When one takes a mere glimpse under the bonnet of EVs most reasonably informed people will quickly realise that with their massive batteries and all the rare and other minerals required for their manufacture, there is absolutely nothing clean nor green about electric vehicles. This is especially so when one takes into account the irreparable damage to the environment and ecosystems caused by mining the various minerals required to manufacture their component parts.
The following is an interesting article about the current state of the electric vehicle market for Ford Motor Company alone.
In March, Ford Motor Company announced that it lost $2.1 billion on its EV business last year. Those losses were double the losses it had on EVs in 2021. As I noted in a video I posted on TikTok on March 23, Ford made 61,575 EVs in 2022. Thus, the company lost about $34,000 on every EV it sold last year. I also noted that the costs of making EVs aren’t falling. Last year, the cost of battery packs for EVs went up by 7%.
While the 2022 losses were huge, warning signs show plenty of potholes lie ahead. (More on that in a moment.)
Indeed, it appears Ford’s 2022 losses were only a warm-up lap. Yesterday afternoon, Ford reported a $722 million loss on its EV business over the first three months of 2023. During that span, Ford sold 10,866 EVs, meaning it lost $66,446 on every EV it sold.
For perspective, Ford lost the equivalent of a brand-new Mercedes-Benz E-class sedan on every EV it sold during the first quarter. (An E 450 4Matic has an MSRP of $66,700.) It’s also worth noting that at the end of 2022, the average EV transaction price was about $65,000. Ford blamed much of its first-quarter EV loss on lower production due to shutdowns at its plants in Mexico and Dearborn as it aims to boost its EV production to a run rate of 210,000 vehicles by the end of 2023.
Before going further, let me state the obvious: EV sales are growing and there is a lot of momentum (and federal tax credits) behind the industry. But the hype about EVs appears destined for a head-on collision with what my friend Tom Petrie calls “market therapy.”
The hard reality is that EVs are still far too expensive for most drivers. I have observed this myself. I never see EVs in low-income neighborhoods. I see more EVs (mostly Teslas) in wealthy parts of Austin than I saw during a two-week visit to Japan back in March. I regularly see empty EV charging stations in cities and on highways. Last weekend, on a trip to Tulsa and back, I saw EV charging stations with no EVs at them.
The photos on the left and middle are of a charging station on the Indian Nation Turnpike near McAlester, OK. I took one pic last Friday afternoon and the second on Sunday morning. I shot the third image at a Buc-ees in Melissa, TX on Sunday afternoon.
My anecdotal observations are in line with the findings of a report released on Monday by J.D. Power that carried the headline: “EV Divide Grows in U.S. as More New-Vehicle Shoppers Dig In Their Heels on Internal Combustion.” The report says that while EV market share has grown “from 2.6% of all new-vehicle sales in February 2020 to 8.5% in February 2023, sales hit a speed bump in March, with monthly market share falling to 7.3%.” It continued, saying that “many new vehicle shoppers are becoming more adamant about their decision to not consider an EV for their next purchase.”
J.D. Power said the percentage of consumers who say they are “very unlikely” to consider an EV for their next vehicle “has been growing steadily for the past three months, reaching 21% in March.” It also said “We find remarkable stability in the top reasons consumers provide for sticking with internal combustion engine vehicles. Lack of public charging infrastructure and price have been the top two concerns for the past 10 months, along with related issues involving range anxiety, time required to charge and power outage and grid concerns.”
But price remains the biggest obstacle. The average EV buyer has an annual income of about $150,000. That’s twice the U.S. average. And J.D. Power said that pricing trends in EVs are driving in the wrong direction. It pointed to guidance issued last month by the IRS and Treasury Department on the requirements that must be met for EVs to be eligible for federal tax credits, including the sourcing of critical minerals in batteries. The batteries and components must come from the U.S. or countries with which the U.S. has a free-trade agreement. “This new hurdle,” said J.D. Power, “will affect the affordability of several EV models, while also likely introducing more confusion among buyers. While we cannot yet forecast the exact effect this new guidance will have on EV adoption, our data suggest that higher prices will negatively affect EV sales.” (Emphasis added.)
So here’s the summary: Ford is losing staggering amounts of money on its EVs, the price it can charge for its most popular EV is declining, and surveys show consumer enthusiasm for EVs is falling. Add in growing evidence of an economic downturn––and long-term concerns about the cost of the massive volume of commodities needed to build EVs, including copper, lithium, and cobalt––and the challenges facing Ford and other automakers become even more obvious.
In its Tuesday press release, Ford said that its EV segment “operates like a startup.” Fortunately for Ford, the company is still making fat profits (about $4 billion during the first quarter) on its conventional vehicles. And it is using those profits to subsidize its EV losses.
But if a business isn’t profitable it isn’t sustainable. The history of electric vehicles goes back more than a century and that history is one of failure tailgating failure. In 1915, the Washington Post declared “Prices on electric cars will continue to drop until they are within reach of the average family.”
Today, 108 years later, Ford and other EV makers are still trying to make that prediction come true.
If you are not familiar with Robert Bryce, I recommend watching his interview with Tom Nelson, which was my introduction to him.
The Express also published today the following article which is worth reading.
The value of some of the most popular electric cars is depreciating at twice the rate of petrol cars, a new study has found.
By Felix Reeves • 3 May 2023
Electric cars losing value twice as fast as petrol vehicles, new study finds.(Image: Getty)
When someone buys a new car, the value will naturally decrease over time given the wear and tear of the vehicle, as well as the mileage and age. But, for some electric car owners, they could be seeing the value of their car depreciate at twice the rate of petrol cars.
According to a new study, EVs on average will lose 51 percent of their purchase value from 2020 to 2023, compared to just 37 percent for petrol vehicles.
This equates to a massive £15,220 loss for electric car owners, with petrol drivers seeing a decrease of £9,901.
The data, from ChooseMyCar.com, used a comparison of new car prices three years ago compared to their value now.
The higher the original purchase price of the car, the bigger the loss, with the Tesla Model S losing £25,000 in value in just three years - a 46 percent drop.
However, entry-level EVs like the Nissan Leaf are also losing a massive amount of value in such a short space of time.
The Leaf’s value dropped by £13,000 - or 58 percent - despite it being one of the most popular small EVs on the market.
Other popular cars like the Hyundai Ioniq and BMW i3 saw large depreciation rates as well with 67 percent and 64 percent respectively.
Nick Zapolski, founder of ChooseMyCar.com, said: “Our research shows yet another blow for EV owners, on top of many other issues that have come to light recently.
“Not only are the EVs themselves not holding value, the price of electricity itself has zoomed up, meaning running the cars is not as economical as it once was.”
The Government previously offered the Electric Vehicle Homecharge Scheme, which enabled drivers to save money on the installation cost of a home EV charger.
It was discontinued over a year ago, with many calling on the Government to reintroduce the scheme to help motorists switch over to electric vehicles.
Mr Zapolski said the hundreds of pounds saved on installing the home charger now looked “insignificant’ compared to the thousands of pounds lost in value.
He added: “Home charge points are expensive to install (if you even had the necessary driveway to allow that) and there has been uproar about the availability and reliability of public charge points.
“On top of that, recent decisions made by the Government mean that some of the initial incentives to encourage EV ownership are being discontinued, such as lower tax and free entry into ULEZ zones.
“The Government really needs to take action if it wants to continue to push the idea of EVs onto the consumer, as currently the cons of EV ownership threaten to outweigh the pros.”
Data from the Society of Motor Manufacturers and Traders (SMMT) shows there are more than 1.1 million electric cars on the road in the UK.
I personally do not know anyone here in rural Wales that would even consider purchasing an EV in a land where SatNavs have difficulty find a desired location, let alone a charging point. Besides, this is just the way we like it.
