Another Automaker Just Walked Back Its ‘EV Only’ Plans

Almost a year ago we claimed that 2024 would be the “Year of the Hybrid,” a prediction that has now been borne out roughly a million times. While some of the hybrid hype was based around the enthusiasm for the technology, most of our reasoning had to do with the clear inability of automakers to persuade enough new buyers to purchase electric cars.

Is it going to be another Morning Dump where we talk about how automakers are finally accepting that an all-EV lineup is going to be a lot harder than it seemed in the glory days of the early 2020s? Absolutely. Starting with Volvo, which has decided its pledge to go entirely EV by 2031 was maybe a bit premature.

Another Geely-owned automaker having to contend with a rough EV transition is Lotus, which is in the extremely Lotus position of selling more cars and also losing more money.

Who is doing better? Hyundai and Kia are out with the first August sales reports and it’s looking good for both of them, thanks to both an increase in EV sales and an even bigger increase in hybrids and PHEVs.

This isn’t to say gas cars are perfect, either, as Ford is recalling a bunch of vehicles over potentially catastrophic engine failure.

Volvo: We Tried To Go Woke, Now We Are Going… To Reconsider Some Decisions

I should start this section of TMD by pointing out that, in general, I think Volvo’s decision to shift towards electrification makes a lot of sense. If any automaker is well positioned to attract buyers who want electric cars it’s Volvo, with its typically left-leaning, well-educated, higher-income demographic.

When it said, in 2021, that it would go to 100% EVs by 2031 it was a promise that almost seemed sensible given the accelerating adoption of electric cars. Volvo, in particular, could make the decision because its parent company was Chinese automaker Geely and China is far ahead on electrification.

There were some small issues, however. The first big one is that, as it turns out, all markets aren’t the same. Places like Norway may be almost entirely electric by the end of the decade, but Texas isn’t Norway.

The reasons for the slow-down in the electric market are myriad, but the biggest issues are:

• Cost
• EV infrastructure for non-Tesla EVs
• The state of most non-Tesla EVs
• Changing governmental regulations

Just yesterday we had a review of the new Volvo EX90, an important car for Volvo, and while it’s almost there it isn’t 100% complete.

Compounding these issues for Volvo is the company’s desire to build some vehicles in China and the existence of Polestar, a brand that makes EVs that look like Volvos and share parts with Volvos yet are not Volvos.

So, anyway, how’s that pledge to go all-EV going? Let’s check in with Volvo:

While Volvo Cars will retain its position as an industry leader in electrification, it has now decided to adjust its electrification ambitions due to changing market conditions and customer demands.

Going forward, Volvo Cars aims for 90 to 100 per cent of its global sales volume by 2030 to consist of electrified cars, meaning a mix of both fully electric and plug-in hybrid models – in essence, all cars with a cord.

The remaining 0-10 per cent will allow for a limited number of mild hybrid models to be sold, if needed. This replaces the company’s previous ambition for its line-up to be fully electric by 2030.

This seems entirely sensible. Electric cars for people who can drive electric cars, PHEVs for people making the transition, a small number of hybrids for everyone else.

How Boned Is Lotus?

Lotus has finally released its revised financials and, whew, it’s not great.

Actually, some of it is great. Let’s be nice. Let’s start with the good news: Lotus is selling a whale-crap ton of cars. In fact, the first six months of 2024 were the best six months in Lotus history, with the company delivering 4,873 units, or about a 239% increase over the same period last year.

That’s awesome. I am, indeed, seeing more Lotus Emiras out in the world. I haven’t seen as many Evija or Electres yet, but sales so far seem to be split between Emiras and the EVs… at least globally.

Sales are up, which should mean that revenue is up and, indeed, 2nd quarter revenue was up more than 100% year-over-year. And with sales up and revenues up, perhaps income will also improve by some similar amount? It actually went the other way, with 2nd Quarter net losses jumping to $202 million, up 4% from the same quarter last year.

Why?

“We continued delivery of strong topline growth in the first half of 2024, with total revenues and gross profit up by 206% and 731% year-over-year respectively,” said Mr. Alexious Lee, Chief Financial Officer. “Gross margin for the first half of 2024 increased by 8 percentage points year-over-year but shrank 2 percentage points compared to year end of 2023 as a result of increased cost of Emira (sportscar) model due to inflation and seasonal variation in product sales mix. Our average selling price (ASP) remained above $100,000 in the first half of 2024 despite intensified competition.

Inflation happens! But what about the future? Well, new U.S. and EU tariffs on Chinese-built electric cars have hit Lotus harder than anyone. In order to sell electric cars here, Lotus either needs to build a plant in the United States/Europe or get consumers to pay double the cost of their new EVs.

The automaker, also owned by Geely, has had to drop its forecast for vehicle sales this year to just 12,000, which is about half where the company wanted to be.

Does this mean Lotus is boned? I’m not sure. The brand is clearly finding traction in China and its sports cars are selling well everywhere. It just has to find some way to get the Evija and Electra to export markets at a reasonable price. That’s a big challenge, but it’s not impossible.

Perhaps my South Carolina-based Lotus factory idea isn’t so crazy, after all.

Kia Has Best Month Ever, Sells A Bunch Of Hybrids

After a slow start to the year, both Hyundai and Kia are reporting big sales improvements. Hyundai sold 79,278 units in August, up 22% year-over-year. Kia had its best month ever selling 75,217 units, a 27% increase over August 2023. Can Kia pass Hyundai this year? Maybe!

How did these brands do it? The addition of the all-electric Kia EV9 certainly didn’t hurt, with more than 2,300 of those sold in August (though potentially cannibalizing some EV6 sales, since that vehicle saw a massive decrease in sales).

The big answer? SUVs/Crossovers and hybrids. While EV sales were up 27% year-over-year at Kia, PHEV sales were up 43%. The company’s SUV/crossovers set sales records in August, though so did the affordable Kia Forte.

At Hyundai, hybrid sales were up 69% year-over-year, with the Tuscon hybrid up a whopping 97% over August 2023.

Another Bad Ford Recall

Ford is having to recall more than 90,000 models equipped with either the 2.7-liter or 3.0-liter EcoBoost motors due to the potential for the intake valves to fall apart, fall into the combustion chamber, and grenade the motor.

From Car And Driver:

Ford says as of Aug. 9, 2024, it is aware of 811 warranty claims associated with fractured intake valves. The automaker has since approved a remedy for affected vehicles, which involves dealers inspecting each model by determining their cumulative number of engine cycles. Ford will replace engines that don’t pass that inspection. The company also said it has provided a reimbursement plan for owners who have already paid for the repair out of pocket. Dealers will be notified on September 30, and letters will be sent to owners starting on October 7.

Impacted models include the Ford F-150, Bronco, Explorer, and Edge as well as the Lincoln Aviator and Nautilus.

Ford has been trying to fix its quality woes, but it’s going to be a long road as those issues can’t be corrected overnight.

What I’m Listening To While Writing TMD

I have a daughter, so I have listened to a lot of Talyor Swift. She’s very talented, and while I’m more of a “Speak Now” kind of guy, the later stuff is also extremely listenable. One album I have not listened to often is “Evermore” and so this track “no body, no crime” featuring HAIM somehow never got played in the car until now. It’s a grim revenge fantasy that sounds like a Netflix crime doc with a lot of great details (“Good thing my daddy made me get a boating license when I was 15…”). It’s like “Goodbye Earl” but with 900% more “Winter’s Bone.”

The Big Question

You’re the CEO of Lotus, what do you do?