I had a long conversation yesterday with David about the sudden-but-expected departure of Volkswagen’s North American CEO. The slowing of the electric car market is causing all sorts of problems for automakers, and I’m not convinced that any 2nd generation electric car that’s not a Tesla is going to be that competitive outside of China. There’s one car I’m into, though, and I think it could be a model for other automakers.
Obviously, Renault doesn’t sell cars here, and the company’s relationship with Nissan is a little iffy so it’s not an obvious next step for the Japanese automaker to sell one of its products here as a rebadged Renault. An Alpine? Maybe. In the interim, I think the new Renault 5 E-Tech gives a great concept for what a “3rd generation” electric car could do to be successful. Ahem, are you paying attention Ford? If anyone at Ford is reading this installment of The Morning Dump please tell us all of your product plans in the comments.
VW’s Pablo Di Si is probably paying attention, though it’s going to be from the sidelines as he’s quickly left Volkswagen amid reports that none of his bosses wanted him there. And speaking of unwanted, VinFast has a new car they’re delivering in California.
And, finally, a quick look at the battery mix that some are predicting for 2030. Spoiler alert: it looks like today’s battery mix.
This Is A Sub-$30k Electric Car And It Seems Just Right
I’m not sure there’s a perfect consensus on what constitutes different generations of electric cars, but when I think of EVs outside of China I divide it this way:
- PROGENITORS: All the small production electric vehicles stretching from the CitiCar to the original Tesla Roadster, including the Nissan Altra EV, GM EV-1, and Ford Ecostar.
- 1ST GEN: These are the early attempts at EVs encompassing the successful Tesla Model S and Nissan Leaf, as well as less successful compliance offerings like the RAV4 EV and B-Class EV.
- 2nd GEN: These are mass-market cars that started with the Tesla Model 3 and now cover almost all of the existing market. They have either LFP or various NCM chemistry batteries, a minimum of 200 miles of range in non-city car applications, and cost more than a comparably sized ICE-powered car or SUV. If they’re sold by a typical OEM they can be found on dealer lots next to comparable ICE-powered cars in the same brand (Equinox EV/Equinox, Blazer/Blazer EV, et cetera)
- 3rd GEN: Not for sale in the United States currently, these are mass-produced vehicles that cost the same or less than comparable ICE vehicles. The range is at least 300 miles for non-city cars and these vehicles are more likely to find grey space in a lineup or replace existing vehicles.
None of this is obvious, and there’s a lot of space in here for cars that bridge two of these generations. Could you argue that the Cadillac Celestiq, in its own unique space and price class, is a 3rd Gen product? You could, but I’d still say it’s 2nd Gen. The same probably goes for the new Chevy Bolt, although I’m open to that being an early 3rd Gen product depending on price/stats.
I say all of this because there are too many 2nd generation cars and not enough buyers. According to Cox Automotive, there were about 60 distinct electric models for sale in the first half of 2024, adding up to total sales of around 599,372 vehicles. That’s an improvement of 7.3% year-over-year, which is not nothing.
Tesla sales cover 304,451 vehicles of those, which is an improvement over last year for the rest of the market, but still means that Tesla still controls a huge part of the market. Subtracting Tesla’s five models, that’s about 50 cars all fighting for the rest of the pie (imagine half a pie cut up 50 ways). The most popular other vehicle in the first half of the year, adding up to 22,234 vehicles, was the money-losing Ford Mustang Mach-E. Put that next to the 198,030 Model Ys that Tesla sold in that same period and it’s not that impressive.
Even if the market continued to grow 10% year-over-year (it probably won’t) it’s just too many cars for not enough buyers.
It will require a 3rd Gen product to be competitive. I assumed, probably incorrectly, that the planned $25,000 Tesla Model 2 would be the original 3rd Gen car for sale. If Tesla CEO Elon Musk is correct then the existence of robotaxis like the Cybercab will change this calculus a bit and that’ll be the true 3rd gen car, but I’m skeptical that it’ll happen as quickly as Musk wants.
My guess is that it might be Ford with its unnamed Skunk Works car line. These are sub-$25k vehicles that are supposed to be exciting and draw lessons from cars like the Xiaomi SU7. If there’s any inspiration to be taken from the present I don’t think you’ll beat Tesla by trying to copy Tesla (no one has, thus far). I think you need to do something different.
The Renault 5 E-Tech, with all of its quirky details, reasonable performance, good size, and extremely good looks might be a model. Renault is one of the few companies doing well in Europe and the 5 E-Tech has the makings of a hit. For one, its price is excellent. Order books open next month and the base 5 with a 40 kWh battery and a 190-mile WLTP range will cost just £22,995 after all taxes/feeds/delivery in England or a little under $30,000. Cars are more expensive in the UK, so to put that in perspective the cheapest Model Y for sale in the UK costs £39,990, or about $50,000. That’s a bigger car with more range, but that’s the point.
Even the smaller 2024 Fiat 500e is about £2,000 more expensive for a car with a comparable range. Even the top-of-the-line version with a range closer to 248 miles is just £28,995, which is still £10,000 less than a Model 3 and it looks way more interesting.
I think that’s the key. Again, you’re not going to out-Tesla Tesla and it’ll take you generations to even catch up. I guess you can argue that GM has begun to catch up with its Ultium-platform cars starting to break even, but the removal of the IRA tax credit might reverse that quickly. If the IRA does go away it’s an even bigger deal to have a cheaper, highly differentiated product. Pay attention Ford!
[Ed Note: I think a 190mi range small EV could be a tough volume-sell in the U.S. I’d make the Renault a bit bigger, keep the battery size at 40 kWh, and offer a small range extender for the range-anxious. -DT].
Volkswagen Group Of America CEO Replaced
If you read the Volkswagen press release about its new North American CEO you might assume that the old North American CEO made the choice to leave. In fact, that’s what it says:
The Volkswagen Group appoints Kjell Gruner as CEO of Volkswagen Group of America effective December 12. Gruner succeeds Pablo Di Si, who has stepped down from his position last week at his own request.
“At his request” is an interesting phrase, especially since we’ve known this was probably coming for weeks. Someone in the main office did all they could to make it clear that Di Si wasn’t long for this world, with quotes like the following from Der Spiegel:
More than a billion euros of expected earnings from North America will be missing by 2025, with Thomas Schäfer, the CEO of VW’s passenger car operations, having to scrounge up that money elsewhere. Chairman of the Board Oliver Blume, who declared success in North America to be a company priority, now has to begin looking around for a new executive for the region after just two years.
[…]
The new executive awakened expectations back in Wolfsburg that the pandemic-era profits would continue to pour in. A mistake. “You get such a job when you make big promises,” says a company executive who asked not to be identified. “And you lose it again because you are unable to fulfill them.”
As with Carlos Tavares at Stellantis, things were fine when the pandemic encouraged automakers to choose price over volume. Pretending that those billions would still be pouring into Europe makes no sense given that Volkswagen’s future was built on 2nd generation vehicles like the ID.4 that, ultimately, were not particularly competitive.
Di Si will be replaced by Kjell Gruner, who spent many years in the Volkswagen family at Porsche, including a stint as CEO of the brand’s American operations. What’s he been doing lately? Heading up sales at Rivian, which is interesting timing given VW’s even bigger investment in that company.
VinFast Delivers VF9 Electric Three-Row To… Someone
Amazingly, we did not get invited to the press launch of the three-row VinFast VF9. Could it be that our review of the VinFast VF8 basically told people to not buy one of the company’s cars until some basic issues were resolved? Maybe. It also might be that VinFast doesn’t seem to have given the car to any major outlets.
Oh well, the company has seemingly decided to skip the press and go straight for customers and delivered cars recently.
The first batch of customers received their VF 9s at VinFast’s North American headquarters in Los Angeles on Nov. 18. Following the eight initial deliveries, VinFast said the VF 9 is available at its 15 company-owned stores in California and 36 franchised dealerships in 15 other U.S. states.
The VF 9 was originally scheduled to launch in California last year after the two-row VF 8 crossover went on sale in March 2023. The VF 9 went on sale in Vietnam last year.
“VF 9 is one of the few seven-passenger, three-row electric car models on the market,” said Mike Nolte, vice president of sales at VinFast U.S. “We believe that the VF 9 will be the ideal vehicle for large families, delivering premium quality and a luxurious experience while maintaining excellent value.”
This is another 2nd Gen vehicle but, hey, maybe they’ll figure it out.
Battery Chemistry Should Be The Same For A While
I’ve been waiting for an updated forecast on battery cathode type all year… because I’m a nerd. It’s here! It’s here! It’s truly the best time of the year! Thank you S&P Global Mobility for this early Christmas present.
Right now the batteries used in electric cars can be easily divided by cathode chemistry (almost all batteries use graphite or a graphite silicon mix for the anode). Higher-performance, longer-range vehicles tend to use some kind of NCM-based lithium-ion battery, with NCM standing for Nickel, Cobalt, and Manganese. Lower-range, lower-priced cars, especially in China, use LFP batteries, with LFP standing for Lithium Ion Phosphate.
According to the forecast and the chart above it looks like that’ll stay mostly the case going into the future.
The report from S&P talks about the benefits of various chemistries, but what’s most interesting to me is the forecast for the ratio of NCM batteries, as they explain:
In the first applications of lithium-ion, the cathode chemistry choice was between lithium in combination with oxides of nickel, cobalt or manganese. Nickel was favored for its energy density, cobalt for its reversibility, and manganese for its safety. Now, in lithium-ion batteries of this type, a cathode combining all three in varying ratios — NCM — is favored because of the attribute trade-offs noted above.
Until relatively recently, the NCM ratio was mainly 1:1:1. However, with the desire to reduce cost and improve sustainability (due to environmental concerns over cobalt mining) and energy density, the nickel ratio has been increased to the point that NCM 811 (8:1:1) has reached near ubiquity in the NCM type. The graph below shows the market makeup and forecast for the various NCM combinations.
The NCM811 combination holds sway over the market and will progressively increase its share. The so-called NCM90+, NCMA and HV NCM60 chemistries are also of note. NCM90+ denotes cathodes where the cobalt and manganese content is cut further (typical ratios can be 9:0.5:0.5 hence the 0 in the nomenclature) to improve energy density. NCMA batteries take the basis of the NCM battery and add aluminum to the mix for greater energy density.
A lot of complaints regarding NCM batteries center around the mining of cobalt as well as the chemical separation of manganese, with the anti-EV crowd pointing out that neither is particularly good for the environment. Plus, a lot of cobalt mining is in the Democratic Republic of Congo.
Being able to dramatically reduce the amount of cobalt and manganese in batteries is a big deal, and it seems like that’s where we’re going.
What I’m Listening To While Writing TMD
There’s a great Robert Earl Keen joke about being a bull rider for 15 seconds stretched across five bulls at three seconds per bull. That’s roughly how long my tango career lasted. I was not good at tango. But I found the Gotan Project and got the chance to dance to “Santa Maria” and that’s a decent trade for all the embarrassment.
The Big Question
Do you like my EV generation breakdown? Do you see it a different way?
