Spritzler Talks China and EV Cars
Holy speedballs. The EV business is changing faster than…I’m at a loss for words!
Last year, the demand for 100% electric vehicles dropped 16%. It’s expected to drop another 10% this year. That’s partly because many of the “early adopter” folks have already signed on and partly because customers increasingly see hybrids as a better “green” option. The sales of these vehicles increased in 2023 by 16%.
That doesn’t mean EVs aren’t a great niche product for many people, however, Biden’s proposed rule to insist on 71% of new car sales be EV within eight years is delusional. I suspect the ceiling on EV adoption is 15% of total car sales.
Another limiter of sales; EVs can be difficult for folks who don’t have access to in-home charging or are in very cold climates that can reduce battery range by up to 40%. They don’t work for everybody.
There are a few additional headwinds facing EVs. First, as demand has dropped so have prices. That’s trashed the used EV market and made the cost of owning one higher (since used ones aren’t maintaining their value).
Also, the Federales are threatening to halt or severally reduce EV rebates unless higher percentages of components and raw materials are sourced in the US. If Trump is elected this Nov expect a much less friendly environment in Washington towards electric vehicles. The days of juicing EV sales with Gov handouts may be waning? If those rebates evaporate sales may as well?
China’s coming hard and maybe bringing “it” to the US. The Chinese economy is in deep deep shit. The massive real estate industry that’s powered their economic engine is imploding. That means they’re entirely dependent on exports to pick up the slack…ergo EV cars.
China produces 60% of the world’s EVs with Tesla’s most serious competitor being BYD (the globe’s leading seller is made in Huizhou, Shanxi, and Shanghai). Most of these cars sell at significantly lower prices. If the Chinese gov starts playing ball with Washington (they really have little choice) Musk may see BYD going head-to-head with him here at home.
Will that drive EV prices even lower? You bet! More competition and the future development of better battery technology that extends the range of the cars could prove to be a game changer and eventually raise the sales ceiling over 15%. It should be interesting to watch.
PS. Can America build its own battery supply chain so we are no longer dependent on China the battery behemoth (hey, that rhymes)?
The price of battery raw materials, particularly lithium has dropped like a rock. That might seem like a good thing, but it’s had one unintended consequence. Trying to build supply chains in the US to compete with China is very tough when the price of the product is dropping hard.
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