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'Automakers Are Freaking Out Too Much': The EV Slowdown May Be A Tesla Problem

Patrick George

May 29, 2024

"Hyundai, BMW, Kia, Cadillac—they’re really moving the needle forward," one expert says. But the real struggle is with Tesla.

You've seen news of it almost everywhere: the "EV slowdown." Headlines that say "Americans don't want EVs." That the electric car revolution has "hit the skids." The problem with that narrative is that while the latest sales numbers may not be as rosy as every single automaker might've wanted, they're pretty dynamite overall and still growing fast. So where's the disconnect here?

That leads off this midweek edition of Critical Materials, our morning roundup of the biggest stories in transportation, tech and the future of how we get around. Also on tap for today: VinFast may be delaying its U.S. assembly plant, and one issue that does persist in the EV world is deep political polarization. Let's dig in. 

If you pay attention to InsideEVs' monthly and quarterly sales charts—which take a lot of work to put together, so we hope you enjoy them—then you know it's been a mixed year so far with electric sales. Some losers, some obvious winners, but a different story from the rather apocalyptic narrative around the industry.

And there are often very clear brand-by-brand reasons for lower sales than in 2023, like General Motors no longer selling the ultra-popular Bolt or gaps between new models. But again, the aggregate picture isn't one of permanent, up-and-to-the-right growth that most analysts and industry leaders want.

That's why so many automakers are now slowing down their EV rollout plans or pivoting more to hybrids instead; many wanted a clear takeoff point sometime last year where they could just plan to stop making ICE cars entirely, and the transition won't be that easy. But sales remain stronger than people think.

Kudos to Bloomberg's Tom Randall for taking the time to point this out:

For every sign of an EV slowdown, another suggests an adolescent industry on the verge of its next growth spurt. In fact, for most automakers, even the first quarter was a blockbuster. Six of the 10 biggest EV makers in the US saw sales grow at a scorching pace compared to a year ago — up anywhere from 56% at Hyundai-Kia to 86% at Ford. A sampling of April sales similarly came in hot.It’s a tale of two EV markets, where consumers are flocking to some brands in record numbers while turning their backs on those with inferior battery range, slower charging and high prices, said Stephanie Valdez-Streaty, director of industry insights at Cox Automotive. Delays of new vehicles, though temporary, added to the perception of a market running out of steam.“We’re still seeing growth in demand, just not at the same pace for every brand,” Valdez-Streaty said. “Right now Tesla doesn’t have new models, Ford doesn’t have a lot in the pipeline. But Hyundai, BMW, Kia, Cadillac — they’re really moving the needle forward.”

Emphasis mine there, because even if you're ride or die for Tesla, you have to admit that its slumping sales are becoming a problem. And they're a problem for the EV market when taken as a whole, because that one company accounted for more than 55% of said market at the end of 2023. Tesla relies on the Model 3 and Model Y for nearly 95% of its sales, and only one of them just got a badly needed refresh. Meanwhile, Tesla itself seems focused more on AI and robotaxis these days. 

But as BloombergNEF analyst and friend of the site Corey Cantor says, that just creates a vacuum to be filled by another player:

Tesla’s gap year leaves an opening for other EV makers, but there’s a self-fulfilling aspect to all the talk of an EV slowdown in the US. Some automakers are concluding from Tesla’s stumbles that they should hold back their own investments until there’s more market clarity, said Corey Cantor, an EV analyst at BloombergNEF. Instead they should be following the lead of Hyundai and GM: Aggressively introduce affordable EV models to build economies of scale.“Automakers are probably freaking out too much, as usual, but there is a bit of a Tesla issue,” Cantor said. “If they want to start taking market share, or even just perform at a high level, they need to start producing EVs at mass volume.”

But that may be happening soon. As that story notes, no other automaker operating in the U.S. has ever sold more than 100,000 EVs a year besides Tesla. In 2024, Hyundai, GM and Ford are each on track to do that. And more models are coming all of the time. In other words, the narrative may not line up with reality by the year's end.

See? Here's another story that's probably going to be chalked up to "another sign of the slowing EV market," but the reality is a little different. Reuters reports that Vietnamese EV upstart VinFast may put off its already delayed North Carolina car plant until next year:

The company had initially planned to complete the factory in July 2024 but later pushed back the start of operations to 2025. It is considering another delay, the source said, asking to remain unidentified because the matter was not public.VinFast, which sold fewer than 1,000 cars in North America last year, said in a statement to Reuters it was "conducting a thorough review and evaluation of all aspects of the construction process for our North Carolina factory."North Carolina's Chatham County, where ground for the factory was broken in July, declined to comment about a possible delay.A spokesperson for the county government said VinFast had twice revised the size of the factory's general assembly building. The latest revision was submitted in April and is still being reviewed by the county's permits department.When VinFast announced in March 2022 its plans for the North Carolina factory, Biden said the plant would create more than 7,000 jobs.

But it's not just a slowdown at work here. You also have the extremely negative early reviews of the VF8 EV, a lawsuit over not paying rent on a showroom, accusations that it pushes to jail critics back home in Vietnam, more accusations that most global car sales are to subsidiaries of its parent company... the list goes on and on. Basically, VinFast is on shakier ground than it wants to admit, especially here in the U.S.

The unfortunate loser in all of this is Chatham County, North Carolina, which was expecting a lot of jobs and a long-term economic windfall from having a car factory in the area. Hopefully, they didn't get completely rolled here, but I'm not terribly optimistic. 

Still, the EV market faces plenty of hurdles beyond just weirdness on an individual automaker level. As we've covered here before, electric cars are increasingly another lightning rod (pun intended) in our endless culture wars—even when they don't have to be

The Wall Street Journal has a story on this, citing data from a recent Morning Consult poll of about 2,200 American adults: 

Of those who are opposed to them, 38% said their political views were a factor. Even more of those with unfavorable views—63%—cited China’s dominance of the EV supply chain as a reason. As for party affiliation, 31% of people who identified themselves as conservative said they had a favorable view of EVs, compared with 66% of liberals. [...] South Florida car dealer Bill Wallace has noticed that more customers have been expressing a sour view of EVs over the past year. His company sells several brands that have relatively popular electric models, including Ford, Hyundai, Kia and Cadillac, and EVs account for about 5% of his total sales. But he estimates about one-third of the customers he speaks with about EVs express adamant opposition.“They are angry,” Wallace said. “They feel like it’s the government trying to control their lives.”Wallace said he broached the subject during a conversation with GM CEO Mary Barra at a private luncheon in Florida late last year. GM, more than many other car companies, has bet its future on EVs and is marketing them aggressively. “I said, ‘Mary, you have to understand the red-state mentality. These people want no part of it,’” he said. 

I don't want to go as far as that dealer did and make it some blanket statement; I know plenty of people in deep-red Texas who are EV-curious but maybe not ready to make the jump yet. But both the industry and America's politicians are going to need to find some way to combat this mentality, and leaving it up to the car dealers probably isn't it. 

100%: Who Gets To 100,000 EV Sales First?

Ford? GM? Hyundai? Kia? Which company are you betting on this year? And is this slowdown really overblown, or should we wait and see what the rest of 2024 yields before jumping to conclusions?

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