This Wild Chart Shows How Different The Electric Vehicle Market Truly Is

I was not expecting to write another story about the current state of the electric car market this morning until I saw a chart that perfectly depicts what’s going on in the United States and how it differs from the internal combustion engine car market. For all of the talk of consumers being illogical with their car purchases, this chart shows that most electric car buyers are actually making extremely rational decisions when it comes to EV transactions.

Is this data going to make product planners feel any better? No. Carmakers everywhere are confused, and that’s especially true for European automakers who see restrictions coming quickly in Europe and slower in the United States. It’s a weird time, especially at Tesla, where the CEO of the company that benefited greatly from EV subsidies pushed by Democrats suddenly finds himself backing a candidate who seems less sure about EVs.

Today has been a little EV-heavy so, shifting gears to a car with actual gears, Maserati is going to be showing a new MC20-derived car this week in California.

Happy Monday, let’s Morning Dump.

If You See A Non-Tesla EV There’s A Decent Chance It’s Leased

Last time I saw this much burnt orange in one place I was leaving Darrell K. Royal sStadium and may or may not have been wearing a cowboy hat made out of a 24-pack of Lone Star. My memory is a little foggy, but something something OU sucks.

What we’re actually looking at here is a chart from S&P Global Mobility that shows just how much the non-Tesla electric car market is completely dominated by leasing. These are the electric vehicles with the highest lease rates and, as you can see, it covers most of the major electric cars on sale from non-American automakers.

Can you guess what orange is? It’s leasing, of course! The blue is financing and the little bit of red (almost evil Sooner red) is everything else (mostly cash purchases). If you’ve read this website before you’re aware that this makes a lot of logical sense. Why?

1. Electric cars are too expensive. The average transaction price for a new electric car is over $60,000, compared to under $50,000 for a new gas or hybrid vehicle.
2. This generation of electric cars, especially vehicles like the Mini Cooper, Porsche Taycan, and Toyota Bz4X are simply not that competitive when it comes to total range. Buying one of these vehicles outright means likely overpaying for a quickly depreciating asset.
3. The lease deals are insane. If you don’t care that much about the EV you’re getting, there are places where you can lease an EV for under $100 a month.

The why of #3 is important. With electric cars being overpriced, the Biden Administration worked with Senator Joe Manchin of West Virginia to pass the Inflation Reduction Act, which puts a credit of up to $7,500 on top of every electric car sold in the United States… assuming your income is below a certain amount. And the vehicle is made in the United States. And it doesn’t cost too much. And the battery doesn’t contain a lot of materials from China. As you might expect, the number of qualifying vehicles is quite small, though it does include the most popular Tesla models, most GM models, and some Ford and Rivian models (as well as PHEVs).

There was a big loophole left, however, and that extended to vehicles used for commercial purposes. Does that mean leasing? The Biden Administration is interpreting it that way, which made departing Senator Manchin super mad. Ultimately, Biden seems to have decided that pissing off Manchin wasn’t as bad as pissing off our many allies in Asia and Europe who were already upset about the IRA.

Being able to toss $7,500 on any EV lease is a big win for automakers like Toyota and BMW whose vehicles would otherwise not qualify either because of where those vehicles were made or because of vehicle cost.

As you can see, it’s working. From S&P:

This increased value proposition of leasing EVs, relative to purchasing them, understandably has driven lease levels to exceptionally high levels. While industry-wide lease mix has only risen slightly in the last several months, the EV lease mix among mainstream products has climbed from 4.9% in Q4 2022 to 63.6% this past April and May; similarly, lease penetration in the luxury EV sector has jumped from 8.6% in Q3 2022 to 42.7% in April and May.

Let’s compare this graph to the overall market:

You can see the overall market for leasing has stayed within a reasonable range, with the obvious downturn that occurred during the vehicle shortages connected to the pandemic. While non-EV leases have rebounded, they’ve yet to come back to historical norms. Luxury and mainstream EVs? Clearly, it’s most of the market for all brands that don’t otherwise qualify for some sort of tax credit.

The only reason the numbers aren’t higher is that GM, Rivian, Volkswagen, and especially Tesla still manage to sell cars. Buying a Solterra new makes zero sense right now. Leasing one? Sure, why not?

It also goes to show that the market for EVs that are not built in America is almost entirely built upon this one tax credit. If that were to go away…

Tesla’s Elon Musk Wants The Credits, Would Rather Not Share Them

We all contain multitudes. We are all bundles of contradictory thoughts and impulses held together by our ability to ignore cognitive dissonance. This seems especially true for Tesla CEO Elon Musk, who is one of the biggest supporters of former President Donald Trump.

Having a carmaker CEO support a Republican presidential nominee isn’t usually a big deal as, I assume, most domestic automotive CEOs over history have supported the Republican candidate. Hell, George Romney, a former CEO of one such company, ran for the Republican presidential nomination. He didn’t get it, but his son Mitt Romney eventually did.

So let’s not act all surprised. What’s a little weirder about this one is that Musk’s company might not have survived or, certainly, been so profitable early on without a huge influx of government subsidies largely passed by Democratically controlled legislatures over the objections of Republicans. Also, former President Trump has not exactly been pro-EV, though hasn’t called for an outright ban. Trump has seemed generally anti-subsidies for EVs, however.

Reuters has a whole write-up on the many contradictions, which includes this bit:

The disparity is hardly the first time that the billionaire entrepreneur – himself increasingly dismissive of subsidies – has sent mixed signals on business and politics.

“Elon tends to say he’s hostile to subsidies while Tesla is gobbling them up like a hungry Godzilla,” said Mike Murphy, a Republican strategist who runs the EV Politics Project, a Los Angeles-based advocacy group that seeks bipartisan support for electric vehicles.

I think there’s a simpler explanation for this from the article:

People familiar with Musk’s management at the carmaker told Reuters his approach to subsidies is pragmatic, a willingness to accept public money if it’s there for the taking. Musk’s willingness to overlook outright Republican opposition to an industry he helped pioneer, meanwhile, signals a broader focus on goals that may not dovetail with the immediate interests of his businesses.

“Tesla is not the endgame for him,” said Andrew Ward, a management professor at Lehigh University, noting Musk’s holdings in sectors ranging from artificial intelligence to space exploration to neuroscience. Musk could “sacrifice some of the short-term interest in Tesla,” Ward added, “if it’ll satisfy the long-term interests of his ambitions.”

This sounds right to me. Musk seems fine prioritizing other companies and beliefs over Tesla, so why should it be any different when it comes to politics? If he can get money, he’ll take it, which is I think how most people operate.

What Do You Do With His Info If You’re A European Carmaker?

Pity the European automaker trying to make any sense of this. I don’t think a 2nd-term President Trump would have the ability to overwrite the Inflation Reduction Act as, frankly, getting laws passed was not his particular forte (he was far more successful redoing the judiciary). Still, as shown above, there’s plenty of room for interpretation in existing law and a Trump administration could certainly attempt to futz with the IRA.

If you’re a European automaker and you’re facing growing incentives to build EVs in Europe, but mixed demand, and an unknown future… what do you do?

From Automotive News, it seems like the answer is to hedge, which doesn’t work for everyone:

Volvo has vowed to go all-electric globally after 2030. But the brand might be ready to retreat on its EV-or-bust strategy as its battery-powered models struggle to find traction in the key U.S. and China markets.

For Polestar, slowing its EV roll is not an option as the brand was launched as a bold bet on a zero-emission future. Polestar’s U.S. lineup will triple this year, with two premium crossovers. Deliveries of the coupe-like Polestar 4 crossover, billed as the brand’s fastest production model, will begin in the fourth quarter.
British automaker Jaguar Land Rover still plans to launch the full array of the EVs it has announced, but the timing has slipped on two Land Rover models.

Fun times.

Maserati To Show An MC20-Shaped Thing At Monterey

I’m excited to be going to Monterey Car Week for many reasons, most of which have to do with hanging out with Jason, Jeff, Beau, David, and the crew. I’m also excited to get a chance to drive the new Maserati MC20 as I haven’t yet had the chance and it looks great.

Maserati will be showing a bunch of MC20 vehicles, including the MC20 Tributo Modenese (pictured here), as well as something new:

The festivities at The Quail, A Motorsports Gathering, will begin with the global unveil of an all-new super sports car derived from Maserati’s MC20 halo vehicle. Kept completely under wraps until the scheduled press conference taking place from 9:12-9:19am PST, Maserati Global Head of Marketing & Communications Giovanni Perosino, together with Maserati Global Head of Design Klaus Busse, will reveal the project for the first time, which stands as a testament to the state-of-the-art pure Maserati racing performance and unique “fun to drive” Italian dynamics the brand is famous for worldwide.

We’ll bring you photos as soon as we get them.

What I’m Listening To While Writing TMD

What better way to start the day than with a little “Hair of the Dog” courtesy of Nazareth.

The Big Question

Last night’s NASCAR race at Richmond ended with Austin Dillon taking out Denny Hamlin and Joey Logano on the last lap. I know rubbin’ is racin’ but is this a little too far?