Ford Is Right, Tesla Should Win The Charging-Port Wars

Ford and Tesla got everyone excited yesterday when they announced they’d share a common charging port and charging network starting as soon as possible. There are many plugs for EVs, depending on where you live and what you drive. The lack of a common standard is a huge stumbling block for EV adoption and Tesla, by itself, was really mucking this up for everyone. Ford, of course, only mucks it up more. Let’s embrace the mucking.

It’s not fun to write that Tesla should “win” anything because, first, it’s a corporation. Second, it’s Tesla, and that brings an enormous amount of irrational love and irrational haterism. There is no objectivity in this debate so I’ll state, again, that I think Tesla still mostly builds the best electric cars, even if the company’s leader is often annoying.

So, Tesla should win. To start this Morning Dump out, I’m going to lean into some analysis, and then we’ll talk about Hyundai battery plants and the like.

Tesla Has The Better Charging Setup

The launch of new technology always results in a war of standards. In “The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger,” author Marc Levinson details the many years of attempts to get the world to agree on one damn size for the shipping container. It seems obvious in retrospect, but before containerized shipping there were whole industries of people whose main job was to figure out how to fit goods of different sizes into different ships. It took decades to get it right.

This is what’s happening in electric cars. Various groups, in various countries, trying to solve a problem that hasn’t been solved before. Here’s a list of most of the common chargers, of which there are at least nine. Most of these are technology specific (in the U.S. a lot of the older cars use CHAdeMO and the newer ones are CCS Type 1), though many are also geographical (China has its own standard, for instance), and one is company-specific: Tesla.

It feels backwards to argue that the odd-man-out, annoying fly-in-the-ointment should emerge victorious. Up until yesterday, I’d have argued that CCS should win (and that the Europeans should ditch CCS Type 2 and join our standard), merely on the principle of just making everything easier. I’d still argue that Apple should ditch the annoying Lightning cable for my phone, for instance.

When Tesla announced a sort of half-measure interoperability and open charging standard last year, we mostly balked, concluding:

[W]hile it’s now theoretically possible for other automakers to adopt Tesla’s style of charging connector, the biggest winners in this whole story are likely Tesla owners seeking different charging networks. While Tesla’s connector does hold advantages such as its small footprint, it’s unlikely that other major automakers will abandon CCS for it. While it would be great to eventually see a global charging standard, it looks like we’ll continue to use a mix of connectors for the foreseeable future.

Well, now a major automaker did adopt the standard (or will, at least). And this is why it’s easier to argue that everyone should adopt Tesla’s standard. Tesla was here first and yet, given many attempts to make a better charger, no one really has. CHAdeMO is worse. CCS is worse. CCS Type 2 is no better (Tesla CEO Elon Musk, on a Twitter spaces with Ford CEO Jim Farley yesterday, argued it was bad and “designed by a committee,” which is anathema to someone who is not normally cooperative).

The Tesla connecter is the best and, in the United States at least, the Tesla supercharging network is vastly superior. I’ve never driven to a Tesla Supercharger to find that it is, in fact, in the parking lot of a jail (true story, near Palm Springs). I’ve never driven to a Tesla Supercharger and found it broken or unable to render a charge (about 40% of the time I try to charge an EV with a CCS charger I find it doesn’t work on the first attempt).

This is a chance to let Betamax win, frankly, and rather than try to fight it we should all just accept it (imagine if 40% of the time you tried to put a VHS tape into your player it just didn’t work for no reason). The faster the better. And what of the many charging stations already built? First, adapters exist already to fix this problem. Second, many of the charging stations out there aren’t great and are going to need to be replaced in the next 3-5 years anyway.

Hyundai And LG To Build $4.3 Billion US battery Plant

No automaker has been hurt more by the Inflation Reduction Act–whose full $7,500 tax credit applies only to cars assembled in North America–than Hyundai/Kia/Genesis. The Korean company was close to establishing itself as a major powerhouse in the United States, with the combined sales of the Kia EV6/Hyundai Ioniq 5 overcoming everything but the Tesla Model 3 and Model Y in Q2 2022. In the first quarter of 2023, the Hyundai and Kia EVs had dropped 8% and 36% in sales, respectively.

This will normalize as the market adjusts to tax credits, but until Hyundai and Kia can start building batteries here, they’re at a huge disadvantage.

So that’s exactly what’s happening, with a $4.3 billion battery plant coming to Georgia, according to Reuters:

Hyundai and LGES said construction of the factory in the state of Georgia will begin in the second half of 2023, with battery production starting at the end of 2025 at the earliest.

It will have an annual production capacity of 30 gigawatt-hours (GWh), enough for 300,000 EVs, they said.

That’s a lot of EVs.

Ford Sees China As Its Main Rival

Here’s another fun one from Jim Farley, via Reuters again, about who he sees as the real threat:

“I think we see the Chinese as the main competitor, not GM (GM.N) or Toyota (7203.T),” Farley said at the Morgan Stanley Sustainable Finance Summit. “The Chinese are going to be the powerhouse.”

[…]

To beat Chinese automakers, Farley said Ford needs distinctive branding, which he believes it has, or lower costs. “But how do you beat on them on cost if their scale is five times yours?” Farley said. “The Europeans let (Chinese automakers) in – so now they are selling in high volume in Europe.”

I think the hint-hint here is: Don’t let the Chinese in like the Europeans did.

The No-New-Normal, Many-Different-Normals Continues

I will continue to reiterate that, in this weird non-recession period, there is not going to be a “new normal” for all automakers and instead there will be many different normals.

A new analysis of overall passenger vehicle sales in the United States from research group S&P Global Mobility confirms this:

As the market awaits a clear signal that either growing new-vehicle inventories or consumer affordability issues will emerge as the main determinant of auto sales trends in the immediate term, new U.S. light vehicle demand in May is expected to soldier on uneventfully and maintain its unsteady climb.

S&P Global Mobility projects new light vehicle sales volume in May 2023 to reach 1.31 million units, up 18% year over year, and representing the 10th consecutive month in which volume has improved from the year-prior level. This volume would translate to an estimated sales pace of 14.5 million units (seasonally adjusted annual rate: SAAR), a step down from the month-prior result, but reminiscent of ongoing monthly patterns in this metric.

On the supply side of the equation, supply chain issues have continued the easing that began in the second half of 2022, resulting in consistent increases in retail advertised inventory levels. As we approach the summer months, vehicle listings have plateaued at approximately 2 million units, 67% higher than a year ago, according to S&P Global Mobility’s proprietary analysis of advertised dealer inventory.

The good news for consumers is that 40% of vehicle listings are now below MSRP, which shows that you can get a deal if you can be flexible on what you want and where you buy it.

The Big Question

Should Tesla win? Am I wrong? Is VHS the way?

Photos: Tesla, Ford, Toyota

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