Ah California, the land of Hollywood stars, electric cars, and a constantly sick David Tracy. It should be the one place where electric car sales never stop rising, but that hasn’t been the case in the last two quarters.
Indeed, Germany, which is our resident consumptive David Tracy’s second home, also, has seen declines in electric car volume. What’s going on here? Why is this happening?
At the same time, Volvo is looking at Polestar and thinking: This was fun, but maybe we should just give it away like Anthony Keidas?
You know who might be in the market for more carmakers who have faltered in the EV transition? Carlos Tavares! I love that Carlos Tavares is becoming a character in The Morning Dump because he’s a shrewd, seemingly caustic and occasionally funny operator. I don’t know him, but that’s the vibe I get.
The California Electric Car Stumble
In theory, all new cars sold in California by 2035 will be electric cars. That hasn’t happened yet, though the state has seen plug-in sales (including PHEVs) rise to cover about 1-in-4 cars in 2023. That’s a big step in the right direction.
You know what’s not a step in the right direction? Only 89,993 electric light passenger vehicles were registered in the fourth quarter of 2023, which is down about 10% from the third quarter, which itself was down from the second quarter of 2023.
What’s going on here?
Here are some theories from Brian Maas, head of the California New Dealers Association, via Automotive News:
I think all of those things are true, obviously. There’s an additional point in there about Tesla not updating its cars, which is partially true (but the new Model 3 is out and a cheaper model is maybe coming).
While many federal tax incentives were still in place in Q4 of 2023, it wasn’t particularly straightforward and it wasn’t yet POS for automakers.
Ok, let’s see what’s happening in Europe, another place full of environmentally-minded people.
Germans Think EV Sales Will Drop This Year For First Time In Seven Years
Welp. Things are not super ideal there either. The German car lobby (the VDA) assumes that sales of EVs will drop in 2024, with shipments declining 14% to 451,000 units. When it comes to EVs, Germany is the biggest market in Europe.
While there’s still demand, there’s also a specific reason that’s not necessarily the case in California, as Bloomberg reports:
In December, Chancellor Olaf Scholz’s coalition government discontinued a subsidy for EVs at short notice, a year earlier than previously planned.
EV sales in Germany last declined in 2016 and have climbed each year since. The country sold over 524,000 fully electric cars in 2023 — more than any other market in Europe.
Yeah, that cut in subsidies didn’t help.
So, to answer the question in the headline: What’s going on here?
I’m not going to continue to beat the dead horse of EVs being too expensive, because we all know that EVs are too expensive.
This all feels like a pretty normal development in the hype cycle of expensive new technology. We are well past the initial gust of wind from early adopters, the second wind from new federal subsidies, and even the third wind of price cuts.
With gas prices low and interest rates high, it doesn’t really matter how good the economy is. People will buy what they can afford and 2024 could easily be a lost year for electric cars, even as more come to the market and more vehicles begin to qualify (or re-qualify) for federal tax incentives. A “lost year” when the market sells more EVs isn’t a terrible outcome.
If I had to guess, by 2025 many automakers will be on the way to sorting their battery-sourcing issues, we’ll have more affordable EVs on the market, and interest rates will probably be down.
There’s also upside this year for an automaker (ahem GM) that can get good, cheap EV products here quickly that also qualify for point-of-sale tax credits.
Volvo Admits It’ll Probably Give Up Polestar
Volvo had the most profitable year in the company’s 97-year history, with profits up a whopping 43% year-over-year as the Swedish carmaker pushed past supply woes and sold a record 708,716 cars.
And the new EX30 and EX90 aren’t even on sale yet, but they look like great products.
What of Polestar, its EV-making subsidiary with parent company Geely?
There’s a hint in the press release that Volvo sent out today:
As we move into the next phase of our transformation, including deploying large-scale investments in the creation and adoption of new technologies and future-fit production facilities, our focus is on developing Volvo Cars and concentrating our resources on our own ambitious journey.
We are therefore evaluating a potential adjustment to Volvo Cars’ shareholding in Polestar, including a distribution of shares to Volvo Cars shareholders. This may result in Geely Sweden Holdings becoming a significant new shareholder.
Geely will continue to provide full operational and financial support to Polestar going forward, and as a result Volvo Cars will no longer provide further funding to Polestar. We will, however, extend the repayment period for the existing convertible loan by 18 months to the end of 2028. This will be subject to relevant approvals and further information will be provided in due course.
That’s a nice way of saying the company might give Polestar to Geely and isn’t giving it any more money. The result has been an increase in Volvo’s stock and a decrease in Polestar’s pretty lousy post-SPAC shares.
European Brands Are Losing Their Minds Over EVs And Stellantis Wants To Reap The Benefits
Stellantis CEO Carlos Tavares, pictured here, is a stone-cold dude. Fresh off dunking on the Italian Premier, Tavares is clearly positioning his Franco-Italian-American-Dutch-Tahitian conglomerate car company to swallow up some more brands.
Here’s an update on that from Bloomberg via The Detroit News:
The 65-year-old chief executive isn’t taking formal steps to pursue Renault, which is virtually off-limits due to the French state’s ownership and influence over the two manufacturers. What he has done is upstage his archrival at every turn, and ready his company to capitalize on any setbacks.
Renault hit just the sort of stumbling block Tavares has been waiting for this week, calling off a multiyear pursuit of an initial public offering for its EV business. In an exclusive interview, the Stellantis CEO questioned Renault’s strategy and whether it will have the scale to compete with his company and EV leaders Tesla Inc. and BYD Co.
“It’s my job to keep my eyes open. It’s my job to understand how the industry is going to survive this transition. It’s my job to make sure that my company will be one of the winners,” Tavares said Wednesday. “And if we are one of the winners, of course there will be opportunities.”
What a killer, man. Ice-cold veins.
And where could some of that money to buy a Renault or other brand? Here’s a fun little update from Reuters:
The Italian government would be prepared to buy a stake in carmaker Stellantis (STLAM.MI), if the company asked it to do so, Industry Minister Adolfo Urso told reporters on Thursday. Urso also confirmed that Stellantis, owner of the Fiat brand, had committed to lifting annual production in Italy to one million vehicles.
Just amazing.
I’m not going to lie, the Tavares strategy is also, to some degree, my strategy. Sports Illustrated obliterated its staff, The /Drive‘s owners shot themselves in the foot with a private equity deal, and Jalopnik might be for sale.
We’re trying to build something sustainable here to ride out this transition and then flourish after it. Consider becoming a member and getting in on the ground floor!
What I’m Listening To While Writing This
The super weird sophomore album from Remi Wolff, which includes this jam about the pandemic and Anthony Kiedis.
The Big Question
What’s a good nickname for Carlos Tavares? What do you think of the guy? Is he doing it right? Is he screwing up by ignoring his domestic brands and skating on EVs? Let’s talk about this dude.
Been saying it for years… automakers are delusional when it comes to EV conversion rates for owners in ICE cars today -purely- because of price.
Out if approx 50 BEV vehicles on sale today less than 10 start under $40k. Know how many models (not including individual trims) start over $100k? 10. You want to sell more EVs? Do some research on the American public, their realistic earning potential and the average home income.
IMO catering to the ultra wealthy for healthy EV sales was only ever going to land automakers on their face. They’re still too expensive for most middle-income families to own and while selling a bunch of $100k Rivian R1Ts might help edge closer to profitability, it’s a short-sighted cash grab for the even shorter attention span the rich have for shiny objects and the latest EV hotness.
I’m a fan of choice and I’m happy we have so many when it comes to cars. But PHEVs were always the gateway drug automakers needed to invest in (look at premiums for RAV4 Prime, Tuscon / Sportage PHEVs). They introduce EV life to consumers instead of forcing adoption. We skipped a step. And now companies like GM are walking back heavy EV initiatives to capture what they should have focused on from the beginning : VOLUME consumption at a modest price. Not flashy 6-digit “Hummers.”
One other factor is fuel prices. If gasoline prices are decreasing, there is less of an incentive on the $ side of things. Here in MA, you have to really want an EV because even with electricity less than most CA locales, I paid between $0.28 – $0.33 per kwh over the last year. As long as gasoline prices are around $3, not enough fuel savings to be had.
Factor in seasonal fluctuations, sometimes losing considerable range, the need to drive slower (than the equivalent ICE vehicle) to achieve stated range, no time of use discounts for EVs in MA, etc, it is still a hard sell.
I am still interested to go to full BEV, I dabbled for years in a PHEV before going back to ICE only, but the economics just don’t tip far enough to say that my next car will definitely be a BEV.
The California thing is surprising considering the overall EV marketshare went up this year. 21.4% of new cars sold in California this year were EVs! Does that mean that gas car sales also decreased? Because having less EV sales but a higher EV marketshare doesn’t make that much sense.
I would attribute decline in sales of non-Tesla EVs to the Orborne Effect. Almost all EV manufacturers announced during 2023 that they were going to be adding the standardized NACS charging port to their cars in 2025. For people who were close to buying an EV in 2023 but don’t immediately need it, they’re probably going to try waiting until closer to 2025 when they can buy an EV that doesn’t ship with an already obsolete charging port.
“consumptive” Hilarious
An important point I did not see mentioned is that electric rates for many Californians are hella high. PG&E services over 40% of the state population. Their EV rates are between $0.34/kWh nighttime to $0.72/kWh depending on the season and plan:
https://www.pge.com/en/account/rate-plans/find-your-best-rate-plan/electric-vehicles.html
Even at the cheapest rate you’d be paying the equivalent of $4.70/gallon to power a new Prius Prime (I paid $3.74/gal for regular couple of days ago).
Charge during peak hours and you’re doubling that. Over $9/gallon equivalent.
IIRC public chargers are about $0.43/kWh so you’d be looking at $6.00 gal equivalent there.
Unless you can get the electricity cheaper the cost benefit of an EV isn’t to be found in PG&Eland.
Yep, EV:s and too expensive and unless you have home charging I cannot really recommend one. The home charging is the silver bullet that really hits had vs ICE. Every time you leave home you’ve got “full tank”, saves tons of time. And money, in our case about 4-5k€ (diesel X1 vs *Skoda Enyaq 4x).
*ID4 AWD variant with less capacitive crap and bigger boot.
However when the ID2 comes(man I really dislike the VW naming convention) and others that offer Golf hatch size car with about 300+km range at 25k€, it will be the sweet spot. ID3 was supposed to be that, but it’s gotten more and more expensive instead of sub 30k. Biggest benefits of EV for both air quality and running costs are reaped with mid sized family commuter. Not long distance cruisers as the fast charging is expensive, hassle and scary for some people.
It’s the infrastructure, stupid. Imagine selling more gasoline vehicles than the gas stations can handle. Now instead of a 5 minute stop, imagine waiting 15 minutes just to get to the pump. Not just Costco, but everywhere.
We’d all still be riding horses.
“a constantly sick David Tracy”
He’s clearly pining for oxide, having a “Hick Fit”.
Robert Palmer said it best:
You can’t sleep, you can’t eat
There’s no doubt, you’re in deep
Your throat is tight, you can’t breathe
Another rustbucket
is all you need
You’re gonna have to face it
you’re addicted to Rust
I’m still shocked at that Adweek piece that claimed that Recurrent had some kind of strategy when it gobbled up seemingly any publication it could get its hands on. When I was at The Drive, it looked less like its corporate overlords had a coherent plan for expansion with solid support structures in place, and more like the corporate version of eBaying under the influence.
Oof – when I saw the part about selling Polestar, was hoping that meant Geely was out
Ummmmm, because EV’s aren’t ready for prime time yet? Nothing to see here folks, nothing to see
Is Carlos the Jackal taken?
Thanks for the link about G/O Media. Their idea was great:
Buy two popular media companies, keep one of them (the Onion) sort of operational and destroy the other set of websites entirely. Sell the burned out husks for pennies on the dollar.
Cue Nelson laugh.
Tavares = Tardvarnish
I thought Tavares was that YouTuber who buys wrecked supercars and fixes them up.
TIL Tavares ≠ Tavarish
Until major manufacturers stop selling ICE Vehicles EVs will slowly suffer declining sales. Irregardless of government subsidies a85% of the Vehicle sales market just want a decent car at a decent price and will not pay an additional price for SAVE THE WORLD in 200 years. I care more about my 401K than planet earth and so does everyone else except teens and 20 somethings who live at home and have their parents taking care of them.
You lost me at the use of that format of regardless.
Sorry but just like flammable and inflammable regardless and irregardless mean the same thing. Dad was an English major made my life hell.
In my experience, most liberal millennials care more about the planet than their 401ks, but generally can’t afford to do much about it. Note that the oldest millennial is pushing 44-46 now, depending on which definition you use, so not a “20 something.” I’ll hit 40 next year, for instance, and I think people that only care about themselves are gross.
In my experience most liberal millennial conduct no research have no idea what they are talking about they yell and scream idiotic comments until educated people who disagree just walk away and then they claim victory. Yeah for using a 3 year Olds debate philosophy. Why milenals think they are correct when everyone ignores them because well stupid is beyond me.
Sounds like every conservative I’ve engaged with since about 2017. Ends up being a waste of my time and effort, so when things devolve (which they inevitably do), I just start trolling them.
It’s funny, I used to have a number of conservative friends, but they all shot right for “shitty human” after Trump came to town – it’s like he told them that it’s okay to be a racist, a misogynist, anti-science, and to otherwise just pretend that anything they don’t like is fake or evil.
Funny I have seen that liberal tactic employed on some occasions, albeit rarely.
Most educated and thoughtful arguments that I can find tend to be from the liberal crowd, and most of the yelling, screaming, and entreaties to “do your own research” tends to come from a less than liberal crowd. And not have much logical basis in fact, so much as belief.
The youngest is now pushing 27-29 depending on definition. So still a minority is “20-something” but it is shrinking.
And while not going so far as to identify as a liberal (more of a not conservative according to the definition since 2010) I would say I and others like me care about both the planet and 401k.
Funny 200 year timeline is a new one for me. Large scale changes seemed increasingly relevant.
I’ll be ICE until the electric cars get to something like a standard. I drive infrequently so nursing a 17y.o. minivan along for another few years is the financially responsible thing to do. I’m not shocked that sales of EVs are going down because anyone with half a brain is either waiting for NACS to hit or for manufacturing percentages to hit the point where subsidies come into play again.