America should rightfully be a leader when it comes to electric cars, having both created the underlying battery technology and proving the feasibility of mass vehicular electrification. China, though, has emerged as the real leader, and a mixture of corporate bumbling, political reality, and market forces seem ready to stunt America’s reemergence in the EV space.
Mass electrification will come, one day, but that day seems further away than ever. That’s not a critique of electric cars in general, as people who drive electric cars typically find them to be a better form of transportation (they usually are).
Am I feeling cynical this morning? Yes. You’ve been warned that the usual buoyant optimism that normally pervades The Morning Dump might be missing today. Maybe it’ll all work out, but I think America’s next best shot at getting ahead in the EV space is in trouble.
Of course, electric vehicle sales are up a bit, having climbed some in October. They’ll probably climb some more as people realize the money for EVs could dry up in the new administration. Will automakers still press forward? Sure, but both the carrot and the stick could disappear as a conservative judiciary might erase California’s ability to set its own environmental standards.
It doesn’t help that the first generation of EVs offered by most automakers has been tilted towards more expensive vehicles, a decision that is resulting in plant closures. I guess what I’m saying is: If you were inclined to buy an electric car you should probably do so now.
EV Sales Were Up A Little In October
For various reasons having to do with how automakers report sales, the only easy way to know for sure what everyone sold in the EV space on a model level is to look at registration data, which usually lag behind sales data.
The most recent month that there’s data for in the United States is October, which is before the election, and sales were up 5% year-over-year. That’s good, I suppose, but I’m starting to wonder if this isn’t a house of cards. Electrification in the United States is held up in no small part by subsidies and, further, by certain interpretations within those subsidies.
Looking at the data from S&P Global Mobility (via Automotive News) the clear trend is that most automakers are seeing increases, with Tesla seeing a predictable drop as it faces competition. Tesla still sold more cars than the next five automakers combined, but it’s a company going in the negative direction.
A close look at the specific models is most interesting here, with the Model Y (21,787) and Model 3 (17,419) far ahead, but the very good Hyundai Ioniq 5 sneaking into third place with 4,485 sales. This was followed by the Chevy Equinox EV (4,180), the Honda Prologue (4,168), and Tesla Cybertruck (4,041) rounding out the top six.
Is the Cybertruck a success? Certainly, at 4,041 sales it’s by far the most successful EV truck. There are signs that the expensive versions aren’t selling fast enough, though, which is backed up by used pricing data. VinFast, somewhat surprisingly, managed to outsell Lucid in October at 623 united to 488. The biggest loser here might be Volkswagen, which reportedly only moved 92 vehicles, which seems extremely low to me.
The lowest? Maserati had a whopping three EV sales. Just three. Presumably, those are all the Maserati Grecalo Foglore, though I’ve reached out to Maserati to confirm that.
What’s most worrying to me is that a ton of these sales rely on leasing, both because it’s probably not a bad idea to lease this generation of EVs, and because lease deals automatically qualify for a big tax credit due to an interpretation of the Inflation Reduction Act.
The chart above from S&P clearly demonstrates that leasing became the dominant mode because of the IRA. As the company wrote up in a recent analysis:
If this loophole is targeted for elimination, or if overall incentives are reduced, it could make BEVs even less accessible, especially as manufacturers may not have the same incentive to drive down prices or ramp up production.
Is that what’s going to happen? I tend to think that’s what is going to happen.
Trump Administration Reportedly Going To Eliminate The Carrot And The Stick
I don’t want to make every TMD about the Trump Administration’s plans for EVs, but it’s relevant. If this is triggering for you, I suggest moving on to another story.
As hamfisted as it could be at times, the Biden administration’s policy towards electrification had clear goals. In order to strengthen this country’s ability to produce competitive electric cars outside of one company (Tesla) and to help curb global climate change, there was money being passed around to build/buy EVs in the United States. That was the carrot. The stick was in the form of increased EPA standards that would make it more challenging to sell cars that weren’t electric cars.
Without getting into the details of how the United States Congress appropriates money, it’s not entirely clear how easy it will be for a Trump Administration to get rid of the popular EV tax credit. However, it might not be difficult for a new White House to reinterpret the lease rule in order to wipe out a lot of automakers that rely on those incentives.
One could argue that these subsidies are unfair and hide the reality that most people don’t want electric cars yet. Just about everything in life is subsidized, one way or another, so it’s merely a matter of society making choices. Did people vote for President Biden because they wanted more electric cars? Did people vote for President Trump because they wanted fewer electric cars?
The carrot going away isn’t a surprise, nor is the news that the new White House will attempt to roll back environmental standards. Ending subsidies for charging stations is the removal of a carrot that most people seem fine with, right? Maybe not. Here’s Reuters:
The transition team calls for clawing back whatever funds remain from Biden’s $7.5 billion plan to build charging stations and shifting the money to battery-minerals processing and the “national defense supply chain and critical infrastructure.”
While batteries, minerals and other EV components are “critical to defense production,” electric vehicles “and charging stations are not,” the document says.
The Defense Department in recent years has highlighted U.S. strategic vulnerabilities because of China’s dominance of the mining and refining of critical minerals, including graphite and lithium needed for batteries, and rare-earth metals used in both EV motors and military aircraft.
Trump’s campaign claimed that EV subsidies were part of “government attacks on gas-powered cars” and it seems like ending the rollout of charging stations is part of the defense of ICE-powered vehicles.
All this, to me, means that if you want an electric car you should buy one soon while the EV incentives are still in place and while automakers are still incentivized to build a wide range of electric cars.
Can The California Air Resource Board Survive?
Speaking of sticks, California has long been able to shape automotive policy in this country by using a clause within the Clear Air Act that says states can establish more stringent standards with a waiver from the EPA. President Biden granted one of those waivers in 2022 and fuel producers sued.
So far, the fuel producers haven’t been able to get a lawsuit heard because they’ve lacked standing, but the Supreme Court now plans to hear the case and decide whether or not fuel producers can, indeed, sue.
Since 1977, other states have joined California in its standards, which means about 1/3rd of the population is under stricter standards. Right now California is hoping to get more waivers in front of the EPA approved even as the Trump Administration says it’ll rescind as many waivers as it can.
If the Supreme Court decides that the oil and gas groups do, in fact, have standing, then the case will be sent back to the D.C. Circuit to consider the substantive question of whether it is lawful for the federal government to grant waivers for California at all.
From there, the soon-to-be-Trump-controlled EPA could seek a settlement with the plaintiffs. Alternatively, the Trump administration could let the case run its course with an eye toward an appeal at the conservative-leaning Supreme Court if the lower court upholds the existing waiver system.
Even if the Supreme Court rules the groups don’t have standing, this is going to keep coming up until the courts decide if the CARB waiver system is constitutional.
Audi Closing Its Brussels Factory
The Audi Q8 e-tron is as good a poster child for the problems automakers have had with electrification as any other vehicle. Elon Musk once said that the future of carmakers is going to be Tesla and a few other Chinese companies, which is a future he does seem to actively trying to make happen.
He’s had help from companies like Audi, which have been pushing vehicles with high prices and relatively low range. A Q8 E-Tron starts at $75,000 in the United States and can’t crack 300 miles of range. It looks good and is probably nice (I haven’t driven it). Starting at $75,000, there are too many other electric cars that are also as expensive and deliver equally mid performance.
Why would you buy this and not, say, a Kia Ev9? Or a Rivian R1S? Or just about anything else?
Because of the poor performance of vehicles like the Q8, Audi announced that it’s going to close the plant in Brussels where it’s built.
From Reuters via Automotive News Europe:
“The decision to close the Brussels factory is painful. Personally, it was the toughest decision I have ever had to make in my professional career,” said Audi’s production boss Gerd Walker.
The plant closure had seemed likely after a spokesperson said in November that Audi had been unable to find a buyer for the struggling Brussels plant.
In theory, the new Q8 E-Tron will be built in Mexico, which should help lower prices if there aren’t any tariff shenanigans.
What I’m Listening To While Writing TMD
When I’m feeling cynical I want to listen to sad bastard music. This means it’s a good week for Eels, though there’s something kinda hopeful about “Christmas is going to the dogs.”
The Big Question
Am I being too cynical? Will it all work out?
Top shot: GM, Lightning effect: Brusheezy
