We live in times of transition and surprises, so seeing that the market for Electric Vehicles (EVs) has struck a downward inflection point in 2024, causing manufacturers to apply the brakes to some of their earlier enthusiasm, should not catch us too much off guard. Lots of market segments are seeing disruption of some form or another. The market for commercial office space, for example, is in a deep funk. Economic output has been stagnant in numerous sectors. But the EV, having been the icon of the environmental movement, was not supposed to sputter.
When climate change catastrophism was at its height, proponents of EVs were pressing their advantage to the fullest, making predictions that EVs were the future of road travel, and that they were bound to become eventually the dominant form of personal transportation, worldwide.
I’ve heard at least one speaker at a Permian Basin Petroleum Association event tell me that when he had finished his talk and was palavering with attendees, the question he gets most from oil company owners or high-up executives is, “How fast is the transition to electronic vehicles happening?” This speaker said that that appeared to be the main worry on those oil professional’s minds.
The year 2024 might be describable as the year of Rising Disappointment with the Short Term Prospects for EVs. But we can’t count out the thought that if the short term is looking disappointing, the longer term may hold some reality checks as well.
As early as Jan. 1 of this year, ABC News ran the headline: “Electric Vehicles Sales are Slowing.”
On Feb. 28, CNN Business reported, “Tesla has been slashing prices. Ford just cut the price of its Mustang Mach-E, too, plus it cut back production of its electric pickup. And General Motors is thinking about bringing back plug-in hybrids, possibly taking a step back from GM’s earlier commitment to shifting straight to pure Evs.
“And now the EPA is considering slowing down requirements for automakers to sell more electric vehicles, dialing back what had been aggressive plans to move away from gas-powered cars and SUVs.
“To be clear: The American market for EVs is not collapsing. In the last quarter of 2023, EV sales were up 40 percent from the same quarter a year before, according to Cox Automotive. In fact, EV sales in the United States hit a record last year, topping 1 million for the first time.
“But the EV market has nevertheless become a major disappointment. There is a troubling gap between expectations and reality.”
They cited high prices and the lack of public charging stations as the main factors.
Meanwhile, at some point in the early 2020s, the Internal Combustion Engine (ICE) came under attack. In the minds of some who had no issues with internal combustion, their beloved gas-powered cars were being villainized.
Then, on May 15, Reuters reported on Elon Musk’s decision to end Tesla’s super-ambitious plan to create a network of public charging stations. Reuters stated:
“In April, on the day before Elon Musk fired virtually all of Tesla’s electric-vehicle charging division, they had high hopes as charging chief Rebecca Tinucci went to meet with Musk about the network’s future, four former charging-network staffers told Reuters. After Tinucci had cut between 15 percent and 20 percent of staffers two weeks earlier, part of much wider layoffs, they believed Musk would affirm plans for a massive charging-network expansion.
“The meeting could not have gone worse. Musk, the employees said, was not pleased with Tinucci’s presentation and wanted more layoffs. When she balked, saying deeper cuts would undermine charging-business fundamentals, he responded by firing her and her entire 500-member team. The departures have upended a network widely viewed as a signature Tesla achievement and a key driver of its EV sales. Tesla Superchargers account for more than 60 percent of U.S. high-speed charging ports, federal statistics show, and the company has been the biggest winner so far of $5 billion in federal funding for new chargers.”
And on May 21 Goldman Sachs reported:
“Sales momentum for electric vehicles (EVs) is slowing globally, and hybrids (HEVs) and plug-in hybrids (PHEVs) are proving more competitive than first thought. As sales flag, Goldman Sachs Research analyst Kota Yuzawa says the team’s bear case for EV sales is becoming more likely. At the same time, he sees investment opportunities in automakers with strong balance sheets and lineups with multiple powertrains. The team also expects demand for EVs to gradually grow amid the pursuit of carbon neutrality. We spoke with [Yuzawa] for his views on where the global EV market is headed. [Yuzawa replied:]
“’We believe there are three main factors blunting EV penetration. For one, we’re seeing rising concerns around EV capital costs due to lower prices being realized for used EVs. In the UK, for example, EV used car prices have fallen sharply in recent months. Two, uncertainty around a number of elections this year has decreased visibility on potential changes to government policies affecting the EV industry.
“’The third and final concern is around a shortage of rapid-charging stations. As EV penetration accelerates, rapid charging station infrastructure issues have emerged as a tangible problem. Several automakers have said that concerns about driving range and charging infrastructure are increasing. These issues may lead consumers to have second thoughts about buying an EV.’”
My point is not that EVs are going away. That hardly seems possible. What seems likelier, though, is that the internal combustion car or truck is not going away. At least not anytime soon. And maybe never.
Maybe the takeaway here is that EVs do have a place in the world, but their place was projected beyond what should have been their due, and now reassessments are in order.
Earlier this year, I read an opinion by one observer who said that the reason EV sales slowed this year is because they had saturated their most immediate (and obvious) market, and that was the well-to-do household possessing multiple family vehicles. Such households had bought EVs because they filled a particular niche for them. For them, the EV was not used for, or meant for, long distance road travel. For those trips, the household used their ICE vehicles. The EV was used for short local hops—to the grocery, to a restaurant, within a prescribed driving range. With use such as that, the need for remote charging stations was nil.
What hinders the EV movement today is that they have exceeded their natural and logical bounds. If makers and buyers would give up on the charging station ambitions, which are by far the most overwhelming challenges on the EV horizon, and instead accept a lesser-but-still-serviceable niche as a “second or third” type of vehicle in the garage, things would go better for them.
And maybe that will happen. But given that we know there is immense political jockeying on this issue, it’s not too likely that nature will simply take its course. No, there will be plenty of bumps before this road show plays out.
Tesla is the best known of the current makers of EVs. Shown here is their Cybertruck. PHOTO CREDIT: WIKIMEDIA COMMONS