from CFACT
Author: Dugan Flanakin
Whatever happened to that old piece of business wisdom: The customer is always right?
U.S. and European automakers have abandoned the slogan to please unelected bureaucrats in Brussels, New York and Doha and sycophants who have ascended to political power by preaching doomsday predictions. They may now regret their “enthusiastic” marching orders to join the Climate Commandos.
Today's sign of the auto industry's apocalypse is the glut of unsold battery electric vehicles (BEVs) that customers have said for years they don't trust with their lives and property.
It's true that the auto industry has not been helped by the post-COVID inflation spiral that has sent interest rates soaring, but much of the auto industry's woes are self-inflicted. Meanwhile, the Chinese are smiling, knowing they hold four trump cards.
General Motors Chief Financial Officer Paul Jacobson announced in June that he would cut the production of pure electric vehicles by 50,000 units. What's the reason? “We don't want to end up in a situation where we give a production target and then we just blindly produce and end up with hundreds of thousands of cars in stock because the market isn't there yet.”
Perhaps Jacobson is reading the tea leaves, predicting that a Trump victory could mark the end of the $7,500 tax credit under Biden's misnamed Inflation Reduction Act. Or maybe he's looking at data that shows more than half of the public has zero interest in buying a vehicle that doesn't meet real-world needs.
Or Jacobson may have realized that much of the billions of taxpayer dollars used to build the charging network have disappeared down the rabbit hole.
in spite of. General Motors just announced it would cut 1,000 jobs and promised incentives comparable to the potential elimination of a $7,500 tax credit. This follows the layoffs of 1,700 factory workers in September. General Motors previously reported a $1.7 billion loss in sales and production of all-electric vehicles in the fourth quarter of 2023.
Ford is also eager to clear out its BEV inventory and announced in September that BEV chargers and home installation would be included in the purchase price of its Model e BEV. The downside to this bold move is that Ford will lose nearly $130,000 on each of the 10,000 all-electric vehicles it sells in the first quarter of 2024, and expects to lose $5 billion on the Model E series in 2024.
Ford also furloughed 730 factory workers and suspended production of its 2023 “Truck of the Year” BEV F-150 Lightning pickup truck until next year “due to weakening consumer demand for electric vehicles.” But the real question might be, as one auto industry expert puts it, are all-electric pickup trucks “the wrong product?”
Ford had earlier abandoned plans for an all-electric three-row SUV and instead focused on hybrid models that use completely different technology to offer longer driving range and better economy. This is happening despite BEV prices falling from $65,000 to $56,648 nationwide.
Just this week, Ford announced it would cut 4,000 jobs, mostly in Germany and the United Kingdom – a 14% reduction in its European workforce. Ford cited weak demand for all-electric vehicles, weak government support for the transition to all-electric vehicles and competition from subsidized Chinese automakers.
Car rental giant Hertz has just expanded its sales of pure electric vehicles, with used Tesla Model 3 now selling for less than $20,000. Hertz hopes to sell 30,000 BEVs as it exits the BEV market, but an 89% increase in BEV depreciation costs (about $537 per vehicle per month) has impacted its profits. Tesla’s own price cuts have clearly had a knock-on effect on the used pure electric vehicle market.
at the same time, detroit free press An October report stated, “For [Stellantis]the future of the automaker that owns the Jeep, Ram, Chrysler, Dodge and Fiat brands is not entirely clear. The newspaper said that after “stunning profits” in 2023, Stellantis hawks reported U.S. sales declines of 20% or more for consecutive quarters in 2024.
Elsewhere in Europe, carmakers are panicking over the wide gap between customer choice and government requirements, although requirements for pure electric vehicles are equally stringent.
Germany's largest car insurance company reported that one-third of pure electric car owners will switch back to gasoline or diesel vehicles this year, up from 14% in 2021. discounts of $4,900 to $6,500. Or, as one German journalist observed, “Evidently, electric cars are not going to convince many owners to stick with this form of propulsion in the long term.”
The situation in Germany is so bad that for the first time in its 87-year history, Volkswagen plans to close “at least” three plants, lay off tens of thousands of employees and downsize its remaining German plants.
A recent survey showed that only 29% of Germans would comply with the law mandating the purchase of pure electric vehicles, and only 18% would consider purchasing a pure electric vehicle next time. To make matters worse, only 3.6% of ICE driving in Germany switched to pure electric vehicles this year, and pure electric vehicles accounted for only 2.9% of all vehicles on German highways.
Germany's governing coalition collapsed in part due to its ongoing pledge to ban the sale of most internal combustion engine cars by 2035. The influx of cheap Chinese pure electric vehicles will only worsen Germany's situation, because Germany accounts for 8% of its annual economic output and 16% of its exports.
In the UK, sales of pure electric vehicles have failed to keep pace with the wider market, according to the BBC. While fleet BEV sales increased, individual BEV sales fell 7.7%, reflecting (according to the Society of Motor Manufacturers and Traders) “slow growth, weak consumer confidence and high interest rates”. This prompted the SMMT to urge the Starmer government to provide incentives to allow private buyers to opt for pure electric vehicles.
Despite Jaguar's rebranding to please society's fringes, the British carmaker is shocked by a Court of Appeal ruling that car dealers have a “fiduciary duty” to tell customers about bonuses, commissions and bonuses they receive from lenders. cost.
Lenders responded by banning car dealers from charging commissions on 90 percent of vehicles purchased through auto loans. The decision could lead to car dealerships closing, forcing people to buy directly from the manufacturer, often sight unseen. But it could also lead to a sharp decline in car purchases as people get used to dealers, not bankers.
It remains to be seen how the incoming Trump administration will impact the battery electric vehicle market. Trump has repeatedly said that battery-electric vehicles can play a role, while disparaging automakers now dabbling in hydrogen fuel systems. But if subsidies are eliminated as expected, will the pure electric vehicle revolution only slow down or come to a screeching halt?
A lot may depend on how automakers respond to the shifting sands of time and money.
This article originally appeared in Real Clear Energy
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