High interest rates, inflated materials costs, and sticker-shock prices in the $60,000 range have stalled the electric vehicle revolution in the U.S.
Inventories are piling up, dealers are offering discounts, and manufacturers have announced incentives of up to 10 percent.
The sales slump is forcing makers to rethink the speed and scope of their transition to electric vehicles (EVs), Business Insider reported.
General Motors has pledged to stop building gasoline- and diesel-fueled cars by 2035. Now, however, it has announced it has abandoned its goal of making 100,000 EVs during the second half of this year and 400,000 during the first six months of 2024.
The company is no longer projecting a date by which it expects to deliver those volumes. It also dissolved a partnership with Honda to make an EV that would retail for under $30,000.
Even Tesla’s Elon Musk sees slumping demand for his company’s iconic vehicles, he said during a recent earnings call.
The EV market “is a pretty brutal space,” Mercedes CFO Harald Wilhelm said on a recent analysts call. The company is discounting its EVs by several thousand dollars each. “I can hardly imagine the status quo is fully sustainable for everybody.”
In addition to high prices and financing costs, potential U.S. buyers also express concerns about charging infrastructure and “lifestyle barriers,” BI noted.
Warning signs popped up earlier this year when Ford dealers began declining their allotments of Mustang Mach-E vehicles. In July, the company delayed its plan to build 600,000 EVs a year and abandoned its goal of making two million EVs in 2026.
Toyota is the only large company that has hung back from rushing headlong into the EV frenzy.
“People are finally seeing reality,” Toyota board chair Akio Toyoda said at the recent Japan Mobility Show.
TRENDPOST: The transition to electric mobility is alive and well in some parts of the world.
In Norway, EVs have claimed as much as 80 percent of new car sales in recent months. Denmark, Iceland, and Sweden are close behind. EV sales in China jumped 36 percent in September, year over year. In August, for the first time, EVs claimed more than 20 percent of new car sales.
However, gas is far more costly in Europe and Scandinavia than in the U.S. In China, EVs are heavily subsidized through government incentives and price supports. Nio, a leading Chinese EV maker, loses $35,000 on each car rolling off the assembly line, The New York Times reported.
TREND FORECAST: Absent those subsidies and fuel market pressures, the U.S. will continue to lag China in EV development, manufacture, and sales, costing future jobs, reducing future GDP, and surrendering this key future economic sector to China.