The buzz around electric vehicles is wearing off.
For years, the automotive industry has been in a state of EV euphoria. Automakers trotted out optimistic sales forecasts for electric models and announced ambitious targets for EV growth. Wall Street boosted valuations for legacy automakers and startup entrants alike, based in part on their visions for an EV future.
Now the hype is dwindling, and companies are again cheering consumer choice. Automakers from Ford Motor
and General Motors
to Mercedes-Benz
, Volkswagen
, Jaguar Land Rover and Aston Martin are scaling back or delaying their electric vehicle plans.
Even U.S. EV leader Tesla
, which is estimated to have accounted for 55% of EV sales in the country in 2023, is bracing for what “may be a notably lower” rate of growth, CEO Elon Musk said in late January.
The broad return to a more mixed offering of vehicles — with lineups of gas-powered vehicles alongside hybrids and fully-electric options — still assumes an all-electric future, eventually, but at a much slower pace of adoption than previously expected.
“What we saw in ’21 and ’22 was a temporary market spike where the demand for EVs really took off,” said Marin Gjaja, chief operating officer for Ford’s EV unit, during a recent interview with CNBC. “It’s still growing but not nearly at the rate we thought it might have in ’21, ’22.”
Ford is significantly increasing its production and sales of hybrid models, which can help ease the transition to electrified vehicles for drivers who may not be ready for fully electric models. They can also help companies meet tighter federal standards for carbon emissions.
GM, which was the first traditional automaker to go all in on EVs, plans to roll out plug-in hybrid electric vehicles for consumers alongside EVs and gas cars. Others, such as Hyundai Motor,
Kia, Toyota Motor
and, potentially, Volkswagen, plan to offer different levels of electrification across their lineups.
“I think the balanced approach is the best way,” VW of America CEO Pablo Di Si told CNBC last month, adding he is in discussions to bring hybrid vehicles to the U.S. The automaker currently sells hybrid vehicles in Europe, but none stateside.
“These technologies exist within the VW group, whether it’s hybrids or plug-in hybrids,” he said. “I think it’s just a matter of time until we bring it here.”
To be clear, although consumer demand for EVs hasn’t shown up in the way executives had expected, sales of the vehicles are still predicted to increase in the years to come.
U.S. EV sales were a record 1.2 million units last year, representing 7.6% of the overall national market, Cox Automotive estimates. That share is expected to increase to between 30% and 39% by the end of the decade, according to analyst forecasts.
“The market was never going to make a smooth transition to EVs, and we expected a slowdown in this shift as early adopters were satisfied,” said Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions. “Moving on to less tech-savvy buyers will slow the EV market share growth over the next few years.”
EV targets
As ESG investing — or investing geared toward environmental, social and governance principles — emerged in recent years and as Tesla rose from niche EV player to the most valued automaker by market cap globally in 2020, the automotive industry largely took note and began plotting its path forward in EVs.
Automakers wanted to emulate Tesla’s success, with some promising to exclusively offer EVs in the not-too-distant future.
Among those targets: Stellantis
-owned Alfa Romeo said its vehicle lineup would be all-electric by 2027. Jaguar Land Rover and Volvo said the same but by 2030. GM said it would offer only electric consumer vehicles by 2035, with its brands Buick and Cadillac aiming to exclusively offer EVs five years sooner. Honda Motor
set its target to exclusively sell EVs and fuel-cell-powered vehicles in North America by 2040. Other, more specialized brands such as Lotus and Bentley have also announced EV-exclusive targets.
While none of those automakers has officially announced changes to its long-term goals, there’s been a notable shift in tone and messaging around their goals. Companies are monitoring consumer adoption, global emissions regulations and EV charging infrastructure to determine future plans, officials have said.
Since first adopting an all-electric deadline, of sorts, in January 2021, GM CEO Mary Barra and other executives have more recently said customer demand will steer its efforts. They maintain that the 2035 goal remains its guiding plan. Cadillac now says it will offer a full lineup of EVs, but not necessarily end production of all gas-powered models by 2030.
“We have the best of both worlds right now,” Cadillac Vice President John Roth said last month during an interview. “We’ll see where it heads here in the future, but we are still committed to offering a full EV portfolio by the end of the decade.”
Ford, for its part, has never stated plans to exclusively offer EVs globally, but it did set targets to be all-electric in Europe by 2030, for 50% of its sales in North America to be electric by that same year and to achieve an 8% EV profit margin by 2026. It has since backed off many targets and is cranking out hybrids — specifically trucks — along with EVs and plug-in hybrid electric vehicles for the U.S.
“We’ve always had a freedom-of-choice kind of approach,” Gjaja said. “Some of that was to protect ourselves against going too far in one direction, because the market right now, as we’ve seen, is very uncertain.”
Source: https://www.cnbc.com/2024/03/13/ev-euphoria-is-dead-automakers-trumpet-consumer-choice-in-us.html