There is not always glory in being first. The Betamax famously beat the VHS to market, but the VHS format prevailed. The Nissan Leaf went on sale before the Tesla Model S and, yet, people who buy Leafs seem to want little to do with Nissan next time they buy a car according to recent data. At the same time, Chevy Bolt buyers seem to love the Chevy Bolt and want to keep buying them, which makes GM’s (now reversed) decision to kill the model extremely shortsighted. Of course, Tesla buyers love Tesla and seem to want nothing else.
On paper, the Chevy Bolt and Nissan Leaf are strikingly similar vehicles. Both are entry-level electric hatchbacks designed to offer decent range for most people at a reasonable price. Looking at return-to-market data (I’ll explain more on that in a bit) I was struck by the notion that the Nissan Leaf would have been better off with no second generation and the Chevy Bolt badly deserves one. This isn’t a crazy idea as many rational* people probably feel this way, but it’s always nice to have data to support a feeling.
Happy Indigenous Peoples’ Day, y’all. On this episode of The Morning Dump we’ll dive deep into electric vehicle loyalty data, take a lap through the UAW’s recent strike moves, dip our toes in Hyundai’s tactical retreat in China, and skim the surface of Renault’s move across the pond.
*rational means they agree with me.
Loyalty Data Shows How Much Nissan Screwed Up With The Leaf, GM Succeeded With The Bolt
It’s remarkable how far the Nissan Leaf has fallen from grace. It was the first true mass-market electric car and, though its sub-100-mile range was not ideal, it had the general idea correct. It was affordable. It looked pretty much like a car. It had a lithium-ion battery. Then the Tesla Model S came out with three times the range and everyone quickly realized what an electric car could be. Still, the Leaf had the advantage of being the only other competitor to Tesla for a while and of being significantly cheaper. Not since the 1993 Houston Oilers has a group of people blown such a huge lead.
Last week I attended a virtual summit on vehicle loyalty held by information services provider S&P Global that used a mix of its own data and data from credit reporting firm TransUnion. The company allowed me to share this data. A lot of the topline information was not a huge surprise (you can read about it here), with loyalty for automotive brands holding fairly steady:
The industry’s brand loyalty rate of 50.6% was identical to the same period in 2022, despite a 7% increase in return-to-market volume among consumers. The lack of change in loyalty is a positive sign for the industry, which had been facing sharp decreases in loyalty due to pandemic-related inventory shortages.
[…]
“The last few years have shown that if a consumer has a need for a certain type of vehicle, they are not going to wait for their preferred brand to supply it,” said Tom Libby, associate director for loyalty solutions and industry analysis at S&P Global Mobility. “This has opened the door for more brands to capture market share from traditional leaders. Years of investment in quality and technology among the industry has evened the playing field, and we are seeing some of the smaller brands take advantage of that.”
A quick review of terms is probably necessary here. Loyalty in this sense refers to a customer buying another car/replacing their car and either buying the same model, make, or manufacturer (e.g. a Toyota Prius owner who next buys a Lexus RX is not model or make loyal, but is loyal to the manufacturer). Return-to-market is pretty much exactly what it sounds like with buyers coming back to buy vehicles.
Tesla is the overall leader, both as a brand and with their models. Tesla buyers come back 68.4% of the time, with Model 3 owners having a 74% loyalty rate (because they mostly upgrade to Model Ys). Here’s the first chart I want to show because it gives you a great idea of what kind of vehicles are popular (trucks) and how well they do:
There are two standouts to me here. First, Bolt buyers (especially when changes to Inflation Reduction Act rules made them suddenly cheaper) come back to the Bolt. Second, Lincoln owners seem to buy Lincolns again when they return to the market, but I’m going to focus on the Bolt. This data is through April 2023 so the Inflation Reduction Act likely explains some of the Bolt’s advantage.
Here’s another chart that tells a similar story, this time comparing when buyers of five popular models dispose of their vehicles, i.e. they aren’t buying a second vehicle but replacing their original vehicle. You can also see how many (in blue) vehicles are being disposed of and where buyers go:
If you own a Bolt and are getting rid of it, the odds are great that you’re buying another Chevy product. That’s true for Mach-E buyers as well. The Nissan Leaf, though? Ouch. An owner disposing of a Leaf is almost as likely to purchase a Tesla, even though S&P data shows that they were increasing their monthly payment by 71% to buy a Model Y and 36% to buy a Model 3 (by comparison, the average Bolt buyer saves about 1.1% getting a new Bolt and only pays a 58.2% average premium to step up to a Model Y). I have a feeling this is going to be even more pronounced as Tesla continues to cut prices.
Here’s another way to look at it below. This chart shows that non-Tesla EV owners are generally a little less likely to purchase another product from the same manufacturer than are non-EV owners of that same brand. This is extremely true for Nissan, which is purging Leaf owners and losing them to other brands. The Chevy Bolt is the exact opposite. Bolt owners are more likely to buy another Chevy product, though just slightly less likely to defect to another GM brand than the average Chevy owner.
Again, none of this is hugely surprising, though the extent of the problem for Nissan (and the opportunity for GM) is greater than I’d have imagined. We purchased a $2,000 Nissan Leaf in good shape, mostly because its battery is so bad. I can’t wait for us to go deeper into the design of the Leaf.
What does this ultimately all mean?
The Nissan Leaf Should Have Been Scrapped Or Replaced Earlier
The Nissan Leaf was not a bad attempt at an electric car and had a significant first-mover advantage. Even with Tesla debuting a superior product, Nissan’s huge price advantage (a Model S was almost twice as expensive when it debuted) left a lot of the market available to them. Though the Leaf saw many upgrades over its lifetime, it could never close the gap with other products and left room for the Model 3 and Bolt to enter the market and conquest buyers.
Additionally, while the Nissan Ariya seems like a fine electric car (I haven’t driven it yet), it debuted way too late to capture Nissan Leaf buyers and offers no obvious advantages over the competition. Leaf buyers have clearly stayed in the EV market, but when they do they tend to buy anything but a Nissan. The Leaf is dead and Nissan is probably better for it.
Sunsetting The Bolt Name Would Have Been A Huge Mistake
Hindsight is important when judging GM’s decisions related to the Bolt. The company correctly predicted that there would be a market for cheaper EVs with better-than-Leaf performance and built a very good product with a flawed battery pack that had a bad habit of catching on fire, necessitating GM to replace basically every Bolt battery (or upgrade software). Did the association of the Bolt with fires convince some C-suiters that it would be better to leave the name behind? Maybe. At the same time, GM thought it would be back in the market soon enough with Ultium-based products like the Equinox to capture Bolt buyers. That didn’t happen.
Instead, Ultium-based vehicles have seen production delays and Congress out-of-nowhere passed the Inflation Reduction Act, which suddenly lopped the price of the Chevy Bolt significantly (GM had run out of old tax credits) and made it an extremely attractive alternative to the Model 3 on price alone. GM has learned its lesson and un-cancelled the Bolt, but it’s not clear when an Ultium-based Bolt is going to actually make it to the market.
UAW Rejects Mack Trucks Contract, Pauses Other Strikes
The above is a real screenshot from Friday’s strike update that I took because, frankly, it made me laugh. IÂ think that Shawn Fain is partially trolling here, but the degree to which he’s trolling is extremely debatable.
Either way, here are the most important updates on the UAW strike from a couple of sources:
Automotive News: UAW declines to expand strike, citing major movement in Detroit 3 bargaining
Three weeks into its strike against the Detroit 3, the UAW signaled for the first time that contract talks with all three automakers had achieved major progress and chose not to send more workers onto picket lines.
Ford Motor Co. has increased its wage increase offer to 23 percent, which would bring workers near $40 per hour by 2027, and offered to give new hires top pay after three years instead of eight. Both Stellantis and Ford have agreed to reinstate a 2007 cost-of-living adjustment formula.
General Motors, according to the union, has agreed to put electric vehicle battery production under the terms of the national contract — a key priority that has so far tripped up talks with Ford.
Reuters: UAW workers reject Mack Trucks contract, will strike
Union workers at Volvo Group-owned (VOLVb.ST) Mack Trucks overwhelmingly rejected a proposed five-year contract deal and will go on strike at 7 a.m. (1100 GMT) on Monday, the United Auto Workers said late on Sunday.
About 73% of workers voted against the deal covering 4,000 workers in Pennsylvania, Florida and Maryland, the UAW said.
The proposed deal had included a 19% pay hike, a $3,500 ratification bonus, improved retirement benefits, additional vacation for some employees and a reduction in the time needed to get to top pay.
Automotive News: Strip club, weed shops offer UAW discounts
Pure Michigan.
Anyone Want To Buy A Hyundai Plant In China?
The dream of non-Chinese automakers being able to print money in China is pretty much over. It was a good run folks. Other than Tesla and certain premium/luxury/exotic manufacturers, automakers have been beaten up there as of late.
Another sign it’s not a desirable market to enter: Reuters just reported that Hyundai had to drop the price of their Chongqing plant by about 30%.
Beijing Hyundai Motor is selling the land use rights, equipment and other facilities belonging to its plant as the South Korean automaker rejigs its strategy in China amid fierce price competition and slowing demand. The original asking price was 3.68 billion yuan, and the statement did not give a reason for the reduction.
Hyundai did not immediately respond to a request for comment on Monday.
The Chongqing plant started production in 2017 with an annual capacity of 300,000 cars, and the decision to sell it came after Hyundai said in June that it would further restructure its China business to focus on profitability.
As the poet wrote: The world never goes back to the way it was, that’s just not something the world does.
Renault Has Just The Car For Struggling Brits
The economy in Britain right now is, uh, real bad. Now there’s a war in the Middle East and all sorts of uncertainty. Who is coming to the rescue? France! Renault just revealed a cheaper, pure-petrol Renault Clio that’ll start at just $22,000 (pictured is the hybrid version).
The new Clio TCe 90 is powered by an efficient three-cylinder turbocharged petrol engine capable of returning up to 54.3mpg. Priced from just £17,795, it’s not only some £1,300 cheaper than the model it replaces, it’s also up to £3,000 less than its direct competitors.
In response to its enhanced quality levels and generous specification, industry specialists CAP have calculated that the new Clio TCe 90 will retain up to 58% of its value after 3 years/30,000 miles, a significant uplift over its predecessor.
For even more efficiency, customers can opt for the new Clio E-Tech full hybrid, which emits as little as 96g/km CO2, returns up to 67.3mpg (WLTP) and provides a range of up to 550 miles. The petrol/electric version is available on Personal Contract Hire at £229 per month.
Thanks, France!
The Big Question
If you’re the CEO of Nissan, what do you do with this information?
“If you’re the CEO of Nissan, what do you do with this information?”
Pack my golden parachutes and as many office supplies as I can fit with me in my giant musical instrument escape case.
Me too! And I’d do it before the other Japanese execs with ties to the Japanese establishment get me arrested on trumped up charges that I would have no hope in fighting.