Automakers have struggled to make anything since the beginning of 2020 as logistics completely collapsed. But the hype surrounding EVs has made them harder to manufacture as EVs start to take a larger share of the market. Ironically, the industry’s desire to see EVs become more popular seems to backfire as no one seems to be able to keep up with demand.
This effectively makes this article a follow-up to our previous articles on runaway lithium pricing, as they all help ensure EV prices will remain uncomfortably high for the foreseeable future. Although the bigger story may be that the whole narrative around EVs has started to fall apart. The optimism appears to be fading, and even the most optimistic EV proponents are starting to notice that the road to ubiquitous electrification is far more dangerous than initially thought.
Wall Street Journal just published a report That suggests the industry is simply not ready for a surge in demand for electric vehicles — even though countless automakers have argued for years that plug-in vehicles will achieve financial and functional parity with gasoline-powered vehicles by 2025. Traditional burning. That date now seems extremely unrealistic, and the industry appears to be rushing to produce alternative-energy vehicles that will be the future, even at a steady pace, CEOs say.
If plug-in hybrids are also included, electric vehicles currently account for about 6 percent of total U.S. auto sales. But that has tripled in the past two years, according to Motor Intelligence, and companies have begun putting customers on more than a year-long waiting lists for electrified products for mass consumption.
Edmonds Five of the six best-selling vehicles in the U.S. in July were electric or plug-in hybrids, the report said. Electric vehicles sold out in an average of 19 days during the month, compared to 47 days a year earlier. By comparison, internal combustion engine vehicles (which are also in high demand) last an average of 23 days.
“Now with EVs, ‘you make it and they come,'” said Steven Center, chief operating officer of Kia’s U.S. operations. “We’re working hard to electrify the lineup as quickly as possible.»
In 2022, this will be true for almost every manufacturer. However, everyone seems to be struggling, even Tesla – which arguably holds the lead better than anyone else.
A major contributing factor outside industry lobby groups such as the Alliance for Automotive Innovation is the US government, which since 2009 has proposed a quota-based tax credit system aimed at driving EV adoption. That changed this year, as the Biden administration’s Cut Inflation Act abolished the quota system and replaced it with an unrestricted system subject to price caps, income limits and certain domestic manufacturing requirements. This overlaps with similar initiatives launched elsewhere and a global regulatory framework aimed at financially punishing automakers planning to build internal combustion engines in the coming years.
By scaling back EV sales when the industry can’t produce EVs fast enough, automakers really don’t have much reason to keep prices low. But with the supply chain in such dire straits, they’re not going to fall apart anyway. The semiconductor industry remains in disarray after the COVID-19 lockdown stifled production and encouraged many companies to abandon making microchips specifically for the automotive industry. Battery raw materials are also scarce, and it appears that no commercial entity has yet made a major breakthrough in battery production, making the process significantly cheaper or faster. However, automakers continue to face pressure to switch to electrification as they anticipate looming government bans – most of which are set to expire between 2030 and 2035.
While the industry is keen to lock in battery contracts and even procure the necessary raw materials, most companies are years away from being able to produce electric vehicles at the desired pace. Wall Street Journal Noting that when Ford decided to ramp up production of the all-electric Lightning pickup in 2021, Ford set up a task force to scour the world for supplies. At the same time, GM doesn’t appear to have the capacity to build more GMC Hummers and, although Cadillac’s Lyriq facility is capable of making nearly 1,000 internal combustion engine vehicles a day, it produces electric vehicles every day.
Disruptions in chip supply have severely impacted the industry’s ability to produce all cars. However, GM, in its response to the Hummer and Lyric, cited ongoing battery shortages that have absolutely crippled EV turnaround times. For now, the US government’s solution is to encourage the construction of new semiconductor and battery factories within its borders. Automakers are also working to develop new business partnerships.
For example, GM plans to build a new battery plant in Ohio as part of a joint venture with LG Energy Solutions. Ford is also preparing new battery plants, spending about $7 billion to build two in Kentucky and Tennessee. Unfortunately, factories take years to build before individual components can be produced, and still can’t fill the raw material gap we talked about last week. The industry needs to solve its supply chain problems today, and in difficult economic times, each proposed solution requires a lot of wait and even more expense.
“Unfortunately, there is no production as we are strengthening our supply chain,” GM Chief Financial Officer Paul Jacobson told analysts last month.
leftover Wall Street Journal Part of the reason is the lack of raw materials needed to make batteries, something we’ve discussed extensively in the past. So I’ll avoid you rehashing and summing up the current situation like a snake bites its own tail.
While the concept of instant torque and home charging is certainly appealing, the industry’s use of electrification to retain more control over vehicles (through maintenance, data sharing, etc.) is a no-no to me. I’m also starting to realize that EV batteries don’t really reduce car pollution because they change where it comes from, and most new models look like behemoths with equally astonishingly high prices. The more I see the “electric revolution,” the more it seems to be about making money and complying with government claims rather than making better cars or actually helping the planet. The problem seems to be getting worse as demand increases.
Obviously, switching to EVs will automatically be better for the average person who needs reliable transportation, and I’m skeptical. But it seems my once unpopular views are gaining traction in the mainstream media. Even the most ardent EV proponents can’t ignore the very noticeable slowdown in production that’s happening right now, or the fact that new EVs are priced higher than their burning siblings. At this point, there is too much evidence to ignore or gloss over.
Automakers know there simply isn’t enough supply to meet demand, forcing executives to abandon their idealistic promises about mobility and instead talk about the realities of today’s market. But consumers don’t really need corporate press conferences to address this, as they’ve already witnessed endless waiting lists and ever-widening price differentials. The average price of an electric vehicle in July was $66,000, up 28% from a year earlier, according to JD Power. By comparison, an internal combustion engine car costs nearly $45,000. While that’s still a staggering 12% increase (year-over-year), it underscores the widening gap between powertrains that needs no further explanation.
Still, the auto industry appears to be stepping up its electrification efforts. With so much money and outside pressure already invested, most automakers have achieved multi-billion dollar success with plug-in vehicles. Exiting now would be a colossal failure, even if the future seems to be mired in production constraints and high prices that ordinary people cannot realistically manage.
[Image: JL IMAGES/Shutterstock]
Become a TTAC insider.Be the first to get the latest TTAC news, features, shots and all the truth about cars Subscribe to our newsletter.