavily in EVs. The paragraph also covers the mixed reactions from investors and the strategic considerations behind Hertz's EV initiative.
🚧 Hertz's EV Strategy and the Road Ahead
The eighth paragraph outlines Hertz's EV strategy, its focus on building resources to educate consumers on EVs, and its efforts to build out charging infrastructure. It discusses the company's partnerships, such as with BP, and the potential long-term benefits of Hertz's investments in EVs. The paragraph also highlights the company's financial performance and the industry's current state, emphasizing that despite the challenges, Hertz remains profitable and is well-positioned for future growth in the EV market.
🛠️ Hertz's Approach to Managing EV Repair Costs and Fleet Utilization
The ninth paragraph discusses Hertz's approach to managing the higher repair costs associated with EVs, particularly Teslas, and the strategy to shift some EVs from the leisure segment to rideshare to mitigate these costs. It covers the company's efforts to rent Teslas to more experienced drivers and the overall growth of Hertz's rideshare rental business. The paragraph also touches on the company's move to return EVs to the leisure segment and the potential for premium pricing as the glut in that segment is reduced.
💼 Financial Performance and Strategic Outlook for Hertz's EV Fleet
The tenth paragraph provides an overview of Hertz's financial performance, noting that despite the challenges with its EV fleet, the company is not struggling. It highlights the record revenue from gasoline vehicle rentals and the overall positive demand and cash flow. The paragraph also discusses the company's strategic outlook, including the potential benefits of its investments in EVs and infrastructure, and the competitive advantage it may hold if and when EVs become more prevalent in the car rental industry.
Mindmap
Keywords
💡EV Sales
💡Range Anxiety
💡Investment in EVs
💡Plug-in Hybrid (PHEV)
💡Oversupply
💡Tesla
💡Government Mandates
💡Charging Infrastructure
💡Residual Value
💡Hertz
💡EV Depreciation
Highlights
EV sales are experiencing a slowdown in the U.S., taking twice as long to sell in August 2023 compared to January of the same year.
Consumer anxiety regarding EV range and the lack of public charging infrastructure are hindering mainstream appeal.
Despite consumer hesitation, significant investments in EVs are being made, with $6.5 billion dedicated to them.
Wedbush predicts spending on commercial EVs will exceed $1.2 trillion between now and 2030.
In 2022, global consumers spent nearly $400 billion on electric cars, indicating a strong market presence.
The U.S. is anticipated to add 1 million new EVs to its roads in 2023, showcasing growth despite the slowdown.
Automotive companies have committed $616 billion in total investments from 2023 to 2027, underlining confidence in the EV market.
Tesla has significantly reduced its prices, impacting the sales of other EV startups and contributing to a surplus of EVs in the industry.
The average transaction price for an EV in the U.S. is between $53,000 and $60,000, which is higher than the average for all vehicles.
EV supply at dealerships is sitting on a 90 to 100-day supply, compared to 52 days for ICE vehicles, indicating a challenge in sales velocity.
Consumer interest in EVs has dropped from 86% in 2021 to 67% in 2023, reflecting a decrease in enthusiasm.
EV buyers are changing, with 40% of EV shoppers trading in a vehicle they already own, nearly double that of a decade ago.
The luxury EV category has not seen as much of a slowdown as the broader EV market, possibly due to higher transaction prices.
EVs are facing challenges from larger economic factors such as rising interest rates and disrupted supply chains.
Used EV prices are falling, with studies showing a drop of around 30% from September 2022 to October 2023.
Tesla's aggressive pricing strategy has caused a significant drop in used EV prices, impacting the entire market.
Hertz, a major car rental company, has faced challenges with its EV fleet, including pricing issues, high repair costs, and low resale values.
Despite current challenges, there is optimism for the future of EVs as the market continues to evolve and mature.
Transcripts
Browse More Related Video
How Norway Built An EV Utopia While The U.S. Is Struggling To Go Electric | CNBC Documentary
The Big Business Of Energy For The EV Industry
$2,000,000 for an Airbnb. How investors destroyed Florida’s housing market.
Monopolies and Anti-Competitive Markets: Crash Course Economics #25
I Tried The Easiest AI Side Hustle For 30 Days
Informational Webinar: Battery and Critical Mineral Recycling – Retailers as Collection Points
5.0 / 5 (0 votes)
Thanks for rating: