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.
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?
That Volvo topshot is from Lime Rock park!
One of the guys with us this past weekend worked there, and he said the Tesla charging stations across the street from the Porsche ones are basically never working. And, they are just on some grass.
Meanwhile, the Porsche one are on that pretty gravel pad surrounded by even prettier and more expensive blocks. Each of those blocks is $6 a piece!!! Lucid had a tent right next to it, and monopolized those Porsche chargers everytime I went by.
Memory breakthrough: Hot Wheels introduced electric cars when I was a kid. they were pretty cool. We juiced them up for 30 minutes, then they ran for about 5 minutes. Then we juiced them up again,… wait, we didn’t. Instead we set up gravity-assisted double-tracks and did a March Madness Tournament and ran it until the winner was determined.
I’m not sure why I thought of this while reading this article. Freud would say…
Are you maybe thinking of pow-pow-Powerwheels?
As CEO of Lotus, I build the cheapest Lotus 7 I could possibly muster and convince everyone it’s what they need.
Sure, I’m gonna bankrupt them in one model year, but then there’s a ton of Lotus 7s on the market again!
I wouldn’t hire you, but I like your thinking.
To paraphrase Groucho Marx:
I refuse to be the CEO of any company that would have me as a board member.
EV Tarrifs should probably have some type of tiered scale based on the number of sales. Sure it would make initial pricing quite complicated, but it would really help smaller manufacturers, which I generally think is a good thing.
Ford is trying to thread the needle here. Replacing 90,000 engines would cost well over a billion dollars. It’s no wonder they are doing everything they can to avoid that expense.
More EcoBooms living up to their namesake.
There is a reason they don’t advertise “Quality is job #1” anymore.
Does that make zero sense to anyone else? The valves are either flawed or they’re not. Maybe the flaws show up more clearly after many engine cycles, but if you’ve got a low mileage engine is it going to “pass” this inspection due to lack of visible damage and then fail 10 years down the road when Ford can more easily brush off the problem?
I hope this is just a wording problem, but given Ford’s history of half-assed recall fixes I fear it may not be.
It makes perfect sense – vehicles with high cycles will probably fail within the warranty period so Ford will fix them proactively. Those with low cycles will not fail until after the warranty period has expired and will be cleared to go home with the owner.
Ford has consistently managed recalls the same way for years – don’t fix the root issue but put some bandaid fix in to get past the end of the warranty.
I find your analysis disturbing, but logically it’s probably spot on.
It’s exactly spot on. The same way that a washing machine spider arm is designed to last exactly 7 years and 2 months, with zero replacement parts after the warranty being available.
I’m the CEO of Lotus, what do I do? Lotus will only build SUVs! Just kidding. I’m going to work on finding either a shuttered factory in the US/Canada, or a manufacturing partner in the US. Then I’m going to kick accounting out of every product planning discussion. Then I’m going to corral all the enginerds into a conference room for a month to come up with the right EV/hybrid/ICE mix for the product line and plan those product lines out over 5 years. Last, in addition to being the CEO, I’m also going to appoint myself as Chief Test Driver.
I’d turn every discussion into an increasingly uncomfortable set of questions about precisely when production of the Lotus Seven Series 4 (and only the Series 4) is set to resume until they either removed me as CEO or set up a new production line, perhaps real, perhaps fake, just to humor me. I’m guessing they’d remove me first but it’s worth a shot.
What to do: add more lightness.
KIT CARS!
If you can make more energy-dense batteries with less mass than what exists, while also being similarly safe, the market is waiting to throw money at you.
Ain’t that the truth.
After test driving a bunch of EVs, I have come to the conclusion that Hyundai and Kia are the only ones who are having consistent EV sales increases because they’re the only ones whose EVs are not infuriating in any way.
Isn’t that something? 120+ years of cars being made, and the ones doing the best, in essence, don’t frustrate people. What a disappointing bar to hurdle.
It’s wild how they’re dropping the ball: They all have wild UI gimmicks and are full of the company’s worst ergonomic ideas. Like a VW id.4 drives great! It’s really comfortable and has a ton of room! But then they completely fuck up the window switches and climate controls, so it drops off the list.
Then you get into one of the Ioniq models and everything works in a mostly sensible way – though I don’t like how the Ioniq 6 puts the window switches in the center.
Hey man, center window switches were good enough for BMW and Saturn!
I got an Ioniq 5 and it’s pretty easy to live with. I do find some of the ‘features’ a little frustrating. I don’t know why absolutely everything needs to be different on an EV than it has been forever on ICE cars.
It seems like too much of the displayed information has to do with the battery and remaining range, battery percentage, whether the battery is discharging or charging, etc. I have never spent that much focus on the fuel gauge in any ICE vehicle.
They also have completely unreliable IC engines, so going BEV is the smart move if you have to have a Kia or Hyundai product.
I’ll have to test drive one to find out how it compares to my Tesla. Which is generally pain free now that I’ve become used to it.
As an ioniq 5 owner, I agree. My wife and I love the car. It has a volume knob. That shouldn’t be special, but in the modern world (looking at you VW) it is. My buddy is getting rid of his Bolt (lemon law buy back) to get an ioniq 6.
I love that Volvo is still not interested in going back to fully ICE cars. PHEVs for the win! I like that move a lot.
Lotus used to be my all time favorite brand, so Lotus of today makes me sad. I was really excited when Geely bought them, because I like the direction they have taken Volvo, but I hate what they have done with Lotus.
I like the Emira, but it’s not much of an improvement over the Evora, and the rest of the lineup is disappointing. The massive, heavy EVs are not Lotus. I’m all for them doing an SUV, but it should have been a Macan style but lighter and better handling. What happened to simplify and add lightness?!
Ford, yeah, not surprised. Their attempts at reducing recalls do not seem to be going so well.
Step 1: Set some really short term company financial goals linked to my bonus and instruct my underlings to change business operations to meet those goals.
Step 2: Collect said bonus.
Step 3: Gracefully step down and hand the steering wheel of change to the next schmuck.
Step 4: Get hired at a better company based on my stellar leadership and targeted company goals during my last period at the now defunct Lotus.
Stellantis may have an opening soon, and I hear they pay really, really well. At least if you’re the CEO.
Oh, you said better company. Never mind then. 😛
If the money is good….rinse and repeat.
Finally a Ford recall that doesn’t affect my Maverick! 🙂
It’s absolutely non-sensical in this day and age but maybe Lotus could finally be the company to build a cheap runaround that’s fun to drive but that people can actually afford?
Since their whole thing has been overall simplicity, lightness and often taking motors from Toyota I don’t see why they couldn’t make an affordable stick-shift car for the masses. No screens, no gizmos, no nonsense, just a small economical car with a manual transmission that’s fun to hoon around town… hell throw one of those GR motors in them!
No, wait, this is all making too much sense now..
Toyota already makes a small car with a GR motor and a manual transmission though? And benefits from extraordinary economies of scale that Lotus could never dream of.
It would be cool if Lotus could make a modern Elise with light weight and decent power from Toyota, but I don’t see how it could be cheap.
Screens and “gizmos” aren’t what make a modern car expensive.
“Screens and “gizmos” aren’t what make a modern car expensive.”
I keep hearing that line of reasoning, and it is probably even correct. But if that’s not what is making cars more expensive, what is?
BTW, it isn’t inflation – average transaction price of new cars, adjusted for inflation, were flat for a very long time (90’s-00’s). But sometime in the 2010’s that ceased, and now ATP (best measure I have for ‘the average price of a car people can/want to buy’) has been outpacing inflation by a pretty significant margin.
I have my suspicions, but I’d like to hear other folks’ considered opinions on the topic.
My thoughts:
-Product mix shifting in favor of larger and better equipped vehicles. Like for like, cars are still reasonably indexed to inflation. Examples: 1995 Honda Civic LX sedan, $13,700 ($28,800 today) vs 2025 Civic LX sedan $24,250. 1995 Mustang GT $22,795 ($48,000) vs 2025 Mustang GT $45,460. The average vehicle is more expensive now, because the average vehicle is more likely to be a truck or SUV, and more likely to have luxurious features.
-Relatedly, the discontinuation of small and/or base trim cars due to unpopularity or unprofitability.
-A lot more stuff is standard now, some of it mandated, some of it driven by consumer demand.
-Cars are much safer, more reliable, faster, and more efficient than in decades past. These upgrades are not free, but they are probably worth it.
-I suspect automakers are raising prices on popular models to cover for losses in their EV programs. This would have been a big change in the 2010s.
I could be wrong here, but Lotus has never been known for cheap. Going back to a little go kart like the Elise would be great, but it would be $70k. You need a big company to go in on something small for it to be reasonably cheap. They can offset the costs elsewhere, Lotus can’t afford to do that. I want to see Toyota use the GR engine in an MR2. But even that will not likely be cheap.
The idea of a Lotus/Toyota hybrid is intriguing.
And tbh, even an Elise at 70k feels about right these days. Too damn much, but acceptable, considering the lack of alternatives currently offered by other manufacturers now. If assembled in the US, maybe they could get by the Chinese ban? I think the amount of North American parts content could help as well.
A new Toyota MR also works for me, if the styling is not nuts.
This. Remember how the FWD M100 Elan was supposed to bring real ‘OEM-quality fit and finish’ to the brand? Base models cost £17,850 in 1990, about $73k USD today, and turbos at £19,850 were equivalent to about $82k in 2024—for a droptop powered by an Isuzu I4. And Lotus still managed to lose money on each one.
And it was FWD on top of all that.
If I was Lotus CEO the last thing I would be doing is chasing volume, doing so is contradictory to what Lotus is and represents.
As someone who’s lusted after an Esprit for 40+ years, Lotus to me exists in the same sphere as Morgan: out on the fringe, the choice you make not because it’s necessarily any better but that it offers you a unique experience.
Of course Lotus sometimes has barely survived doing this so this is exactly why I’m not their CEO.
I think they need the volume to survive, similar to how both Ferrari and Lambo have SUVs now. Even Aston Martin had to follow that trend to make money, but Lotus should have gone for a Macan style, small, light SUV with incredible handling that makes you think you’re in a sports car. Make the big bucks there, then continue with the Emira, bring back an Elise, and then add an Esprit on top of it all.
As the CEO of Lotus I am going to pull the rip-cord on my golden parachute and retire to a life of leisure and luxury.
So very much this!
But first, you need to engage in cost cutting and restructuring for a “leaner, more agile organization.” Lay off a few thousand people and express insincere regret. Then pull that rip-cord, baby!
Aka simplify then add lightness
Layoffs to make the company more attractive for private equity investment. Broker investment that destroys the soul of the storied brand. You ride off into the sunset to dive in your Scrooge McDuck money pool.
Ford actually invented the Hyper-Atkinson cycle, where the intake valves closing is indefinitely, dynamically delayed, compared to the 20-30% delay into the compression stroke like those “efficient” traditional Atkinson cycle engines. You thought the prius engine was thermally efficient? You ain’t seen nothing yet! Ford yet again leading the charge in innovation, technology, and reliability!
“thermally efficient” is not the same as “thermal event”
Of course, modern vehicles never experience fires, oh no, fire is bad for PR. They *do* experience thermal events on rare, isolated occasions of course. Some American, Oval-Shaped-Badged vehicles, perhaps at an elevated rate some consider statistically significant. This is entirely theoretical of course and in no way whatsoever validated by an easily queried NHTSA database of recall numbers by manufacturer. Entirely theoretical.
Lotus played big going into Norway, with the launch of flashy showroom right in the centre of Oslo (only a stone’s throw away from another struggling Geely brand, Polestar). Someone should have told them it might not be the best idea to set up a car showroom in a pedestrian street.. and maybe that’s the reason why you see so few Eletre’s on the streets? It’s more expensive than the popular Q8 e-tron, but charging that price for a car coming from a company with almost no brand recognition and reputation? Good luck.
Lotus should be the last company selling ICEs, not the first to go all EV.
The details I leave to others, but as CEO, that statement would be posted on my office door.
I disagree. I look at Caterham as what Lotus should have done. Their new concept V should have been a Lotus. Small, lightweight, but still EV. Don’t go only EV, but not offering anything isn’t going to get them very far in a few years. https://caterhamcars.com/us/models/projectv
Two things:
1 – Nothing you said contradicts anything I said. I only asked for Lotus not to go all EV, not avoid them entirely. Be the last to sell an ICE, but that doesn’t mean it’s the only thing you sell.
2- To put it very lightly, I am skeptical that V concept can be brought to market successfully as is.
Touche. I read that as you were saying they should only offer ICE. In that case I agree all around.
The V is a big swing, and I agree it may not make it, but if it had a Lotus badge, and came with Geely’s deep pockets then it would stand a better chance, and could do amazing.
Lotus: send the car body as a CKD kit to SC and use a US sourced battery. Geely is probably going to have room and spare battery capacity for a few high performance cars. They can argue that final assembly took place on US soil with a US battery pack.
Its not perfect but if we take half of their 2024 sales as quarter 2, then take their losses, by that math, they are underpriced by $83K per car just to get to breakeven? I really hope a bunch of that money was investments in infrastructure to make each car cost them way less. Otherwise, they need to double pricing and sell the same volume to get anywhere.
Can’t remember the last time I saw a new(ish) Lotus.
Walking back overly-ambitious EV plans is, for me, a sign that a company wants to run a profitable business. When infrastructure/technology/software deliver all that EVs theoretically promise, manufacturers can then drop their ICE plans. Doing that beforehand is a sure way to disaster.
I’m the CEO of Lotus? I’m Mr. Manager? Well first thing I do is beg Geely to sell off the company to GMA at a bargain price, and let Gordon Murray and team do there thing to make Lotus’s as they should be.
PREACH
Similar, but get Caterham to take it over. Bring the 7 back into the fold, and that project V is a perfect car for Lotus.
We just say manager.
Okay George Michael.
CEO? Run it in the ground and take the golden parachute.
As for EVs, they have come a long ways but not in the ICE replacement yet. The charging infrastructure is not there yet. If I put in a home charging until and where I commute had stations, it can work.
My long haul 2000+ mi trips, the charging is too long. Even getting food and stretch the legs is still a lot of wait time.
I think the other issue with full EV volvo is that EVs are great in urban areas but they are still really, really, really limited in harsh climates in the mountains. The milage drops pretty bad in cold weather, and then you throw in steep mountain grades, AND the rolling resistance of snow and slush, and it’s abysmal. Volvo is a nordic car company, and if none of their vehicles can handle a ski trip… well… is it a good idea?
Also, I had no idea Lotus was even still around. lol
There is a guy in my smallish area that dailies his red Emira. I see him/it a few times a week. I’ve never had the time or chance to talk to him about it, but we are on a “thumbs-up/wave back” basis.
It sure is a small ride, but it is one slick way to get around town.
I’m not sure Lotus has ever really been “around”, they’ve kind of barely existed for most of their history. Which is a shame because everyone loves them.