America’s EV Adoption Is Still Stalling Over High Cost And Low Range
Good morning! It’s Tuesday, October 31, 2023, and this is The Morning Shift, your daily roundup of the top automotive headlines from around the world, in one place. Here are the important stories you need to know.
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1st Gear: Americans Aren’t Buying EVs
After the fanfare surrounding the rollout of Ford’s Mustang Mach-E and F-150 Lightning, as well as Tesla’s expansion of its range and Mercedes’ entry into the EV space, you’d have thought everyone was excited about the switch to electric cars. But it turns out most Americans aren’t, and sales of EVs are stagnating.
In fact, after EV sales reached a high of 7.8 percent of new car sales in America, Automotive News reports that this has dropped to 7.7 percent in September, and it’s projected to fall again in October. According to Automotive News:
The “reality” of EVs is becoming apparent, Toyota Motor Chairman Akio Toyoda told reporters at the Japan Mobility Show last week.
The main issue is sluggish demand, despite a robust supply and growing selection of EV models, said Lance Iserman, CEO of Morrie’s Automotive Group.
“That’s related to range anxiety and cost. As the early adopters have adopted, the average consumer is not willing to pay a premium for an electric vehicle with a range of only 300 miles or below,” he said.
Because of this, dealers report inventory of EVs piling up on their lots. One dealership Automotive News spoke with said it had 100 days worth of supply across brands such as Ford, Audi, Volkswagen, Hyundai and Kia.
This swelling demand has forced some automakers to rethink their EV rollout. Because of this, Chevrolet has delayed the launch of its Silverado EV pickup truck and Ford has cut a shift at the plant assembling its F-150 Lighting EV.
2nd Gear: UAW Eyes Tesla As Its Next Target
The United Auto Workers union looks like the next hot band to be in right now after it won new contracts for workers at Ford, Stellantis and General Motors. It should come as no surprise, then, that it’s eyeing other automakers to unionize, starting with Tesla.
Following the union’s agreement with GM, which was announced yesterday, union president Shawn Fain said the next time they head to the bargaining table, he hopes it’s against “a Big Five or Big Six.” To do this, Bloomberg reports that he’s gunning for Tesla’s plant in Fremont, California, to begin to unionize. The site reports:
Unionizing the EV maker would not only grow UAW’s membership but it would help the union exert its clout as the industry shifts to a battery-powered future.
“The UAW would love to get into Tesla, but I don’t think they have a chance,” said Mark Eberley, a former employee at the Fremont plant who worked on a UAW-backed union drive at Tesla before leaving in 2020.
In order to unionize the plant, Fain and the UAW will go up against a harsh opponent in Elon Musk. The Tesla boss previously quashed attempts to organize the plant and Seth Harris, former deputy director at the National Economic Council described any attempt to do so as a “battle royale” for the unions.
But that might not be enough to put off Fain, who has described workers at plants operated by Tesla, Toyota and Honda as “UAW members of the future.”
3rd Gear: The UAW Strike Cost Big Three $3 Billion
After holding out for six weeks against the UAW, blaming the industrial action on a hit to its finances and arguing that it couldn’t offer striking workers any more, America’s Big Three finally agreed new contracts for workers at their sites in the U.S. But the automakers have warned that there could be a huge cost to profits as a result.
For Fiat and Jeep owner Stellantis, the cost appears to be the lowest for the Big Three after it reached a tentative agreement with the UAW on Saturday after weeks of industrial action. Now, Reuters reports that the company claims the impact of the strike could wipe a mere $800 million off its profits for the year. Reuters reports:
The group, which owns brands including Fiat, Peugeot, Jeep and Ram, confirmed its full year forecast for a double-digit margin on adjusted operating profit and positive industrial free cash flow.
“We believe we continue to be in a very strong position globally and in the U.S.,” [chief financial officer Natalie Knight] said in a media briefing. “We’re going to continue to be very focused on sales and profitability in all our regions.”
Knight, who started the job this summer, said the 750 million euro hit to profitability would be the smallest among the Detroit Three.
In contrast, the hit to profits at Ford and GM could be into the billions, Reuters warned. It estimated that the strike could cost Ford a $1.3 billion drop ion profits, while GM could see profits drop by “no less that $1 billion.”
4th Gear: Berkshire Hathaway Offloads BYD Shares
Warren Buffett-backed investment firm Berkshire Hathaway has been offloading millions of dollars of its shares in Chinese automaker BYD over the course of this year. After starting the year with more than ten percent of the company in its ownership, the investment firm has cut that down to just a 7.98 percent stake in the EV maker.
In its latest sale, the investment firm sold more than $25 million with of BYD shares, according to a report from Reuters. The sale brought its share in the company below eight percent for the first time since it began investing in the company way back in 2008.
Berkshire Hathaway initially acquired more than 220 million BYD shares at a cost of $232 million in 2008, but started offloading its stake in the company last year. It first sold 1.33 million of its shares in BYD shares for around $47 million in August 2022, according to AP News. This was followed by a sale of 1.96 million BYD shares worth almost $60 million in May 2022.
Its latest sale sees the company shift 820,500 Hong Kong-listed shares in the EV manufacturer for HK$201.73 million, which is about $25.78 million at today’s exchange rates. The sale drops the investment firm’s stake in BYD from 8.05 percent down to 7.98 percent.
