Electric Car Sales Climb Sharply Despite Shortages

Electric Car Sales Climb Sharply Despite Shortages

Americans are buying electric vehicles at a record pace, without rising prices and long waits for delivery, a further indication that the twilight of the internal combustion engine is on the horizon.

Vehicles that run on batteries. 5.6 percent According to Cox Automotive, an industry consulting firm, new car sales from April to June, a small slice of the market, are double what they were a year ago. Overall, new vehicle sales fell by 20 percent.

Companies like Tesla, Ford Motor and Volkswagen could deliver more electric cars if they could build them faster. Automakers struggled with shortages of semiconductors, which are even more important for electric cars than gasoline vehicles, while prices for lithium and other raw materials needed for batteries soared.

“The shift is real,” said John Lawler, chief financial officer of Ford, which sold 15,300 electric cars from April to June, up 140 percent from a year earlier. “The demand for electric vehicles is far greater than what we can supply.”

At the same time, the popularity of electric vehicles has surprised the industry and exposed flaws that could slow the transition to battery power, which is considered essential to combating climate change. .

One lesson for Ford and other automakers is that the shift to electric vehicles requires them to fundamentally rebuild their factory and supply networks. To make the transition, they have started underwriting manufacturers. Advanced batteriesFor example, and dealing directly with mining companies to secure scarce raw materials. It’s Ford. Plans for a $5.6 billion complex Near Memphis to build electric vehicles.

Automakers and suppliers have announced plans to invest more than $500 billion worldwide by 2026 to upgrade their factory networks and supply chains, according to AlixPartners, a consultancy. But it will take years of manufacturing capacity to meet the demand.

The lack of public chargers is another hurdle, especially for apartment dwellers who lack garages or private driveways where they can plug in. Multiple companies are competing to build the network, and The Biden administration is providing funding, but they are playing catch-up.

“The market is ahead of the charging network,” said Cathy Zoey, chief executive of EVgo, which operates more than 850 fast charging stations in the United States.

Electric cars remain much more expensive than their gasoline counterparts and out of reach for many buyers, even when fuel economy is taken into account. . One reason for this is the cost of batteries, which after years of low prices have increased due to raw material shortages.

“To get to 15 percent of the market, or 25 percent or 50 percent, we have to appeal to a broader segment of the marketplace,” said John Bozella, president of the Alliance for Automotive Innovation, an industry group. “That to me is where the challenge is.”

While electric vehicle sales are growing rapidly in the US, Europe and China are far ahead. Battery-powered vehicles account for more than 10 percent of new cars sold in Europe and about 20 percent in China. Government quotas and subsidies play a big role, but there is also a large selection of low-cost models.

Government policy also plays a large role in the United States. California requires manufacturers to sell a certain number of zero-emission vehicles, and residents there drive about 40 percent of the electric cars on the road in the United States. But the Biden administration’s efforts to promote electric vehicles across the country, through the offering Tax credits for electric car buyers Values ​​up to $12,500, for example, met with strong opposition in Congress.

Sales will accelerate as battery-powered cars become more common in the United States, said Felipe Smolka, a partner at consulting firm EY who follows the electric vehicle market. He said people would be reluctant to buy fossil fuel-powered cars, fearing they might become obsolete and lose their resale value. Automakers have largely stopped investing in internal combustion engine technology.

“The energy behind this transition is already at a point of no return,” Mr Smolka said.

Not all automakers are equally involved in the electric vehicle boom. Among traditional automakers, there’s a growing divide between those that have begun selling vehicles that can compete with Tesla’s popular models and those that haven’t.

Major automakers such as Jeep, Chrysler and Ram automakers Toyota, Honda and Stellar are largely absent from the pure electric vehicle market in the U.S., although they have announced plans for battery-powered models. Toyota started selling a battery-powered sport utility vehicle, the bZ4X, this year called back Some of these cars in June due to the risk that the wheels could come off.

Being early to market is no guarantee of success. The Nissan Leaf was one of the first electric vehicles to be mass-produced, but U.S. sales of the model totaled just 3,300 during the second quarter, down 30 percent from a year earlier. Replacing the Nissan Leaf is the Ariya, an electric SUV that will go on sale in the fall.

General Motors, once considered the EV leader among traditional automakers, was derailed last year. to remember of his electric bolt. Batteries were a fire hazard. GM sold less than 500 Bolts in the first quarter of 2022. In the second quarter, sales rose to 7,300, but that was still a 20 percent drop from the second quarter of 2021.

For companies with electric vehicle lineups, ongoing technological change presents an opportunity to raise their profiles. Ford and South Korean automakers Hyundai and Kia, which are corporate siblings, have been the most popular EV brands in the United States this year behind Tesla.

Tesla remains the company to beat, but it’s showing signs of weakness. Company Delivered more than 254,000 vehicles. In the second quarter, it fell below 310,000 in the first quarter due to shutdowns and supply chain issues that affected its factory in Shanghai.

Tesla’s second-quarter sales were up 26 percent from a year earlier, and the company said it built more cars in June than ever in its history, a sign that supply problems are easing. are

Still, Tesla faces stiff competition in China, which has the world’s largest car market. BYD, a Chinese automaker that also produces batteries, sold 70,000 pure electric vehicles worldwide in June alone. In Europe, Tesla overtook Volkswagen, Stellenbosch and Hyundai/Kia in electric vehicle sales through the first five months of 2022, according to Berlin-based Schmidt Automotive Research. (Tesla’s Model 3 and Model Y remain the most popular electric cars in Europe.)

Analysts at Bank of America said in a recent report that the introduction of dozens of electric models by traditional automakers will erode Tesla’s market dominance. He predicted that Tesla’s share of worldwide electric car sales would fall to 11 percent by 2025, from 70 percent last year.

“Tesla’s dominance in this still nascent market segment may be coming to an end,” Bank of America analysts said.

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