Despite the shortage, sales of electric cars are growing rapidly

Despite the shortage, sales of electric cars are growing rapidly

Americans are buying electric vehicles at record rates, undeterred by rising prices and long delivery waits, another sign that the twilight of the internal combustion engine is on the horizon.

According to industry consulting firm Cox Automotive, from April to June. Battery-powered vehicles accounted for 5.6 percent of new cars, still a small share of the market but double the number from a year ago. Overall, new car sales fell by 20 percent.

Companies like Tesla, Ford Motor and Volkswagen could have delivered more electric cars if they could have produced them faster. Automakers have struggled with shortages of semiconductors, which are even more important for electric cars than gasoline cars, and prices for lithium and other raw materials needed for batteries have soared.

“The transformation is real,” said John Lawler, chief financial officer at Ford, which sold 15,300 electric cars between April and June, up 140 percent from a year ago. “The demand for electric vehicles far exceeds what we can offer.”

At the same time, the popularity of electric cars has taken the industry by surprise and exposed flaws that could slow the transition to battery power, which is essential to curbing climate change.

One of the lessons for Ford and other automakers is that transitioning to electric cars requires a major overhaul of the factory and supply chains. To make the transition, they began underwriting advanced battery manufacturers, for example, and partnered directly with mining companies to obtain scarce raw materials. Ford is planning a $5.6 billion complex near Memphis that will build electric vehicles.

According to the consulting company AlixPartners, car manufacturers and suppliers have announced plans until 2026. investing more than $500 billion worldwide to upgrade its factory networks and supply chains. However, it will take several years for production capacity to meet demand.

The lack of public chargers is another barrier, especially for apartment dwellers who lack garages or private driveways to connect to. Many companies are competing to build networks and the Biden administration is providing funding, but they have caught up.

“The market is ahead of the charging network,” said Cathy Zoi, CEO of EVgo, which operates more than 850 fast-charging stations in the United States.

Electric cars remain much more expensive than their gasoline counterparts and out of reach for many buyers, even when fuel economy is factored in. The average price of an electric car in the United States is about $66,000, compared to $46,000 for all new cars. . One of the reasons is the price of batteries, which has risen due to a shortage of raw materials after several years of decline.

“To get to 15 percent of the market or 25 percent or 50 percent, we’re going to have to appeal to a much broader segment of the market,” said John Bozzella, president of the industry group Alliance for Automotive Innovation. . “I have a challenge here.”

While electric car sales are growing rapidly in the United States, Europe and China remain far ahead. Battery-powered vehicles account for more than 10 percent of new cars sold in Europe and about 20 percent in China. Government quotas and subsidies play a big role, but there is also a greater choice of cheaper models.

Government policy also plays an important role in the United States. California requires manufacturers to sell a certain number of zero-emission vehicles, and its residents drive nearly 40 percent of electric cars on U.S. roads. But the Biden administration’s efforts to promote electric cars nationwide, offering tax credits worth up to $12,500 to electric car buyers, for example, have met with strong opposition in Congress.

Sales in the United States will pick up as battery-powered cars become more mainstream, said Felipe Smolka, a partner at consulting firm EY who tracks the electric car market. People will be reluctant to buy fossil fuel-powered cars, he said, fearing they could become obsolete and lose resale value. Car manufacturers have largely stopped investing in internal combustion engine technology.

“The energy of this transition is already at a point of no return,” Smolka said.

Not all automakers share the electric car boom equally. Among traditional automakers, there’s a widening gap between those that have begun selling vehicles that can compete with Tesla’s popular models and those that haven’t.

Major automakers such as Toyota, Honda and Stellantis, which make Jeep, Chrysler and Ram, are not exclusively in the electric car market in the United States, although they have announced plans for battery-powered models. Toyota started selling the bZ4X battery-powered sports car earlier this year, but recalled some of the cars in June due to the risk of the wheels falling off.

Getting to market early does not guarantee success. The Nissan Leaf was one of the first electric cars to go into mass production, but the model sold just 3,300 in the U.S. in the second quarter, down 30 percent from a year ago. Nissan is replacing the Leaf with the electric SUV Ariya, which will go on sale in the fall.

General Motors, once considered the EV leader among traditional automakers, was derailed last year by the cancellation of the electric Bolt. There was a risk that the batteries could catch fire. The first of 2022 GM sold less than 500 bolts in the quarter. Sales jumped to 7,300 in the second quarter, but that was still down 20 percent from 2021. according to the data of the second quarter.

For companies with an EV range, the ongoing technological transformation is an opportunity to raise their profile. Ford and South Korean automakers Hyundai and Kia, which are corporate siblings, were the most popular EV brands in the United States this year, after Tesla.

Tesla remains a beatable company, but it’s showing signs of vulnerability. The company delivered more than 254,000 vehicles in the second quarter, compared with 310,000 in the first quarter, due to shutdowns and supply chain issues that affected its Shanghai plant.

Tesla’s second-quarter sales rose 26 percent from a year earlier, and the company said it produced more cars in June than at any time in its history, a sign that supply problems are easing.

Still, Tesla faces increasing competition from China, which has the world’s largest car market. Chinese automaker BYD, which also makes batteries, sold 70,000 electric-only vehicles worldwide in June alone. According to Berlin-based Schmidt Automotive Research, Tesla in the first five years of 2022. Volkswagen, Stellantis and Hyundai/Kia dropped sales volume of electric cars. (Tesla Model 3 and Model Y remain the most popular electric cars in Europe.)

A recent Bank of America analyst report said Tesla will dominate the market as traditional automakers launch dozens of electric models. They predicted that Tesla’s share of electric car sales worldwide by 2025 would be will decrease to 11 percent, and last year – 70 percent.

“Tesla’s dominance in this still-nascent market segment may be coming to an end,” Bank of America analysts said.

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