In China, they refer to HEVs, EREVs, PHEVs, and BEVs as “new energy vehicles,” or NEVs. The idea, in addition to simplifying the acronym soup, is to separate traditional gas-powered cars from everything else. Here in the United States, some automakers use the term “electrified” to cover basically anything that has an electric motor driving the wheels, even if it also has a gas-fueled engine.
For the purposes of today’s Morning Dump, and for getting a headline people will read, I’m going to point out that more than 1-in-5 new cars sold in America were “electrified,” and we’re getting awfully close to the point where it’s 1-in-4 cars. Can it last, though?
More cars could end up being electrified if Tesla builds a cheaper car, as many have been begging it to do. Unfortunately for people hoping for an all-new vehicle, the early indications are the vehicle will be more like a decontented Model 3/Model Y. Tesla is unique in some ways, but also not at all unique, which is why it’s at risk of tariff-related slowdowns just like any other company. Even OEMs that don’t sell in the United States are worried.
And, finally, Ford is going to save some money on executive bonuses as leadership didn’t hit quality goals for the year. I’ll explain why that’s sort of encouraging.
Hybrids And EV Sales Are Growing
I mentioned earlier this week that Tesla was absolutely taking it in the shorts when it comes to sales lately, both figuratively and literally, as anyone shorting Tesla this week has probably done well. The company doesn’t release monthly sales data, so we have to go by registration data, which lags.
The very nice folks at S&P Global Mobility sent me the full series of data, and it’s quite interesting. Right off the bat, we can see that Tesla’s market share dropped to 42% from 54% the year before. There was some inevitability to this due to competition, but you might not expect year-over-year sales to drop for the brand while they’re increasing for almost everyone else.
Rivian actually led the losers in January, dropping 21.6% year-over-year, compared to a decrease of 10.9% for Tesla, 6.9% for Kia, and 5.2% for Hyundai. Looking at the other big brands, pretty much everyone else is up by large amounts. Ford grew back into the #2 spot with a 54.8% year-over-year increase, followed by Cadillac (37.5%), and Chevrolet (36.4%). Technically, Volkswagen was up the most at 163.3%, but the company had a stop sale last year on its only EV so that doesn’t exactly count.
Looking model-by-model, the Model Y was still America’s most popular EV, albeit way down. The Model 3 grew in popularity, selling almost 14,000 units. Is the cheaper Model 3 cannibalizing Model Y sales or is this just a factory switchover issue? Or both? My guess is both, but we’re going to need more than one month to figure that out definitively.
The Mustang Mach-E was way up year-over-year at 146.8%, besting the ID.4, which barely stayed ahead of the popular Honda Prologue. So that’s the big data. What I’m a little more interested in this morning, though, is the overall mix of fuel types, as seen above.
For all of last year, solely gas-powered cars dropped to their lowest take rate since probably the end of the 19th century, with about 75.4% overall, though ICE in total was a little higher due to diesel and flex-fuel (ethanol). BEVs were at 8.1% and hybrids were at 12.1% of new car market share.
In the first month of the year, EVs were strong at 8.4% of the overall new car market, with hybrids up to a strong 13.7%. With more and more automakers offering hybrids, I don’t think anyone suspects regular hybrid sales will drop. PHEVs and EVs? That’s a little harder to predict.
If the up-to $7,500 tax credit enacted by President Biden is removed, EV sales could drop by 30% in 2027 and up to 40% off by 2030 according to a recent study from Princeton University. A lot of this has to do not only with overall pricing, but with the ability of companies to lease electric cars if they don’t qualify for tax credits the normal way. This would also have an impact on the construction of battery and car plants in the United States.
From one perspective, the fact that these cars need a tax break to be popular shows that they’re not competitive on their own in the way that, say, hybrids are. It’s a “new” technology and the goal was to jumpstart production in North America to better compete with China, which seemed to be happening.
It’s not clear if President Trump has the votes to remove the Inflation Reduction Act, but nothing the Democrats in Congress have done lately indicates that the party’s leadership in the Senate has any discernible backbone, so it’s very possible.
Is The ‘Cheap’ Tesla Just Going To Be A Decontented Car?
I’ll just get this out of the way immediately. It’s possible that nothing Tesla does is going to help the company if a large portion of its usual buyers get sick of the CEO. It’s also possible, like with just about everything in modern life, people will just move on. A just-released poll by Quinnipiac University (who will lose to the mighty Gaels of Iona today) shows that common ground might be hard to find, but a bunch of Americans agree they don’t like Elon Musk’s Department of Government Efficiency (only 36% approval). Worse for Musk, more than half of Americans think that Elon Musk and DOGE are hurting the country.
Would you buy a car from someone you think is actively harming the country? That aside, Elon Musk once touted the idea of a cheaper Tesla, though that was then rumored to be shelved last year. In October of last year, Musk said the idea of building a $25,000 car with a steering wheel “would be silly.”
Now it’s being reported by Reuters that there is a cheaper car coming, but it’s most likely a decontented Model 3/Model Y that can be built on existing production lines (which aren’t being fully utilized).
The U.S. electric vehicle maker is developing the model under a project codenamed “E41” and will build it using existing production lines, the people said. Mass production will begin at its biggest factory by output in 2026, said two of the people.
The car will be smaller and cost at least 20% less to produce than the refreshed Model Y launched late last year, two of them said. The Model Y, a mid-sized SUV crossover, retails from 263,500 yuan ($36,351).
The Shanghai output will be mainly sold in China to defend market share, one of the people said. The model will also be produced in Europe and North America, the person said, without providing a time frame.
Tesla really missed out by not calling it E-40, right? This is what happens when you leave California.
What does “smaller” mean in this context? Fewer seats? Actually smaller? Here’s what Chinese tech site 36Kr had to say:
People familiar with the matter told 36Kr that the new model is a “lower – priced Model Y”. Compared with the currently sold Model Y, there are basically no major changes in parts such as the battery, power system, and chassis of the new car.
“It is developed through the depop method,” revealed the person familiar with the matter. Depop is an internal development concept at Tesla, which means to quickly launch products by simplifying configurations while keeping the main functions unchanged.
Conceptually, a cheaper Model Y without all the fancy materials and stuff is a good idea. We’re in support of more affordable cars that are not overburdened by features people rarely use. But 20% off is not a $25,000 car. Maybe, maybe it’s a $35,000 car, or $34,420.69 because this is Elon Musk’s plan. [Ed Note: I don’t think sharing a common platform is bad, especially given how similar EV platforms are to one another. A smaller Model Y isn’t a bad thing so long as the new model offers some uniqueness. -DT].
The big questions are:
- Tesla’s margins are falling, will this hurt them even more?
- Will this be enough to overcome the competition?
- Will the market be excited by something that looks like a smaller Model Y?
I just don’t see the Model Y Play moving the market as strongly as a purpose-built, $25,000 car.
No Automaker Seems Happy About Tariffs
Like Jason when he starts talking about the Coptic Pope, no one is really quite sure where a trade war will go, but everyone is a little worried. BMW this week said they didn’t expect tariffs to last long, but expected to take a roughly $1 billion hit from them.
Even Škoda, which doesn’t even sell cars here, is worried, as CEO Klaus Zellmer said earlier today to Bloomberg:
The effect of US tariffs would be “indirect” as Skoda’s suppliers are based around the world and levies hitting them would raise costs and weigh on margins, the brand’s Chief Executive Officer Klaus Zellmer said Friday.
“If China can’t sell anything in America they will look for other avenues to pursue their growth ambitions — and of course that’s Europe,” Zellmer said in an interview with Bloomberg Television. Competition in its main sales region is increasing as a result, he added.
Using tariffs to protect and grow homegrown industries isn’t necessarily a faulty concept, although global trade in the 21st century is nothing like it was before containerization of goods was standardized. If you shut off one market, you end up impacting every other market. If Chinese suppliers can’t sell to the United States, then they’ll just look to Europe. Worse, if you’re, say, an American cattle producer, and can’t sell to China over a long enough time period, then, perhaps, your customers will find another source of beef.
Also, there’s just straight up retaliation. Tesla, in a letter to the US trade rep, complained that the company could be particularly singled out for retaliatory tariffs if a trade war continues.
Ford Execs Lose Some Bonus Over Quality Issues
Ford CEO Jim Farley will only get $24,861,866 in compensation for 2024, down from $26,470,033 in 2023 according to recent filings with the SEC. The reason, largely, is that Ford hasn’t hit the goals it set for itself to improve quality.
Farley was Ford’s biggest individual earning executive last year, but because his compensation is largely dependent on how the company performs, his total compensation declined year over year. Last year, Ford changed how it rewards executives, tying bonus payments to yearly performance rather than long-term focus. Farley said last year that executives were still getting bonuses despite disappointing performance, so he changed the practice.
In the filing, the company praised Farley for delivering solid financial results and revenues, recruiting top talent, driving a diversified product strategy, advancing a multibillion-dollar turnaround of Ford’s international operations, and building Ford’s software and services business. But it said he fell short on meeting quality improvement goals and cost-cutting targets.
As the article points out, this was mostly Farley’s own doing. Honestly, watching a CEO take some responsibility for a company’s problems is unfortunately a refreshing change from the usual. By comparison, ousted Stellantis CEO Carlos Tavares will probably end up with more money than Farley despite his company’s massive underperformance. Accountability, what a concept!
What I’m Listening To While Writing TMD
I am not going to play the song-that-shall-not-be-named because I know I’m going to get into trouble with a decent percentage of the readership here if I do, even if I think it is indeed a remarkable achievement in pop music. Instead, here’s Carly Rae Jepsen singing her not-quite-meteoric hit “I Really Like You” in the video… starring Tom Hanks walking around SoHo. What?
The Pop Question
What car needs a super decontented version?
Top Photo: S&P, Ford, Hyundai
What is there left to take out of a Model 3/Y? They’ve already deleted the instrument cluster, door handles, stalks, and even glove box release to save money.
Are they going to delete the computing hardware that runs all the ADAS and the underlying infrastructure for all the “software defined” features? But they told me all that stuff was was a net revenue generator that will make cars cheaper! They wouldn’t lie, would they?
Probably run a much cheaper compute unit and delete all the self driving related functionality. That’s a huge cost per vehicle.
I was always jazzed about (but never holding my breath) a $25K Tesla. One like the smaller, two-door cybercab thing is fine (but with a steering wheel) or a simplified Model 3 w/less range and power (which will still be way more than I need or want). But of course it never happened, despite almost a decade of Elon’s edging the American car-buying public about it. His hand and mouth must be so tired by now.
But now, it’s a non-starter for me. Even at his PR peak/prime, Elon was clearly dislikable but you could hold your nose and rationalize buying a Tesla for environmental/greater good/economic reasons. The guy would be king of the incels if not for his money and hair plugs… but that alone wouldn’t have kept me from considering one of his cars. But since he’s now so set on demonstrating his negative qualities to everyone on the entire planet, all of the friggin’ time, nose-holding won’t suffice. I’d no more buy a car associated with him than I’d buy one associated with any social/moral pariah.
I.e.: a Tesla while Elon runs or owns most of the company is about as appealing to me as a Ted Bundy edition Maverick.
“the early indications are the vehicle will be more like a decontented Model 3/Model Y”
Decontented as in it lacks the baggage of Elon? Like it lacks all the “modern” features to be more like a car from the late aughts with gauges/switches/buttons and knobs but no $1000 bumper sensors and empty promises of FSD? Or decontented like it comes in a box with some assembly required?
The problem for Tesla, is that the Model 3 already IS a de-contented entry-level executive car. You trade all the buttons and interior niceties you might find in something like a Lexus IS350, for a stripped-out interior and a competitive electric drivetrain. All the sensors and the 15” screen cost pennies on the dollar.
They would have to start making serious mechanical and platform changes, like ditching the glass fastback roof, double-wishbone suspension, move to a smaller battery, weaker drive unit, make the car smaller…
Basically, follow through on the ‘Model 2’ they should have produced instead of the own-goal Cybertruck.
So yeah, ultimately we’re talking about de-contenting Tesla of their moronic CEO.
Re E 41; I guess it’s better than flat out calling it the E 14. Hyphy Forever!
The LC300 Land Cruiser.
Would love to get the barebones UN-spec ones, but the US only gets the Lexus LX which is full of expensive stuff of course.
So…what happened to all that doom and gloom about EV sales from a few months ago?
“nothing the Democrats in Congress have done lately indicates that the party’s leadership in the Senate has any discernible backbone”
Voting to keep the government open showed leadership. Democrats from safe districts do not understand that they do not have the trust of swing voters who decide elections. Using the filibuster to shutdown the government after years of saying we need to get rid of the filibuster is hypocritical. There is literally nothing that democrats could have gotten from imposing shutdown costs on the government and hurting their constituents other than getting rid of the filibuster permanently.
No, no it didn’t. It showed them to be a bunch of feckless c*nts.
it’s so funny to watch the left discover the uniparty. Something the right has noticed for years. They all hate you friend, every single one of them, even bernie and aoc.
They get rich off our anger.
I have long maintained every model relative to their place in the market ought to have a stripped version, a performance version and a posh version. I remember my folks buying a Hyundai about 15 years ago and being in the dealership and seeing an Accent (pretty sure) on the showroom floor that had no stereo which shocked me then. I couldn’t imagine what reaction I would have if such a thing were to be found now.
I posted this for the last Tales from the Slack, but it seems appropriate here. For the pleasure of my fellow Autopians, the only acceptable version of the song that shall not be named.
https://m.youtube.com/watch?v=-qTIGg3I5y8
“What car needs a super decontented version?”
All of them. All new vehicles these days seem to be over-equipped.
We need to get back to some truly basic vehicles that don’t have unnecessary things like heated seats, heated steering wheels, A/C (though you might not be able to cut that in hybrids and EVs as the A/C is used for the batteries as well), oversized wheels/rims, driving assist tech, ambient lighting, powered trunks/liftgates and other stuff.
Of course due to modern safety standards, you can’t get rid of ABS, stability control, the rear camera, TPMS, seatbelts and the airbags.
Plenty of vehicles are made today without heated seats, heated steering wheels and powered liftgates. I agree big wheels are annoying.
Driving assist tech is required by law through a mandate for automatic emergency braking. Once you the required hardware in place for AEB things like lane centering and auto cruise control are just software.
Nobody is going to buy a car in 2025 without A/C – at least not enough of them to bother offering the option. You would likely end up with the scenario where cost of adding the option actually increases costs.
A/C isn’t optional anymore in the American south. Too many 100% days, too much humidity, too many foggy windows. Source: the last 3 years I was able to drive the Z4 it’s been without A/C and it has crossed the line from muggy and gross to dangerous, especially in standstill traffic or warm and rainy weather.
It’s even bad in places like southern Indiana now, we’ve had whole weeks with the heat index over 100 with high humidity over the past several years. I’ve got an air-cooled Beetle and on the days I brave driving it in the heat, even briefly sitting in local traffic is miserable with no A/C. I couldn’t imagine anyone buying a car without it today. Plus it’s also good for defrosting in certain situations regardless of the outdoor temperature.