There’s only one reason automakers like Ford and GM are backing away from ambitious EV plans: customers.
Contrary to the enthusiastic predictions of Elon Musk, environmental groups, and other industry and government “experts,” the love affair between EVs and American consumers appears to have fizzled after a honeymoon period of strong sales volumes.
Meanwhile, China is happy to serve consumers its competitors have ignored: In late 2022, China captured nearly 100% of Russia’s car market in just a few months.
With hybrids offering most of the efficiency without the range anxiety, these relatively expensive new products no longer prove to be so appealing.
Looking at the changes in market share, it is clear that the process of transitioning fully or even largely to EVs will take decades, not years.
This strong feeling of mine was backed up by a study from iSeeCars.com last year, which showed that cities and states where EVs have a new-vehicle market share above 7% are seeing sales growth much slower than markets below that level.
Media and government hype about the latest must-have technology only seems to work up to a point. Increasing EV share from 3% to 7% is much easier than going from 7% to 10%. 20%, 30% or more? That’s clearly a long way off.
Moving away from EVs makes obvious sense for US automakers, but don’t they risk losing ground to China?
Not necessarily. China already has an advantage in every way when it comes to EVs, from dominating the world’s lithium supply to aligning its manufacturing sector with the government to drive down costs. Before going head-to-head with them, we might as well strengthen our own position.
The best bet for American automakers is to sell Americans the gasoline and hybrid cars they want now while building a domestic EV supply chain, allowing automakers like Ford and GM to maintain healthy sales and profits while funding more measured and practical electric vehicle efforts.
They have already tried the shock and awe approach to flood the market and we have learned some great lessons from that. Now the question is how quickly can we adjust production to reflect true consumer demand.
Even China isn’t betting all on EVs, as it is acquiring the internal combustion engine technology that left-leaning European brands foolishly abandoned.
While Biden and Green New Deal enthusiasts try to impose a one-size-fits-all solution on Americans, Chinese automaker Geely is building some 15 internal combustion engine factories in Europe to supply super-efficient turbocharged four-cylinder engines to brands like Mercedes, Nissan, Renault and Volvo that are being squeezed by dwindling demand for EVs.
Some brands, like BMW, Hyundai, Kia, Genesis and Toyota, had the foresight to realize this was getting bad and continue to offer consumers choices, which helped boost their bottom lines.
Meanwhile, China is happy to cater to consumers that its competitors have ignored. In late 2022, China captured almost 100% of the Russian car market in just a few months. All China had to do was supply the good old gasoline cars that no one else was interested in producing. As a result, China experienced its biggest export boom in history.
Imagine that: innovating with new EV technology while serving the needs of consumers who aren’t ready for change.
This is called “hedging your bets,” and all smart players do it. The current administration might want to look into it.
