Why the EV Battle Is Brutal for GM, Ford, Other Automakers: Tesla Cuts Prices Again, Barriers to Entry Vanish, EV Entrants Muck Up High-Profit Pickup Truck Oligopoly

But what’s going on in the Wall Street Hype Machine regarding the EV space is hilarious, when you think about it for a moment.

By Wolf Richter for WOLF STREET.

Citi came out this morning and raised its price target for GM shares, which are already up 50% from a year ago, to $85, from $70, with a path to $100. What’s hilarious is the reasoning behind the increase in the price target: GM is getting serious about EVs.

In reality, the EV space is a brutal game within the zero-sum auto industry where the sale of each EV comes at the expense of a sale of an internal-combustion-engine (ICE) vehicle. In US auto sales, there has been a lot of turmoil but no growth for over two decades, and then in 2020, auto sales plunged to 1970s level. The only US automaker that grew was Tesla.

GM is finally getting serious about EVs in an all-out effort to avoid oblivion. GM has been dogged for years by declining revenues and declining global deliveries. In 2020, GM’s global revenues dropped by 11% from 2019, and by 17% from 2018, and by 21% from 2014. GM’s global deliveries in 2020 dropped by 12% from 2019, and after four years of declines, are now down by 32% from 2016.

Why the EV battle is brutal for GM and other automakers.

Automakers have to fight that battle in order to stay relevant. They cannot dodge it, they’ve been forced into it at first by Tesla, and now by a slew of other startups, and government incentives and regulations globally have been pushing in that direction, and they know if they fail in that battle, they will become irrelevant.

Legacy automakers’ control of the market fell apart, barriers to entry vanished. EV powertrains are far simpler to design and build than modern ICE powertrains. The EV components are being commoditized across supply chains. The hard part is the battery-cell technology, but automakers can buy the cells from battery suppliers (which is what Tesla does). This lowers the technical barriers to entry.

And the flood of money handed to EV startups and to Tesla is completely tearing down what remains of any barriers to entry: The companies with deep pockets that can lose nearly unlimited amounts of money on getting EV models on the road and scaling up are now the startups!

Legacy automakers compete with startups that are designed to lose tons of money for years. But legacy automakers do need to make a profit. Legacy automakers are going to get underpriced by companies that will purposefully generate losses in order to gain market share – in order to gain scale, the mantra of investor-funded startups these days. Along the same principle as Uber’s strategy to undercut taxi fares and generating huge losses that continue to this day, and thereby becoming the biggest taxi enterprise in the world, and also the one with the biggest losses. Legacy taxi companies that couldn’t afford to lose money for years didn’t fare well.

This may seem unfair, but that’s how it is these days. Automakers will have to compete on that basis, and that means only one thing…

EV prices are already getting cut. Under pressure from the dozens of EV models coming on the market, Tesla already cut prices in 2020. And yesterday, on its website, it cut prices further, this time for its near-mass-market models at the lower end where it is coming under pressure from other automakers:

  • It cut $2,000 off the Model Y Standard Range, to $39,990
  • It cut $1,000 off the price of the Model 3 Standard Range Plus, to $36,990.

Tesla isn’t cutting prices because it wants to make less money. It’s cutting prices to defend its market position and its sales against the new competition coming on the market that is specifically targeting its models.

In the US, Tesla is the dominant EV maker, and other automakers have to dance to its pricing tune. If Tesla cuts, they have to cut. Legacy automakers have been targeting Tesla’s older price points with their competing models, and they now have to rejigger their pricing downward.

Price cuts mean lower than expected profit margins and earnings prospects from EVs for all manufacturers. EVs already have a notoriously low profit margins due to the expense of the battery – though the powertrain itself and everything around the powertrain is far cheaper than an ICE powertrain and all the systems that go with it.

These price cuts mean that EVs are no longer considered a premium product, but are now a competitive product where prices matter – prices compared to ICE vehicles and to EVs.

The shift to EVs will remain a giant money-suck for legacy automakers for years to come. Both GM and Ford have announced investments exceeding $20 billion each over the next few years in order to get their EV programs off the ground. This includes developing the hardware and software, and converting manufacturing plants to EV production. Volkswagen said it would invest $86 billion into its EV and related programs over five years.

Tesla burned through more than $20 billion in investor money to get where it is today. Tesla raised most of this money from share sales. The legacy automakers will have to rely on their cashflow and on borrowing money via bond sales.

In essence, the shift to EVs has been and will continue to be a giant money-suck. It will take years to settle down. And legacy automakers cannot dodge it. The market has turned, and legacy automakers now have to compete in it, or become irrelevant.

Ultra-fat profit margins in the Oligopoly of ICE pickup trucks are being targeted by EVs. Everyone is entering the EV pickup space. The way to reach scale is to undercut competition on price. ICE pickups have been where Ford, GM, the former Fiat-Chrysler, and Toyota have made much of their money in the US. These are hugely profitable model lines with high prices and relatively low production costs, and legacy automakers didn’t challenge each other on price. There was enough for everyone, the thinking went, leading to obscene profit margins that everyone loved, and that all automakers bragged about in their earnings calls. And Americans were willing to pay those profit margins.

But the new entrants in the EV space don’t care about that. They want to reach scale. They want to ramp up. And they’re going to do it on price. Pickups are the low-hanging and juiciest fruit because of their high prices. With their frame rails and their higher weight, pickups are ideally suited for EVs. And electric motors have flat torque curves, which is ideal for towing. Ford, GM, and Fiat-Chrysler are all coming out with full-size e-pickups to defend their turf.

Full-size pickups are the bestselling vehicles in the US, and with their obscene profit margins, they’re where the earnings of legacy automakers are most vulnerable. That was a gravy train, run by an oligopoly of four companies, and EVs are going to muck it up.

It will take years to ramp up and play out, and until the new-normal settles in, tons of money will be invested and lost in the EV space, while profits of legacy automakers from their high-profit ICE trucks are going to get gutted.

It’s laudable that GM and Ford and other automakers are finally taking EVs seriously, after brushing them off for a decade. But this is a survival effort. Tesla and now many new companies – hundreds of them in China alone – are forcing legacy automakers into this battle to defend their turf. Government regulations around the world are favoring EVs. And automakers know if they fail, they will be tossed into the big scrapheap of automakers that didn’t make it.

Financially, it’s going to be a long hard slog for GM and other legacy automakers, in an industry where there has been zero growth in developed economies in over two decades, and where each EV sale is therefore coming at the expense of a more profitable ICE vehicle sale.

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  222 comments for “Why the EV Battle Is Brutal for GM, Ford, Other Automakers: Tesla Cuts Prices Again, Barriers to Entry Vanish, EV Entrants Muck Up High-Profit Pickup Truck Oligopoly

  1. stan6565 says:

    Financialisation destroying physical R&D. Once the creators of old progress have been bankrupted, the destroyers will start to think about creating again.

    Mmm, fudgy

    • Tom S. says:

      Agree 100%. Overdesigned underperforming cellphones on wheels. In a way, the automotive industry deserves to head in this direction with the way they punished American suppliers and workers. But…mechanics isn’t tech, where a simple patch can be released the next day…there is still plenty of time for Tesla or any of these startups to have that major screwup that will crush the fledgling industry.

    • Dr Harry Mertin says:

      Gosh. I would not call your article untrue, but I would call it poorly researched and poorly presented.

      Just one example… the GM sales decline. It is true. But it was intentional as GM withdrew from markets like Russia and sold Opel, along with ending other relationships. That saved expenses, freed up lots of capital and is paying off with share value increases and better profits. Yet you made it sound like it was a toilet flush. Shame on you. Your effort has now made me question your knowledge in other areas you wrote about. I know the car business pretty well and you sir, stepped in it and tracked it all over the house. I know less of the other subjects you wrote about … but now I have a more jaundiced eye on your journalistic credibility. My bet is that you can do better sir. Please.

      • Wolf Richter says:

        Dr Harry Mertin,

        “Intentional” revenue decline? Hahahahaha….What unadulterated horse crap. I didn’t know GM had paid trolls out there.

        GM had taken a bloodbath on Opel for years, and tried to get rid of it, and tried to shut it down during the Financial Crisis, but Merkel made a deal with GM to keep it running, and Opel’s revenues declined too. And GM finally got rid of it in 2017. And since then in 2018, 2019, and 2020 global revenues continued to decline even though the Opel story ended in 2017. And in GM’s overall global revenue picture, Russia was a flyspeck.

        Here is the long-term decline in deliveries in Europe and Russia. This wasn’t anything new. GM has proven to be a shitty operator in Europe for many years (the chart is from a piece I wrote a while back, so it’s a bit outdated, sorry, but in 2020, GM’s deliveries in the region were still 0):

      • Javert Chip says:

        Dr Harry Mertin

        I sure hope you’re an academic “Dr” (ie: PhD) as opposed to a medical doctor (ie: MD) where ignorance can kill.

        In the latter half of the 20th century, GM and the UAW were locked in a death struggle; in 2009, the UAW (and Obama administration) won with GM’s bankruptcy.

        GM market share at the beginning of the 1960s was close to 50%, but dribbled on down year by year to under 17% in 2000. From around the beginning of the 1980s, GM actually never earned its cost of capital. It literally slowly bled to death.

        in 202-00-2021, GM is essentially reproducing that 20th century experience.

        Every year, GM comes out with a bright, shiny new story, and every year (on avg) they lose market share. It’s Deja Vu all over again.

        The problem is GM culture. Nothing will substantively change until thousands of legacy GM managers are gone (I’m not just talking a few executives). Elon Musk has more creative ideas in a given week than 1,000 GM “product developers” have had since the 1960s.

        • Boatwright says:

          Where is Harley Earl when they need him? GM’s designer of tail-finned rust buckets led the company’s annual styling presentations. Design after the introduction of the automatic transmission in the early 1950’s stagnated. By the 1970’s GM cars were complete crap.

          Meanwhile Japanese automakers were focusing on quality and led the market with steady improvements in functionality and reliability. IMO, GM is a sclerotic lost cause.

      • MarkP1950 says:

        While the article IS poorly researched, his past articles are much worse. He still fails to fully understand the growth.
        It’s less EV against EV,
        There is NO “EV market”. EVs are taking market from ICE. New GM sales are coming out of GM ICE sales. Same with ALL other ICE makers.
        GM cutting off ICE sales by 2035 is NOT “ALL OUT”.
        EVs only have to take a small market share to turn the ICE market into a glut. Falling ICE prices means it will be hard to get rid of your ICE car.
        The ICE glut will come faster than you think. Many are predicting 2025. ICE technology will become a heavy weight for legacy makers.
        Sort of explains your “WTF” questions.
        Only restraint for EVs right now is battery supply.
        Legacy thought the switch to EVs would be easy. They are finding it hard.
        GM and a million EVs by 2025? They are in trouble.
        “It will take years to ramp up and play out”
        Growth follows a S Curve and becomes exponential. Which explains your WTF charts.
        You are doing better and do more studying.

        • Wolf Richter says:

          MarkP1950,

          Sheesh. It would be helpful for you to read what I said before you comment on what you just think I said without having read it. At least read the key points before posting, including the item about the auto industry being “zero sum” and that every EV sale comes at the expense of a more profitable ICE sale.

        • Dilettante77 says:

          The author has already said that EVs will fill the ICE market not create a new one. There will be an ICE glut but not to the extent you are claiming. Most consumers do hire purchase or some kind of PCP.

  2. 2banana says:

    Wolf – you won the internet for today.

    Perfect analysis.

    I would have added something about insane unions are even insaner pension costs that Tesla doesn’t have to deal with…but that may have been a yellow flag for piling on.

    • Paulo says:

      Great article and analysis. Very interesting and certainly reflects Wolf’s automotive history and interest.

      I see Tesla, and would be inclined to buy a Nissan Leaf. I suppose most urban (cowboy) PU truck drivers rarely use them as intended, but I’ve operated, owned, and worked trucks for almost 50 years. My first vehicle was a PU at age 16. I can tell you this much for sure, you won’t see Tesla pickups on real work job sites or in the ‘bush’ (as we say on the west coast). Next week I have to haul about a ton of posts and beams. It’s all going on the rack and hanging over, and yes the truck might get scratched. You think I would do this to a show piece? Would anyone? Will people use a Tesla to launch their boat or tow a travel trailer? I didn’t think so.

      Oh yeah, my truck is a 19 yer old CMC 1/2 ton. Great truck.

      • Anthony A. says:

        Paulo, existing and companies with no product have been advertising an EV pickup for “how many years now”? And one has not surfaced on the retail end yet. (it’s those damn batteries!)

        I’ve had maybe 6 or 7 pickups in my life and the last few were for oilfield work. I beat the living hell out of them and put them down wet at 300K miles. I doubt very much that an oilfield equipment or oil/gas producing company will use an EV pickup for “work” as where they go, there are no charging stations. Maybe the CEO or his pretty secretary will drive one to the office?

        I would guess that the first generation of EV pickups will be used for show for the “fanboies” that can afford $100 K for a decked out short range 1/2 ton pickup to replace their current gas hog.

        The current ugly pickup that Tesla has shown off has a lot of pre-orders, and it sure is different. My gut feeling is that unit will be so heavy and big that it will be classified as a 3/4 to one ton rig. But I’m an old fool so what do I know anyway? LOL

        But that’s where we are today! And GM, Ford, Ram and Toyota are in trouble as Wolf so elegantly points out.

        • Jeff says:

          Seems reasonable to assume that OIL FIELDS would be the last place to adopt an EV anything mode of transport…

        • Anthony A. says:

          Jeff, there are lots of other businesses that use pickups for work details and those details are not like your morning coffee run to Starbucks.

        • Javert Chip says:

          Anthony A

          I understand you actually work your truck.

          But take a good look around at the rest of the driving public: probably 75% of trucks will never do what you do to your truck.

          My next-door neighbor has 2 of them (both crew-cabs; wife drives s van).

          I drive a BMW M8 , but I’ll never race it (well, you know what I mean…).

        • Anthony A. says:

          JC, I do understand and my point was there will still be a solid demand for ICE pickups and other construction equipment that are not up to the task. Here in Texas I am surrounded with Big Truck cowboys with tall pickups that are decked out and their 23″ tires never have seen grass or dirt!

          I suspect most of those Big Truck guys won’t want a Tesla EV truck, but maybe a legacy one if they show up on the scene.

        • Michael Cannon says:

          Wherever you park your EV work truck at the end of the day will probably have electricity to charge the truck, so it will be fully charged every morning. Tesla’s $39K truck will have 300 miles of range, with a body made from 1/8″ stainless steel. The batteries and drivetrains in many of their cars have exceeded 400K miles, and I expect as much from their trucks. Don’t underestimate Tesla’s engineering…

      • Bobby Bittman says:

        Paulo,

        I suspect this generation of urban and rural planners view your GMC truck as a rolling cigarette. Nothing taxes, regulations and a sustained shame campaign won’t fix.

  3. Nicko2 says:

    GM has over $100 billion in corporate debt. It’s a zombie, Tesla is the future.

    • DawnsEarlyLight says:

      Yes, Tesla is well positioned as the leading Vampire.

    • roddy6667 says:

      Tesla only keeps its door open by two methods. One is reselling its credits, which are paid for by the taxpayers. The Bubble stock is the other source of revenue, courtesy of wide-eyed hipsters who worship Musk. If Tesla is the future, all is lost.

      • Wolf Richter says:

        roddy6667,

        The interesting aspect of this is that, as other automakers ramp up EV production, they too will be getting these pollution credits, and fewer of them will find it necessary to buy them from Tesla. This could lead to a situation where Tesla can no longer get as much for these credits, or cannot sell them at all, and will have to use them itself to lower its tax bill, but given how much money it lost over the past 10 years, Tesla might not have a tax bill for years to come.

        • MCH says:

          Are the pollution credits limited to automakers? Meaning can Tesla only sell those to other automakers, but not to for example, airlines? Just curious, either way, you’re right above the expanding supply of carbon credits. I wonder what that market is like, and what are the supply and demand around it.

          By the way, just one point, one has to appreciate the genius of Al Gore in all of this, it all started with An Inconvenient Truth, but he jump started this carbon trade scheme, I am curious to see how much he made from it. I am not slamming him by the way, I think he was brilliant in turning a one trick political issue into a way to make a fortune.

        • Wolf Richter says:

          MCH,

          Would be good to have an international tax expert chime in here.

          I remember reading a story some time ago about Fiat Chrysler in Europe buying pollution credits from Tesla. There are numerous of these programs out there in different countries.

          I don’t think “carbon trading” has anything to do with this. Tesla’s “regulatory credits,” as it calls them, are tax credits that it sells to other companies. They’re not traded on exchanges.

        • MCH says:

          If only Tesla could sell those same credits to United, American, Southwest, etc. That would really help boost their revenues… heh heh, but then again I don’t know that they aren’t.

        • MarkP1950 says:

          Credits are extra.
          They accumulated enough cash from credits to build a factory thank you!
          Lost money? Tesla is the only automaker with positive cash.
          You better do more study.

        • Wolf Richter says:

          MarkP1950,

          Good lordy. I understand from your comments that you actually never read my articles, but just comment on them pretending to have read them and pretending to know what’s in them and what’s not in them. This gets really tiring after a while. So this from my article last week:

          “Tesla was profitable in 2020 for the first year ever. It made $721 million in net income, thanks to its only profitable business, selling pollution tax credits it obtains from various governments – “regulatory credits” – to other companies. In 2020, it sold $1.58 billion in regulatory credits to other companies. Without those regulatory credits, it would have lost $860 million.”

          https://wolfstreet.com/2021/02/10/tesla-gm-ford-together-in-ludicrous-mode-wtf-charts/

      • Bobster says:

        It seems to me the Tesla has three methods…
        Tesla bought $1.5 billion in bitcoin, and then announced doing so to the world. Then bitcoin goes up by, what, 35%? Telsa made $500 million in a couple weeks. This may be more than Telsa ever makes selling cars.

        • Javert Chip says:

          Bobster

          Nope.

          Tesla 12/31/2020 Net Income to Common Shareholders was $690 Million.

        • char says:

          Buying bitcoin for dollars is easy, selling them for dollars is hard. And the float isn’t that big

        • Bobby says:

          Javert, your number is incomplete there and Bobster may still well be correct in the long term. What is Teslas accumulated profit/losses, not just for 2020 but life to date (looks like something exceeding 5b in losses)

        • Javert Chip says:

          Bobby

          Nope; 12/31/2021 $690M Tesla profit (“Net Income Shareholders”) comes from Yahoo Finance (which comes from audited financials).

          I’m expecting someone to tell me you can’t trust audited financials and $690M is REALLY less than %500M…yada, yada, yada.

          You and the tooth fairy just need to come up with a better story.

          Link:https://finance.yahoo.com/quote/TSLA/financials

        • Javert Chip says:

          Make that 12/31/2020.

          My bad.

      • james wordsworth says:

        ICE manufacturers only keep their doors open due to the obscene subsidies given to oil and gas producers that keep gas prices ridiculously low and therefore permit people to keep buying gas guzzling pickups and SUVs. If gas was priced properly EV’s would be everywhere now.

        Tesla is still in its startup phase and still optimizing production and building new modern plants. With the new factories opening watch them drop costs further and further and then keep dropping prices. The legacy ICE producers are toast. Watch a few Sandy Munro videos about how Tesla relentlessly is improving its product and its production processes (compared to glacial legacy manufacturer speeds) and see that this game is just getting started.

        • J Smith says:

          Oil and gas companies do not get subsidies, they are one of the most taxed businesses in the world.

        • Wolf Richter says:

          J Smith,

          They do get subsidies, including massive tax benefits written into the tax code, and being able to drill on federal lands for minuscule annual rent per acre, and a minuscule royalty. The good thing is that in Texas, most of the drilling is on private land. But that’s not the case in some other states.

        • dex3703 says:

          Bingo. Gas should be at least $20/gal.

        • Happy1 says:

          Yes, oil and gas is subsidized, but green energy for transportation is subsidized to a far greater degree. In the poorest countries, where there are no subsidies, green energy for transportation is a nonstarter because it is much more costly.

        • Bob says:

          Wolf, you’re wrong. Oil companies don’t get subsidies in the U.S. They do however get to write-off the costs of drilling a well. Just like every other business gets to depreciate capital expenditures. They also get tax credits for R&D spending, again just like every other company in the the U.S. However, they pay a myriad of taxes, royalties, severance, extraction, and other special taxes to just about every tax district in America. Signed, former tax accountant of large oil company headquartered in California.

    • topcat says:

      Well, if we were playing Top-Trumps I would top-trump you with Volkswagen with the biggest debt in the world, $192 Billion. Interestingly 5 of the top 10 world’s most indebted companies are in the car business:
      Volkswagen $192 billion
      AT&T inc. $176 billion
      Mercedes $151 billion
      Toyota $138 billion
      Softbank $135 billion
      verizon $129 billion,
      Ford $122 billion and
      BMW $114 billion;
      Comcast $104 billion
      Anheuser $96 billion

      • Cas127 says:

        Useful list.

        Also it is interesting to note that the mega debtors seem to be responsible for a disproportionate pct of total aggregate Corp debt (I think…it has been a while since I looked at the aggregate figures…but I remember being struck by the mega debtors’ share).

        I also recall heavy debt concentration in just a handful of industries as well.

        • char says:

          Knowing what their car-leasing arm debt is would be more useful than the raw numbers. Especially considering markets like the UK were everybody leases and nobody buys.

    • David Jacobs says:

      if it is zombie why is GM’s stock price skyrocketing?

      • sunny129 says:

        D.Jacobs

        Check out the chart of GM for the last 5 days, 1 month.
        It is sliding. So is Ford!

      • Javert Chip says:

        David Jacobs

        For exactly the same reason Tesla stock levitates – hope springs eternal in the human breast, to coin a phrase.

    • Jack says:

      A future zombie, give it a year :)

    • Javert Chip says:

      Nicko2

      “…GM has over $100 billion in corporate debt. It’s a zombie, Tesla is the future…”

      GM debt of 104B is 71% of revenue and 88% of total capitalization
      TSLA debt of 13B is 88% of revenue and 72% of total capitalization

      Corporate debt in’t killing GM, declining market share will. At least we’d both agree, for the moment, Tesla has infinitely better access to additional capital.

    • MJ says:

      How long did it take for Tesla to make a profit? Did it just?
      Are even they behind the curve of vehicle-sharing, and Uberesque transport once the economy makes its heavy post-pandemic shift?
      Is the oil and gas industry going quietly?
      Their lobbies in Congress?

      Honestly wondering.
      What do you think Wolf?

  4. ej says:

    nice one wolf.. the future comes rather you want it or not! evs and fsd are immeasurable forces that will kill old industrys and create amazing opportunities in forward thinking types. throw some block chain on it and who knows how this plays out!

    • sxs says:

      Hmmm… I wonder if you even know what you are speaking about. There is a valid chance FSD is not going to happen at all. And throwing a blockchain at a car… What does that even mean? Blockchain per se does not do any good. It is an energy intensive way to store data redundantly. Just because is sounds cool and most people don’t really understand it, it does not ensure that it is very important in the future. Blockchain is just a pretty sophisticated communication protocol it does not have intrinsic, automatic value creation modes embedded :-D

      • Wolf Richter says:

        sxs,

        I read the blockchain comment as humor. I thought it was pretty funny. I thought I could take a set of those blockchains with me to the mountains when we go skiing, and then mount them on the tires when required to do so. I heard they work really well in ice and snow 😁

      • Javert Chip says:

        sis

        Ok, what is FSD?

        And yes, I’ve Googled (actually (DuckDuckGo’ed) it and among it’s many meanings, nothing jumps out as being relevant in this conversation.

  5. raxadian says:

    Don’t electric vehicles have a weight problem? As in the more weight the less the battery lasts without recharging? That makes heavy EVs a bad idea.

    Granted it does happen wirh fuel too nut is way easier and cheaper to get fuel that to recharge an EV. You can get fuel delivered to the middle of nowhere, if your EV loses power in the middle of nowhere? Bad luck.

    I feel like EVs will become popular workdwide for small vehicles that aren’t used to move too far away, aka EVs from cities to stay in cities while remote places will keep using fuel vehicles out of convenience.

    I can see Japan going full EV in less that twenty years but not the USA, the distances involved won’t allow it.

    • Antwan says:

      The only real issue facing EVs is the inconvenience of long haul towing. They are far superior for everything else, especially for performance and larger vehicles. Want performance? A 32mpg Impreza becomes a 18mpg WRX that requires premium. You’re looking at 120% more in gas cost. Meanwhile, a 118mpge Bolt becomes a 113mpge Model 3 Performance. Basically the same price in electrons. Range anxiety isn’t a valid excuse anymore for 90% of people. People who actually drive 500 miles a day regularly might just buy hydrogen.

      • raxadian says:

        You forgot fuel prices are ridiculously low right now.

        EVs have their own problems that make adopting outside big cities difficult.

        • Antwan says:

          Fuel prices low? Oil is $60 a barrel and gas is $3.70 in Cali. Not to mention price increases of 20 cents a gallon are being floated around due to the refining disruption in Texas.

    • Fat Chewer. says:

      Wow! Analysis of the future without a single reference to climate change. That’s what I call an all encompassing analysis without tedious and inconvenient facts to spoil your morning reading. Well done.

      • raxadian says:

        What killed coal is economics not caring about the Earth.

        Also if you are in freaking nowhere USA were are you going to charge your electric vehicle?

        Mass adoption of EVs needs a infrastructure that’s just not here yet.

        • sunny129 says:

          It cost nearly $900 for full charge of Tesla in some places inTexas, couple days ago!

          Mind you the failure ‘Texas’ grid affected small portion of many other 15 states, besides most of Texas.
          Wind turbines froze. Natural gas pipe(head ends) line froze. Nulclear plant came to stand still.

    • char says:

      All cars will be electric in 20 years. There maybe cars that will have a generator to power the vehicle outside zero-emission zones (like all towns outside Texas) but it just be cheaper to bold a generator on an EV than a battery on an ICE

      • BaritoneWoman says:

        You have enough charging stations in the urban areas? Too many people who live in apartments/condos don’t have access to one.

        • char says:

          That is a now problem. With enough time, like 20 years, easily solved. Also cities will be zero-emission zones. You couldn’t even run an IE in one*

          * except with a lot of red tape. good for a parade of old timers, not for daily usage

        • Anthony A. says:

          Char, in Houston, there are 2,800 apartment complexes owned by individuals, companies, financial institutions, and hedge funds. How do you get them to install charging stations?

      • Just had a laugh imagining someone driving a Tesla with a Honda generator strapped to the roof

      • MitchJ says:

        Why is it cheaper to bolt a generator onto an Ev?

        • Wolf Richter says:

          MitchJ,

          That is a joke, recounted millions of times daily for many years by anti-EV folks. It’s not a funny joke anymore. By now it’s just a stupid joke.

      • Happy1 says:

        Put this on your calendar and check back. There will still be lots of ICE vehicles in 20 years.

  6. David says:

    All of this made possible possible only by capital market distortions arising from “Meme” stocks such as TSLA etc. and securities fraudsters, and the ZIRP/QE infinity trap built by PE Powell and predecessors. The end result is a near mathematical certainty. Fix the money, Fix the system.

  7. Antwan says:

    Governments are throwing obscene amounts of money into subsidizing EVs pushing it to almost price parity. For a lightly used 2020 car locally, I’m seeing:

    Toyota Corolla XSE: $20,300
    Fully Loaded Kia Soul EV: $26,700

    The Soul is more advanced and sedans are out of favor. It’s basically price parity at this point with the savings on gas, free charging at hotels, and certain maintenance if you live somewhere with high gas taxes such as California or abroad. With the potential of carbon taxes and city bans of non-EVs, I don’t see why anyone would buy a new ICE. As usual, Hyundai’s Genesis experiment is always a step late by choosing to roll out gas guzzling SUVs now and sedans into an SUV market in the past few years.

    • nick kelly says:

      Hyundai is Kia’s parent co.

    • sunny129 says:

      Just be aware:

      The electricity shortage in Texas amid the cold snap has sent spot electricity prices soaring so much that the surge in power prices equals a cost of $900 for charging a Tesla.
      zh

      • jc says:

        zerohedge jumped the shark a long long time ago

      • Wolf Richter says:

        Only if you’re one of the 29,000 hapless Griddy customers.

        • dirk says:

          Some Texans use 2021 Ford F-150 hybrid pickup trucks to power homes amid winter storm:

      • MarkP1950 says:

        Aging Texas infrastructure.
        RethinkX has developed a plan to convert to 100% solar/Wind/Batteries…. With HUGE benefits.
        Start with 35-90 hours of battery storage.
        Then add 3X-5X the generating capacity of solar/wind.
        The result is massive extra power most days. And plenty of power for the bad days.
        And power very cheap or free…
        Add 20% to that and power cars and homes and industrial.

        • Anthony A. says:

          You mean the batteries and charging equipment is free? Who pays for what?

    • JC says:

      I’ve been back and forth with a nearby chevy dealer in NY.

      They have a dozen 2020 Bolt EV’s LT trim all the packages and DC Fast charge option, including dealer discount, gm discounts, NY $2k credit for $23,999, GMcard is offering another $3k credit, so for $21k, you get a fast charge equipped EV with 259mi range brand new.

      That Kia Soul EV has 111mi range, not in the same league.

      • Antwan says:

        The 2020 fully loaded Soul has 250 miles of range. A 3 year old Soul with 111mi of range can be had for $15,000 or less. But yes, EVs can be had at very competitive prices now.

        • JC says:

          I didn’t know they made make a 200+mi range soul. A quick search reveals it does not exist in the tri-state area of New England. In fact, there is 1 count-em 1 new Soul EV’s listed on Autotrader and it’s a leftover 2018 with a range of 111mi’s.

          It sure looks like the Soul EV after 2018 is vaporware.

    • MitchJ says:

      To be fair you need to compare new vehicles.

    • Happy1 says:

      ICE vehicles are more than 90% of new vehicles sold. So you are in a very small minority. Take away tax incentives and that minority shrinks.

  8. Robert says:

    “EV powertrains are far simpler to design and build than modern ICE powertrains. ”

    Hmmm. How simple? If simple enough you could have a strong kit car market, or you might be able to just walk into a shop and choose your chasis, battery and specs all buit from 3rd party parts. Could be done in 24 hrs.

    I think the time has come for a modular auto design that is not only fast, but allows you to swap out the old parts of the vehicle easily. Would be very environmentally friendly, although the NTSB might complain.

    Doesn’t sound like you want to be owning stock in any legacy car makers at all.

    • max says:

      Vaclav Smil, professor of Environment and Environmental Geography at the University of Manitoba in Winnipeg, has written a new book called “Energy Myths and Realities.” In the book, he looks at a number of things he considers myths:

      1. The future belongs to electric cars

      Let’s look at a few things Vaclav Smil has to say:

      Electric Cars

      Smil points out that electric cars have been around a long time and are still expensive compared to internal combustion cars. But his major concern seems to be that the amount of additional electricity required would be more than could reasonably be added within a short time frame. And, given the limitations of renewables, there would probably need to be a big ramp-up in fossil fuel use, to accommodate the additional cars.

      According to Smil:

      An electric car whose size would correspond to today’s typical American vehicle (a composite of passenger cars, SUVs, vans, and light trucks) would translate to 3 MWh of electricity consumption.

      In 2010, the United States had about 245 million passenger cars, SUVs, vans, and light trucks; hence, an all-electric fleet would call for a theoretical minimum of 750 TWh/year. . . The charging and recharging cycle of Li-ion batteries is about 85% efficient, and about 10% must be subtracted for self-discharge losses; consequently, the actual need to be close to 4 MWh/car, or about 980 TWh of electricity per year. This is a very conservative calculation, as the overall demand of a midsize electric vehicle would be more likely around 300 Wh/km or 6MW/year.

      But even this conservative total would be equivalent to 25% of US electricity generation in 2008, and the country’s utilities needed fifteen years (1993-2008) to add this amount of new production. As this power for electric cars would have to come on top of the demand growth by households, services, and industries, it would be exceedingly optimistic to expect such an increment could be in place in less than twenty years.

      He later goes to explain how much fuel would be needed for all this.

      The average source-to-outlet efficiency of U. S. electricity generation is about 40 percent, and adding 10 percent for internal power plant consumption and transmission losses, this means that 11 MWh (nearly 40 GJ) of primary energy would be needed to generate electricity for a car with an average annual consumption of about 4 MWh.

      This would translate to 2 MJ for every kilometer of travel, a performance equivalent to about 38 mpg (9.25L/100 km)—a rate much lower than that offered by scores of new pure gasoline-engine car models, and inferior to advanced hybrid designs or to DiesOtto designs. . .

      He explains that there would be no CO2 savings in all of this, unless renewable sources were used for all of the additional energy required. He also notes that a European report by the European Federation for Transport and Environment called How to Avoid an Electric Shock offers analogical conclusions. A complete change to electric cars in the EU would increase European electricity consumption by 15%, and would not lower CO2.

      https://www.resilience.org/stories/2010-10-18/vaclav-smils-energy-myths-and-realities-review/

      • Wolf Richter says:

        max,

        That book came out over 10 years ago and was probably written a couple of years before then, so maybe 2008. Since then, EVs have arrived in fairly large numbers, and they work just fine, and electricity consumption in the US has fallen since then. This Vaclav Smil appears to be full of horse crap, even back then.

        You sure had to try hard and diligently dig 10 years deep to find someone like that to quote here to support your point of view.

        • Ted says:

          Yeah Wolf but you gotta admit Vaclav is a pretty cool nmae.

        • Migrant Worker says:

          Wolf,

          The problem that Smil does not touch upon is the lack of materials for building a replacement EV fleet in the first place. The requirements have been calculated for the UK in 2018, assuming the use of “the most resource-frugal next-generation NMC 811 batteries”. It would take:

          “just under two times the total annual world cobalt production, nearly the entire world production of neodymium, three quarters the world’s lithium production and at least half of the world’s copper production during 2018”

          To bulid a replacement EV fleet (still passenger cars only) for the entire world, “based on 2018 figures, annual production would have to increase for neodymium and dysprosium by 70%, copper output would need to more than double and cobalt output would need to increase at least three and a half times”.

          If you also want to produce the electricity for these (passenger) cars, then you have to build some more structures. If you happen to have “a further years’ worth of total global copper supply and 10 years’ worth of global neodymium and dysprosium production” then you can power the world’s EV (passenger) fleet with windfarms. But if you’re lucky enough to have “over thirty years of current annual tellurium supply” just lying around, then you can power them with solar panels instead.

          Either way you would still need to meet “substantial demands for steel, aluminium, cement and glass”. Oh and supplies of those funny-named thingies like tellurium (lol!) and dysprosium (lmao!) are already considered “critical” for reasons such as “natural scarcity or their recovery as minor-by-products of other commodities”. And (passenger) car industry would have to compete for those materials with other industries which you may consider crucial for modern lifestyle, such as electronics, metallurgy, electricity transmission and so on.

          So TL;DR: an EV replacement for the current-day ICE vehicle fleet will not be built.

          Migrant Worker

        • Bill not the Science Guy says:

          Wolfe, exactly where is Prof. Smil wrong? Are his calculations of the number of joules required to move an EV wrong? Or the losses in charging a battery? Maybe it’s the amount of resistance in electron transmission that’s incorrect? Finally, having been written 10 years ago is simply an ignorant argument. Most of the works describing energy and electricity was written over a hundred years ago. Truly, you are an anti-science troll.

        • Wolf Richter says:

          Bill not the Science Guy,

          It’s total BS. He doesn’t even understand how EVs work. For example, regenerative braking, where the electric motors brake the vehicle and thereby charge the battery. An EV with 300 hp in electric motors can generate a lot of energy when braking, much of which (not all) is being recaptured. This is a huge factor, particularly in urban driving where most of the driving in the US occurs. And the simple fact that EVs never idle.

          ICE engines are inherently inefficient. A stationary big diesel running at a constant speed at its optimal rpm, the most efficient piston-type ICE engine there is, runs at about a 35% thermal efficiency. The rest of the energy is wasted. Auto ICE engines don’t get anywhere near that. When idling, they’re 0% efficient.

          Extrapolation the energy consumption by an ICE vehicle on a simple theoretical level to an EV is braindead.

          People have said for years that EVs cannot work, will never work, will never be economical, and will never be supported by the grid have been dead wrong for all these years, and continue to be dead wrong, day in and day out. I don’t even know why this old braindead crap is still being dug up and cited.

          I tell people all the time, don’t buy an EV if you don’t want one. There are plenty of other choices out there. But don’t make a fool of yourself with your arguments.

      • Tim says:

        This doesn’t take into account residential solar energy storage and night-time charging. All power doesn’t have to come from the grid.

    • KGC says:

      I think there’s something to this. Kit cars have kind of faded, but in the 60-70’s they were not uncommon. Personally I could see someone taking a basic body design and building a slightly lower tech platform that could be manufactured as “snap-together” for the DIY crowd. I’d consider one.

      What I want is basic transportation, not $50,000 rolling media platforms. I think the company that can come out with the Miata of EV’s is going to have a real winner.

      • Ethan in NoVA says:

        There have been conversion kits to EV certain cars for a while. I ran into someone with an electric BMW Z3. He said that when the hurricane hit NJ all the people were buying up the Nissan Leaf batteries from the insurance companies that were totaling the flooded cars. That is where his batteries came from.

        Obviously it’s no where as high tech as a modern EV car since the vehicle electronics are still old and no regen breaking and such. But you might be able to get around the EV taxes and the gas taxes since the car wasn’t an EV and you are no longer buying gas.

        • KGC says:

          The problem with converting a ICE to EV is you lose a number of the advantages of EVs. What I’m anticipating is DIY kits that bolt onto an EV platform; cheaper, more basic, and readily adaptable.

          Think about the potential for a Meyers Manx on an EV platform.

    • MarkP1950 says:

      Building EVs are so easy. Where are all the 300 mile range EVs at? LOL!
      Teslas…

      • Anthony A. says:

        There is a lot of engineering and testing that goes into building ANY road worthy and SAFE vehicle. This is not something one with few skills can build in their garage over a couple of weekends.

    • Sir Eduard R. Dingleberry III says:

      Not fully sold on EVs yet but legacy automakers are definitely toast. Even hired Will Farrell as their pitchman on that Super Bowl commercial. They are as done as him only funnier. Ford Fakestang is their only bright spot, sadly. I am just hoping the new Congress can hook us all up with some kinda better EV deal in the next year or so to make the price comparable. Congress will bankrupt us all to save themselves but at least hook a brother up while you’re at it.

  9. George says:

    and to think GM actually sued California for the mandate that inspired their own development of the Ev1; a vehicle which lacked consumer confidence or just one big conspiracy? Either way, for the most part they all were gathered up and crushed. See “who killed the electric car” and then ask yourself if GM is receiving the punishment it deserves.

  10. jeffrey durrance says:

    I haven’t seen the data but I imagine the legacy (American) auto manufacturers bought back stock instead of R&D. Now these “capitalists” will begin begging government $$ to “save” themselves, as mentioned in an earlier comment. Funny how our form of capitalism is the primary driver of socialism. A huge problem is the lack of of micro chips,(heard 1500 in every new car). Thousands of cars are partially assembled but can’t be completed- no product = no income. Tesla is getting into that gig(micro chip manufacturing) since they actually have cash..read where Musk has made 500m off bitcoin in 2 weeks,

    • Old school says:

      John Law was the smartest guy in France til his stock imploded. He barely got out of France before he was killed.

  11. Felix_47 says:

    I thought that heavy pickups got some sort of beneficial business tax deduction or something…….I don’t drive a pickup but I thought that was why so many sold. And is there not a tariff on smaller ones that led Toyota to start assembling them in the US or is that long past? I think most of the US pickups are made in Mexico with 3 dollar per hour labor…..maybe some final assembly in the US for tax or tariff reasons but essentially labor arbitrage. So Uncle Sugar is providing the big pickup subsidy to the manufacturers maybe? Any readers know?

    • KGC says:

      The primary reason pickup trucks were shoved down the American consumers throat are 1) they don’t have to meet the same EPA standards, and 2) they don’t have to meet the same Safety standards as set b the Feds for passenger cars. They got past that by being “commercial” or “work” vehicles.

      And then they started adding extra seats, upgrading the interior, etc. The P/U on the dealers lot today only has the bed, most of which is rarely used, so they can play this game. Try finding a stripped down, single cab, P/U with a 8′ work bed sometime. They may be “available” per the manufacturers, but dealers don’t carry them.

      • Happy1 says:

        People buy pickups because people like pickups. Sheesh.

        • MJ says:

          Bigger is still better in a lot of American minds. Small is beautiful is big in Europe and Japan. Until the CEO’s want the Cadillac- large fan base in China?

          Back to comment on climate change and/or conservation of resources. The economics are beginning to tilt a bit when BP and Chevron are investing out of fossil

        • MJ says:

          Bigger is still better in a lot of American minds. Small is beautiful is big in Europe and Japan. Until the CEO’s want the Cadillac- large fan base in China?

  12. Seneca's cliff says:

    I am not really sure that I buy the idea that EV’s are way cheaper to build and maintain. I have owned forklifts for 34 years now, and during that time I have always owned electric (battery) forklifts because of the issue of fumes inside closed buildings. Electric forklifts are a very mature technology. yet in my experience ( plus what the salesmen and service guys tell me) electric forklifts cost more to buy, and cost a bit more to maintain than ICE forklifts ( usually propane). High power electrical components are expensive and have been getting more expensive at a rapid rate. A 8 hp 3phase motor that I used to purchase for $275 bucks back in the 90’s is now $800.
    I have a customer that imports and sells gas engined garden tractors with old fashioned mechanical gear boxes and they are very reliable and normally last for 25 years. They also import and sell radio controlled steep slope mowers ( all electric) and robot mowers ( all electric) and they say these EV products require more frequent repairs than the gas ones. Small control wires fraying, software issues, water contamination etc. I know in my 27 year old diesel car I have not had to repair any of the mechanical components but many of the electrical parts ( power windows, power antenna, radio, gauges, etc have been the things that go out over time.

    • Jos Oskam says:

      @Seneca’s cliff
      My thoughts exactly. As a mechanical engineer I’ve been around engines and vehicles all my life. Your basic ICE is not all that complicated, really. With some basic maintenance a well-designed ICE lasts almost forever. Think old GM straight 6 or Toyota inline 4. These things are not orders of magnitude more expensive or complicated to mass-manufacture than state-of-the art electric motors.

      First of all, problems start appearing when you isolate the operator from the machine with an ever-thickening layer of complicated ancillary systems, fashionable accessories, sensitive electronics and miles of cabling. Whether we’re talking about ICEV’s or EV’s, as the years go on, circuit boards are gonna fail, wires are gonna fray, connectors are gonna corrode, and so on. Electrical “gremlins” are becoming a plague, extremely difficult to diagnose and locate, more often than not very expensive to repair. Restricting tools, diagnostic equipment and parts to official dealers is certainly not going to help limit the bills.

      Second, any road vehicle, no matter what its propulsion, needs an awful lot of components just to make it road-worthy. Wheels and tires, brakes, steering, suspension, these things are subject to wear and tear, have a limited lifespan and will have to be replaced eventually. The price of parts and the hours needed to do the work are more important cost drivers than whether the work is done on an ICEV or an EV.

      Third, any moving vehicle risks to be hit and sustain more or less serious damage during its lifetime. Bodywork is just as expensive on an EV as it is on an ICEV. And let’s not forget, the fact that the bumpers of modern cars are literally crammed with sensors and camera’s is not going to help to keep down the tab. So, because damage repairs are becoming more and more costly, insuring any car will certainly become more and more expensive.

      No, I’m not trying to bash EV’s here. I’m fust trying to nuance the feeling some people seem to have that some new driving paradise is just behind the horizon, if we would all scrap our ICEV’s today and let ourselves be lead to the brave new EV world.

      • steve says:

        “well-designed ICE”

        and where do you find one of those?

        My 2 year old car had a full 2 part recall for the breaking systems, needed almost every part replacing, and as the system is shared with the clutch that meant dropping the gearbox. A year later it got a warning on the MOT (safety test) for leaking gearbox oil as they had screwed up the seal, so out comes the gearbox again.

        Good job it was a lease, and I can wave it goodbye. Now I have an EV, with much less parts to go wrong, and 1/32 of the previous tax level.

      • Anthony A. says:

        My friend in Denver bought a new Tesla Model Y in November 2020. In early December he hit a deer and mashed up one front corner (bumper cover, fender and hood).

        Tesla sent the body parts to an approved body shop in Denver in late January 2021 and the car was put back on the road early this month. He told me that about 1/2 of the cabin electronics are inoperative and Tesla is blowing him off at the moment. The body shop takes no responsibility and said they wired everything up as configured.

      • Henry Wood says:

        Great comments. All of the major repairs that I have had to do on my ICE cars were electrical. Batteries, regulators, control modules, electric window motors, starter motors, pump motors, solenoids, and worn insulation.

  13. Ron says:

    Are you guys blind winter storm knocked out electrical grid we don’t have infrastructure to do this huge ponzu scheme where are charging stations don’t invest get out future not bright feeding u s***. Then run off with your money

    • MCH says:

      I love Ponzu… how do I get in on this scheme. I heard this funny one that charging a Tesla in TX this week at one point would’ve costed $900 per charge.

      That’s what happens when you don’t connect your grid to the rest of the country. Not even CA is that crazy. Where is that robust infrastructure bill, been hearing about it for a decade now… come on Joe, get it done.

      As soon as you restore the SALT deductions of course.

      😀

      • Anthony A. says:

        Nah, you just go to the local Walmart and use their free chargers….oh wait, Walmart has no power. Woops!

        (I’m in Houston, we had no power anywhere in most places for a day and a half). No heat either!

      • DawnsEarlyLight says:

        “I love Ponzu”…. LOL 🤣

  14. c1ue says:

    The question is just how much more appetite/capacity still exists for “investors” to fund the money losing startups.
    I am more and more convinced that the $1T that fled China in 2015 is the single largest proximate cause for the new “lose money on every sale but make up for it in volume” business model. This flood fooled others into thinking a structural changed occurred – including Son-san and MBS.
    But the spigot cut off after those $1T horses left the barn and isn’t going to be opened again without much stronger safeguards.
    Uber did manage to survive 2020 – they lost $5.6B and have $5.4B in cash left – will they survive 2021?

  15. Greg says:

    The governments of Ontario and Canada are set to announce details of their plan to each spend $295 million to help Ford upgrade its assembly plant in Oakville to start making electric vehicles.

    The fact that the governments are chipping in cash is not new — it was a key part of last month’s $1.8-billion deal between Ford and its biggest union, Unifor, to start making five new electric car models at the plant.https://www.cbc.ca/news/business/ford-oakville-government-1.5754974
    Canada is so uncompetitive the gvt must heavily susidize the automakers with direct billions$$$ in cash and EV subsidies! Similar gvt giveaways to GM and Fiat without any ownership of stock or intellectual property. These billions $$$ in direct subsidies are most certainly breaking USMC trade rules as well as WTO rules.
    Canada’s best days have come and gone and all that’s left is printing trillions in fake fiat currency, and we all know that will end badly!!!

  16. Ron says:

    I can buy a used golf cart 3,000 basically the same thing also don’t need to license

  17. andy melnick says:

    It will be interesting to see in colder weather climes whether hybrids will prove more popular. I own an EV and if colder weather that we are experiencing the range drops 20-25%. In addition, the recharging time takes longer. Hopefuly, they will come up with a solution to this problem. Despite these concerns, Norway has gone EV. In any case, if this issue cannot be resolved, the southern states will have an advantage.

    • endeavor says:

      It will be interesting to see in colder weather climes whether hybrids will prove more popular.
      Now you’re you’re talking. Partial electrification through widespread use of hybrids eliminates most of the logistics problems associated with EV’s. But it is too sensible for the zealots.

  18. SpencerG says:

    I think the legacy auto makers will be fine here. Quite frankly, consumer buy-in of EVs is a problem on all types of vehicles… and I would imagine particularly on pickups. That space in the market is a lot harder to invade than pretty much any other. It is why Toyota, Nissan, and Honda (which are not some fly-by-night newbie) control 29% of the US auto market but still has only an 14% market share despite years/decades of effort to get acceptance for their pickups.

    Until Ford, Chevy, and Dodge say that EV pickups are worth the money… then to most redneck pickup drivers they simply aren’t. Brand loyalty is just huge to them.

    • Cas127 says:

      Good pt about the Asian importers’ inability to take a proportionate share of US truck mkt.

      If Asia Inc hasn’t been able to do it for 30 yrs, I wouldn’t count on EVs doing a better mktg job than, say, Toyota with its monumental reputation.

    • nick kelly says:

      ‘but still has only an 14% market share despite years/decades of effort to get acceptance for their pickups.’

      They face a steep 25 % tariff on full- size trucks ( separate chassis)

    • Wolf Richter says:

      Watch until the first 1,000 HP all-wheel drive flat-torque-curve e-pickup hits the showroom 😂

      • Can’t wait until the first 1000HP flat torque semi tractor hits the road. I might get back in the game.

      • David H says:

        Wolf,
        It has been a while but, from deep in my memory – I believe DC motors have the greatest torque at zero rpm and declining torque from there. Not flat. This is actually more advantageous than you state in terms of towing, etc. and I believe is exactly why standing on the “gas” in an EV is so thrilling to those who are used to driving gas ICEs, which have a mostly opposite torque curve.

        • Patrick says:

          David H., my thoughts exactly. Wolf’s post shows how the EV industry dupes the ignorant with their lies. A classic example of an illiberal college education.

        • Wolf Richter says:

          Patrick,

          Good lordy, that’s neither what David H nor I said. You’re fantasizing.

  19. MCH says:

    The value chain is all the industry seems to be shifting. Perhaps it’s time to look a little further downstream at the components suppliers, especially the guys were making batteries. I wonder who are the largest battery makers these days, is it still Panasonic and LG?

    Pretty soon, all the legacy auto makers are going to become like Magna.

    I guess it would be a little too late now to invest in Lithium miners, but wonder which companies might be in the forefront of recycling batteries, those might be excellent investment in the future.

    • Old school says:

      These things usually follow a pattern of too much hype and excessive valuations and then the shakeouts and bankruptcies happen in a Minsky moment. The best will survive. Probably Toyota, Volkswagen and one in the USA as far as mass sellers. There will be high end niche manufacturers, but you have to be very good to make 5 or 10 million cars a year for a decade or two..

  20. Jack says:

    I think these price wars starting is an indication of the deflation on the horizon, Tesla’s share price is sitting on the edge of a cliff & so are all stocks. Janet Yellen today wants big stimulus, has she looked at yields & noticed people are dumping, this arrogance beggars belief, it wouldn’t be so bad if they did targeted stimulus, just give people food stamps & the ability to apply for rent help.

    This whole episode is a means of bailing out corporations via the people & getting people to buy call options to keep the hyper bubble going, also today Pfizer admitted 2/3 less effective vaccine against SA variant, reality is starting to catch up.

    • Jack says:

      This market is on the verge of collapse, I give it days or a few weeks max.

      • OSP says:

         “the markets can remain irrational longer than you can remain solvent”
        John Maynard Keynes

        • Jack says:

          Sure can but that’s been the case since 2016, I think 5 years is enough, this thing is going down in days or a few weeks, well I think so anyway.

          People think irrationality just arrived but I think the market wanted to collapse in 2016, but then turned, 2016 to now is the blow off top. It’s over.

    • Old school says:

      Very interesting interview with interactive brokers CEO saying that GameStop short squeeze almost broke the system. He said there were going to be bankruptcies of brokers, hedge funds and banks because as the squeeze spiraled the hedge funds would have to pay whatever price it took. It’s interesting that because of poor regulation it’s impossible to know if the same stock is shorted multiple times.

      Plus when a broker fails your stocks can be liquidated to pay creditors is what it sounded like to me.

      • Jack says:

        Old School,

        Interesting, I knew that but not in fact, I believe this was the Bear Stearns event, remember 2007, Icelandic banks collapsed markets ignored it, Northern Rock UK collapsed market ignored it, Bear Stearns ignored it, mortgage default sky rocketing & mortgage bonds only rose, then came Lehman Brothers & all hell broke lose.

        Also what else happened before the 2007 blow up, oil went $150, grains sky rocketed, all commodities did then collapse.

        Fast forward 2020/21, same things happening, virus markets are ignoring it, lockdowns worldwide market ignores it, variants of the virus markets ignore it, assets & commodities skyrocketing, companies bankrupt but skyrocketing shares, this is a financial crises that dwarfs 2007 but the market is in denial, they think if they just push it all higher the problem goes away.

        Now you can added massive leverage, massive participation in markets, no one has any idea of the mortgage losses, car loan losses, debts that won’t be paid, junk bond bubble, I fail to grasp how people are so blind, I called 2007 & that also was the same, no one will ever believe, they just laugh, until they cry when it all collapses.

        People always behave the same way, always.

        • sunny129 says:

          I went through the turmoil of Mkts through GFC with S&P losing nearly 60%!
          Many investors in 45y or younger, have never gone through a bear mkt in their time. This coming one will be a record to remember in their life time.
          The corrosive DEBT with leverage along Covid 19 with multiple waves (many mutants) will be like termites in our economy from working within but looks great untill the last minute!

      • Jack says:

        Wait until you see the Dollar short squeeze, the long bond short squeeze & the VIX short squeeze all happening simultaneously, it’s gonna epic, history is about to be made.

        • sunny129 says:

          Currency crisis due to Fed’s usual policy error along with inflation popping will be too much and too late to handle.

      • Ted says:

        The brokerage firms don’t own your stocks, they only hold them for you. Maybe someone more knowledgable can chime in?

        • jack says:

          That’s true Ted, the broker only hold ya stock, the cash in the account is a different matter, but that also has a form of protection to a certain amount.

          So if you have stock that should be set aside as yours, the broker doesn’t own it.

        • Old school says:

          Could have been only the stocks that were in the two day settlement window. I read an article about ownership structure on a stock trade. It’s legally very complicated. I will dig around some more.

      • Javert Chip says:

        Old School

        “GameStop short squeeze almost broke the system” sounds like a good story…but I highly doubt it.

        Other than 1 hedge fund that got caught napping and a couple million Reddit/RobinHood sheep that either have, or stand to lose, a few hundred to a couple thousand dollars each, I ‘m not reading a lot of sob stories about how individuals or firms have been seriously damaged

        And yea, I understand DTCC capital calls, etc, etc, and RobinHood got caught in a capital squeeze, but RobinHood runs a pretty marginal business (among other things, it has a miserable systems-availability record).

        I still think a few Reddit guys bought GME early & talked another 2+ million to buy in & hold. These early movers have made tens of millions off fellow Reddits.

        In the mean time, high-frequency traders are rolling in the profits.

        • Old school says:

          I think Interactive broker ceo is named Peterfy of something like that. The problem is the regulation is that shorts are only reported every two weeks and he said they needed to be reported daily. He stated that there was a shortage of Gamestock shares and no one really knew how bad the shortage was. The fear was that the spiral would have losses heading toward a bigger number than multiple hedge funds could absorb and if multiple hedge funds go down, then banks start dropping as they borrow from banks. I think the deep pockets told Robinhood they had to stop trading certain stocks and then stumped up $3 billion to backstop them.

        • Javert Chip says:

          Old School

          Yes, theoretically, that could happen to any shorted stock, and this was a doozy to watch. However, I have infinite faith in human greed, which would, sooner-or-later, frees up GME shares; apparently $435/share was greed’s “freeing -up” point.

          Deep pocket didn’t step in & tell RobinHood to stop trading certain stocks (RobinHood had a variety of business options, but unilaterally deciding to stop trading a specific stock probably isn’t even legal); the trading restrictions came about due to volatility of specific stocks (GME & a couple others). The DTCC stepped in and gave a few firms, including RobinHood a margin call.

          RobinHood was significantly undercapitalized and could not meet the margin call without additional capital due to its explosive growth (not a chronic issue with quality or quantity of capital) from its backers. Usually, being undercapitalized and under stress is the end of a brokerage firm; RobinHood is the rare exception.

          Side note: whatever capital its hedge fund backers provided, they charged RobinHood a 30% premium.

        • Jack says:

          Javert,

          Well someone high up did force Robinhood to stop the buying of stocks & call options in GME, you fail to realise that robinhood was not the only broker who put a stop to the trading of many stocks, Interactive Brokers did to, so did Scwhab and others, So OLD School is correct, this was a concerted effort to stop the stocks being squeezed being bought, if it was just a Robinhood issue other brokers wouldn’t have followed suit.

          Another point which is not fact is I doubt very much Redditt retail investors had anything to do with it, I said this at the time when people were saying they are smart, that they beat the hedge funds, the fact is this was highly orchestrated by hedge funds to beat other hedge funds, the Reddit crowd might have jumped in but most with their silly tribal nature didn’t sell & are now sitting on losses. This wasn’t retail, it was pros at war with each other.

        • Jack says:

          Javert,

          You can’t have it both ways, a margin call is applied to allow continued trading in said stocks, so Robinhood had just under $800 million margin call, they raised 3.4 billion.

          So if they raised massive amounts they could continue to allow trading, it wasn’t in my view the margin call, other brokers stopped the trading, it was by force to save the hedge funds who deliberately do insane leveraged bets & if they win take huge profits, if they lose they cry contagion risk & regulators step in to save them by applying illegal bans.

          I think the problem is still mutating like Bear Stearns, if a regulator asked for more capital for margin & four times that was raised trading could continue, no capital no trading, you can’t say 4 times the amount of needed capital was raised but a ban on stocks should be enacted.

          This is the corruption in the markets today, no one can really know exactly what went down, only those present, I doubt anyone can imagine the level of corruption taking place right now, once this whole house of cards collapses as in 2007 all will be revealed.

  21. nick kelly says:

    I can’t think of another time in history where so many competent, well healed, late arrivals are targeting the early adopter. All the new arrivals will be using basically the same batteries.
    But many of them have a huge advantage over Tesla in that they already know how to mass produce cars. Tesla has a slew of quality control problems: door handles, bumpers falling off, suspensions, paint, etc. It is already notorious for not admitting some exist and refusing to fix them. As for no dealer/service network, that does not help the quality issues.

    As for T’s vaporware ‘self- driving’, it is now forbidden to call it that in Germany. It is typical of lax US regulation that it hasn’t followed. Yet.

    Very ominous for T is VW /Audi pledging 85 billion on EVs, or more than double Ford and GM combined.

    If GM and Ford can’t share batteries and costs, they deserve to hang separately. This may be an area for some govt intervention, because the duo will undoubtedly request tax breaks and subsidies.

    • nick kelly says:

      Oh god…lol, ‘well healed’ should be well heeled. Assuming VW is healed from diesel gate.

    • Old school says:

      Nobody knows how it’s going to turn out, but my guess is Tesla will fail because they are not setup to weather adverse market conditions. It’s the intentional high risk strategy Musk is employing, but because of being politically connected he will probably get the GM bailout treatment.

    • MitchJ says:

      Makes me think of the PC business, pretty much putting the dominemt mainframe and mini computer manufacturers out of that business. Some of the old names like IBM are still around but they haven’t exactly thrived and they’ve significantly changed their uesiness models.

  22. Wolf Richter says:

    OK, I give up. I lost. Bitcoin futures trading is now getting advertised on my very own site…

    As seen just a minute ago, with mixed feelings 🤣🤢😂😢😍😁

    • sunny129 says:

      Like it or NOT, after Musk dropped 1.5 Billion into Bitcoin, others are slowly joining the buy side. Paypal is already in. So is Signature Bank! At least strong rumor from some of the banks, credit card and today Hedge fund Gundalach.

      It is the volatility which is keeping many at bay. But the Bitcoin is now around 52K. Once it reaches 60 – 70K ( this is just speculation on my part) 50K was a key inflection point. I am incorporating ias uncorrelated asset in my portfolio but part of tactical TRADING segment. The more Fed monetize the debt, the more will jump in with at least a portion of cash holdings.

      Funny Gold is going down but cryptos are creeping up. It is still speculative but Fed’s action in debasing our currency, many are willing to chance it, out with crypto, right or wrong!

      • Old school says:

        Crypto reminds me of the Mississippi stock bubble where for a while the stock became the preferred monetary holding. It might work out, but it’s basically speculation.

        I read the end of all bubbles is nearly the same. The masses trade their hard earned labor for something that becomes worthless. With bitcoin at $52,000 that’s roughly one year of average persons labor.

        • sunny129 says:

          Today bit coin is around 58K. 10y yield is 1.34 30y yield 2.13 and rising. Gold still below 1800.

          It could a bubble as you mention but I trade them with Greyscale trust – ETFs. If I get 25% within a day or two or even within a week. I sell 50% but start with a new position. Already done it more than once. (‘RIOT” crypto has option trading) NOT ideal and NOT for every one. Same with other (tradeble) cryptos.

          Fed is determined to monetize the debt but soon to be caught between inflation and rising yields. All the US bonds and Corp bonds DOWN today. Equity mkt got the jitters at the end of day!
          I expect volatility going forward and live with it.
          (Been in the mkt since ’82)

        • sunny129 says:

          Bit coin hits the headline at WSJ!?

          ‘Bitcoin Is Hitting Record Highs. Why It’s Not Too Late to Dig for Digital Gold’

          -Bank of New York Mellon, BK 0.33% founded in 1784 by Alexander Hamilton, announced last week it will help clients hold and transfer bitcoin and other cryptocurrencies.
          – Mastercard said this month it plans to support some cryptocurrencies, particularly stablecoins, directly on its network.
          -Signature Bank (NY) has fast growing ‘digital asset’ banking business!
          -Digital currency deposits at Silvergate Capital (La Jolla CA based bank) grew 138% during 4th qtr (’20( to 5 Billion
          -Mastercard said this month it plans to support some cryptocurrencies, particularly stablecoins, directly on its network
          Apparently there will be VISA rewards debit card liked crypto accounts!
          —-
          If this is like ‘tulip’ like mania, why are these businesses getting into digital currency mkts?

    • SpencerG says:

      You have my sympathies.

      The other day I was trying to explain the Tulip Mania to a kid telling everyone on Facebook to buy Doge Coin. Waste of my time… might as well been pissing into a hurricane. I really ought to just start taking advantage of these people instead of trying to inform them.

    • Jack says:

      A sign the bubble is about go POP!

    • Jack says:

      They only do it out of fear they will lose customers to Robinhood, anyone going into the market of crypto is just keep customers happy.

      People should refrain from thinking they are an endorsement of it’s success or longevity, I’ll buy some Bitcoin for $20 a piece, maybe at $10, I hear the UK has banned financial brokers from selling any Bitcoin assets, such as ETFS.

      I can guarantee anyone investing in Bitcoin will be told to sign a waiver after being briefed about it’s danger & it’s real worth of zero.

      • Javert Chip says:

        Jack

        No disrespect, but I just don’t see you comfortable with modern life, especially as an early adaptor.

        But then, further upstream in this blog, you said “This market is on the verge of collapse, I give it days or a few weeks max”, I guess it doesn’t matter; Armageddon cometh.

        • Jack says:

          Javert,

          What a strange comment, No disrespect taken, nothing you said is disrespectful, an early adaptor of what?? Bitcoin?? I have a Coinbase pro account & was one of the first with one, I had an account when people were waiting months to get one, I just think Bitcoin is worthless.

          As for a collapse why is that Armageddon, have people now decided that a healthy market is bad, the stock market needs to collapse over 50%, it’s normal, it allows yield to fall, prices to fall & allow for the economy start growing again.

          What would you suggest, keep borrowing money as yields spike & the US goes broke as people dump the bonds & refuse to loan it any money, or maybe devalue the Dollar till they end up like Germany?? I think ya jumping to a lot of conclusions but none are accurate, a good functioning real market needs a purge.

          So ya comment is well of base, as speculative as the market itself, badly managed companies need to go bankrupt, stocks need to be fairly valued, it will happen, not Armageddon, the opposite in fact, it would be a good thing.

        • Jack says:

          Javert,

          I think you’re talking about yourself without realising it, you’re projecting subconsciously, you can’t adapt to the fact the US is becoming a failed state, embarking on policies which are destructive to itself, although the comment you read was strictly about markets for which my explanation is above, the US is in the middle of a collapse, it really is, Rome part 2.

          Although that is a different subject to what my original comment is about I’m afraid to say the US is in a state of collapse, it seems like it’s you who is failing to adapt to that reality, same can be said about most of the western world, but only the US has a big advantage of the reserve currency & the means in which to use that status to fund a massive unneeded military.

          All you have to do is look at markets, look at the disaster of the virus compared to China, look at the inability of people to get together & mitigate the spread, the lack of empathy, all people care about is the price of Bitcoin & denying the markets are in a hyper bubble as people flee bonds due to the profligate & arrogant nature of the custodians of the financial health of the country. It could well be Armageddon for US citizens if things don’t change.

        • Javert Chip says:

          Jack

          I, too, believe the country is on the wrong path in a number (not all) of ways, and I strongly agree marginal companies should experience the financially painful but necessary cleansing of a business downturn (in fact, capitalism depends on this “creative destruction”). The years of accumulated dead underbrush just adds to the risk.

          At this point, I simply still have more faith than you do, in the inherent strength of the system to recover.

        • Old school says:

          We do have all the signs of a mania. Only things backed by a future longterm income stream can be valued. Everything else is a speculation.

      • sunny129 says:

        I haven’t signed ANY waiver.
        I am in the equity mkts since ’82. Been a life member of AAII( American association of Individial investors) I trade Greyscale trust ETF Cryptos both my taxable and IRA accts. Bitcoin is final number is 21 Millions coins the last of which will be mined around 2040.
        GBTC is 1/1000th of a bit coin.

        There are other tradeble cryptos – BITW, LINK, RIOT, ETHE, BCHG, ECHG ++. All are zooming since the the beginning of the year. It is reflection of DISTRUST in fiat being debased by Fed/CBers.
        Due diligence on your own. Yes, it is highly volatile and risky.

    • rhodium says:

      Once in a blue moon you have to get new batteries for your ev. The electric motor and other parts (barring cheap capacitors or poor corrosion prevention) should stay in good working condition for a long time. I don’t hear many people mentioning that ev’s are going to significantly add to the average age of vehicles on the road as time goes by. That means ultimately fewer vehicles sold in general going forward. How about those growth prospects, and wouldn’t it be a shocker if these people with stonks end up protesting at pro monopoly marches just to protect their “wealth”. Well I personally won’t complain if competition means I get a cheap ev in 6 years, as it should be if capitalism is going to do me any good.

      • C Steinmetz says:

        It’s sad to read people repeat the lies Mr. Musk and other stock touts have told about EVs as facts. It shows their complete lack of basic technical knowledge. For example, electric motors do wear out. I financed most of my college education working for a company that repaired, refurbished or recycled electric motors.

        • Anthony A. says:

          Other things wear out too:

          Brakes, suspension parts, struts and shocks, axles, CV joints, the gearbox (yes, there is one), electrical components, switches, other mechanical parts, etc.

    • BaritoneWoman says:

      At least it’s regulated by the Chicago Mercantile Exchange.
      Problem is, you need about $200 grand to trade 1 contract (5 bitcoins). As of today, margin is over $99 thousand, maintenance is over $90 thousand.
      And right now, there are no mini or micro contracts or options on the horizon.

  23. gorbachev says:

    Bitcoin is just ether right. Right.

  24. Old school says:

    I am surprised a public corporation can get away with holding it on its books as an asset as if it’s cash. It’s unbelievable how the Fed has got everyone trained to speculate.

    I think all the central banks have left is trying to get the three or four countries that haven’t completely blown their balance sheet to lever up like the rest of the geniuses. At least the next time Texas freezes they can burn fiat tho stay warm

    • Jack says:

      I doubt very much it will be held as an asset, it will be held as safe custody just like a safety deposit box, so a customer asks for exposure & they provide that service, the sign the documents to assume all risk & it’s done.

      At the end of the day people can spend their funds on what they like, customers ask for the service & it’s provided, no different to Coinbase, milk the fees & make their customers happy. It’s either that or they go elsewhere.

    • Javert Chip says:

      Old School

      An instrument like Bitcoin will not be on the balance sheet “…as if it’s cash…”.

      I’m guessing Bitcoin will be booked at cost; future price increases will not result in appreciation income, but price drops below cost will show as an expense.

  25. makruger says:

    If the US Government really wants EV’s to be the future of transportation in America, then there needs to be a government coordinate effort to rollout thousands of EV charging stations across the nation. In addition to this, apartment dwellers need a way to overnight charge their EV’s too. The lack of a standard for charging connectors also remains a problem to be solved.

    Will the current state of the US electrical grid even support these initiatives? Apparently not in Texas or California, but probably nowhere else either.

    • Wolfbay says:

      China has the answer. They are opening hundreds of new coal burning power plants to power their “green” EVs.

      • Wolf Richter says:

        China has been building more renewables capacity in recent years than any other country in the world.

        • Russell says:

          They have a long way to go. I realize their country is moving toward a more modern society, but while the US and Europe have seen their CO2 exhaust slowly decline over the past 20 years, China’s has doubled. The US could drop to zero emissions and the global output would still be going up.

    • MarkP1950 says:

      Keep the government out of out chargers.
      The only thing that we need out of government is to make sure innovation is not blocked.

  26. MDM says:

    Any discussion about EVs will inevitably include a discussion about batteries:

    “When a man begins to talk about batteries, it brings out all of his latent capacity for lying”

    –Thomas Alva Edison

  27. California Bob says:

    re: “In reality, the EV space is a brutal game within the zero-sum auto industry where the sale of each EV comes at the expense of a sale of an internal-combustion-engine (ICE) vehicle.”

    Not necessarily in all cases. I’m getting to where I don’t really like firing up my 475HP Mustang just to make the 20-mile round trip to the family ranch. I’m giving some thought to an EV–yes, probably the Mach-E–as an around town (only) runabout. The ‘real’ Mustang has a small trunk and isn’t suitable for hauling loot from Costco, and it’s not particularly good on an ICE to do lots of short trips. I realize having a couple vehicles for different purposes is a luxury, but I can see some buying a used Leaf or Bolt to keep from putting the family Expedition on the road for short trips.

    • Anthony A. says:

      I’ve thought of and mentioned here somewhere that I may be looking for a used Leaf to just run local errands. Our big van and my Mustang convertible are not that well suited for the short, traffic filled errands. It would be a third car for our household of two.

  28. sunny129 says:

    Currency is getting debased/devalued everyday! The smell of inflation is in the air, although Fed either deny it or allow it climb.

    Stock remain overvalued and overbought.Gold keeps going down, in spite of expectation of inflation in the air. Price of gold is controlled/manipulated in future mkts, for decades! Just like Libor, until recently.

    I know, Bitcoin gets bashed by ever one, in Wall St but it gained respectability once Musk invested 1.5 Billion. Now even Gundlach is considering it! Stay tuned!

  29. Reverse Petunia says:

    Whether driven by financialization, or government subsidies, ultimately if EVs end up being more cost effective and usable technologies for certain uses then they will win out, so will commenters whine when this is the case?

    Lots of technology and infrastructure we all use today was “financialized” or subsidized in some way in their development or introduction, but I’m sure you currently buy/use them.

  30. char says:

    Pick-ups: Engine in the front, than cabin and cargo in the back

    Problem is an EV engine is so small that it can go under the cargo floor. So cabin to the front and than cargo space. but this is not a pick up but a van. I expect work trucks to be displaced by electric vans. this will kill the work image of the pick up truck which it need to sell so no fture for the e-pick up

  31. Ehren Stuff says:

    Your article is misleading for 2 reasons: (1) it is not Tesla that is leading the charge on pricing, but the Chevy Bolt, from a legacy company, is forcing Tesla to react. (2) Although Tesla is reducing the price on some models, they are increasing it on others to off set the decreases.

    • Wolf Richter says:

      The Bolt and the Model 3 don’t compete. They’re not in the same category of vehicle. And Bolt sales are minuscule compared to Model 3 sales.

      • Ehren Stuff says:

        I’m not going to argue quality, just the facts that Tesla followed GMs price reduction of the Bolt. Perhaps coincidence, or indicating the pressure they felt. Regardless, it does discredit your argument that the legacy companies cannot compete when it is a legacy company reducing their prices first.

  32. Willy2 says:

    – I remain unconvinced that EV will be a serious competitor for ICE cars.
    – I fear that these price cuts/competition will drive more jobs away from the US to Mexico.

    • char says:

      Of all the big car making countries (Japan, Korea, China,India, EU, UK, North America) is only North America not mostly dependent on oil imports. All those oil importing countries will push for EV as soon as they are good enough (and they now are). It will take time to develop the production capacity for all those EV but than it is out for ICE* in those markets. ICE will not be a serious competitor in those markets and the rest of the world is not big enough to carry the development of ICE into a competitor of EV so there it will also die out but slower. (like steam locs in India)

      * excluding specialty vehicles, but that is a few percent of the market at most.

  33. James Charles says:

    “TOKYO — A trip of 500 km on one charge. A recharge from zero to full in 10 minutes. All with minimal safety concerns. The solid-state battery being introduced by Toyota promises to be a game changer not just for electric vehicles but for an entire industry. “
    https://asia.nikkei.com/Business/Technology/Toyota-s-game-changing-solid-state-battery-en-route-for-2021-debut ?

  34. John Beech says:

    It’s funny how people fret about range (range anxiety). Yet everybody I know owns more than one car. When she physically taught in schools, my wife’s driving was relatively predictable and once a week charging would work beautifully even with the of stop at Publix. Now, with the pandemic, I take her car out for exercise once every week or two, and my own suffers a similar fate.

    The real scam is the auto insurance market. I pay premiums for four cars (yes, I know) for two drivers. Thing is, I can only drive one at a time. Seems we should insure drivers, not cars. Wonder when someone will offer this business model? If it were more reasonable, I’d switch in a flash.

    I’d bet a milkshake, just as the big four automakers are effectively an oligarchy, there’s a similar oligarchy (if not cabal with politicos involved) of insurance interests preventing this idea from seeing the light of day. Any takers? Wait, what’s with that black helicopter circling my house? Hey, is that a missile heading my . . .

    • char says:

      How do you check if a driver is insured? If you do it car based it is relatively easy and can be done without a police officer stopping you.

    • lenert says:

      And most of the premium is for medical care as if we aren’t already paying Obamacare, Medicare, Medicaid, Tricare, this-care-that-care-and-the-other-care.

  35. Here’s what will happen (probably). Battery design and manufacture will move back to the US, and GM/Ford will own a controlling interest. The legacy automakers are matters of national security, and will get special government subsidies to provide batteries for critical US customers, DOD, etc.

    • lenert says:

      If the Italians sell Chrysler to the Japanese then all three of the Axis powers will have had their go at it.

  36. MarkP1950 says:

    Amazing. After reading the comments, so few people think out of the box.
    I sold my car years ago.
    I ride the bus. Works GREAT.
    No insurance, no maint, no parking spots, no license fees, no tickets.
    When Tesla comes up with the robo-taxi network, MAYBE I’ll ride that every once in a while.
    If I go on vacation I rent a car.

  37. Tim says:

    Another reason the PU market is so profitable for domestic manufacturers is the 25% tariff the U.S. puts on light truck imports.

  38. Sir Eduard R. Dingleberry III says:

    It’s funny how the Internet exaggerates everything. Global warming is a problem that parallels the rise of the Internet. And suddenly it’s the end of the world if we don’t all drive EVs in 2021.

    • Wolf Richter says:

      Sir Eduard R. Dingleberry III,

      I recommend you read the article, instead of just spouting off a knee-jerk reaction to the two letters “EV.” There is nothing in the article about global warming. It is all about the car business — and the tough position the legacy automakers have gotten themselves into.

      • Sir Eduard R. Dingleberry III says:

        I did read it. Your articles are good. That’s why I come here. I’m just pointing out that the reaction to those 2 things may possibly be overdone. And it is tied together. EV tech is cool but I’ve got a 14-year-old Honda and a 19-year-old Honda. Which EV will last that long? I’m actually trying to talk myself into buying one. Not just saying that or anything. I looked into Nissan Leaf enough to learn about the companies that will replace the batteries with used ones they fish out of the junkyard even. Waiting for Congress to hook us up with a good deal.

  39. IronForge says:

    Nice work, Mister Richter:

    After reading about what transpired in USA.TX and in DEU.Berlin(Electric-Battery Buses Taken Off Routes due to their inability to Function in Freezing Temps) these past few weeks, I don’t think BEVs will sell well outside of Sunbelt States.

    As is, majority of TSLA sales were in California (perfectly smug SoCal CommuterMobile), with FL a Distant Second.

    In a NYTimes Article years ago, the Model S couldn’t make a Direct Trip from NYC to BOS on a Winter DAY; and the Journo needed help finding a Charging Station for a hours-long Charging Break.

    TSLAs are probably being towed everywhere btwn BOS and WDC from November thru March.
    ***
    I think people in 4 Season Areas are going to look at FUELED Vehicles – Hybrids, NatGas Vehicles (NGVs), or HFCVs (New Mirai has an 430mile EPA (530miles in JPN) Range, with TM footing the Hydrogen for the first 3 Years).

    ***
    I recommend for All to back off EV Pickups for at least 2 Full Years.
    Why?
    Cold Weather and Battery Pack Durability.

    “…it onn-ly takes a ss-spaarrkk, to-ooo geehht a Fi-er go-oh-iinnngg…”

    • Wolf Richter says:

      OK, look at the traffic in Texas on Tuesday and Wednesday. There was hardly anything on the road. ICE vehicles got stuck or wouldn’t start. Gas stations were shut. People didn’t even have power to get their garage doors to open. And all you can think about is EVs. If you have an EV, you could have at least supplied power to your house. And EVs work fine in cold weather. And ICE vehicles have lots of problems in really cold weather.

      The buses you’re talking about … that was some clickbait headline about the buses in Berlin. If you had read the actual article, you would have known that of all the e-buses in Berlin, 1.7% had a mechanical problem that caused them to malfunction in the cold. Berlin is talking to the manufacturer about it. The remaining 98.3% of the e-buses were fine.

      Did you try to find out how many of their diesel buses are out with mechanical problems at any given time? I didn’t think so.

      • Happy1 says:

        EVs lose 20-40% of their range in 20 degree F weather per AAA and consumer reports studies and empiric observation. This is non trivial for those of us in cold weather states. ICE vehicles have problems in extreme cold but that is -20 F weather, not common in the lower 48. If you drive in the mountains of Colorado frequently, as I do, weather around zero F is common, and ICE cars don’t lose range in that kind of cold.

        This is why EVs make way more sense in warm weather states.

      • IronForge says:

        Think we are referencing different Articles regarding Berlin, since I had the Translated few newspaper articles and English Articles as well. One Paper required a sub, so I didn’t get to read that source. Mine didn’t mention mech problems. They took E-Buses Offline because some models ate too much Juice trying to heat up the Cabin, and Others couldn’t make the Trips.

        Batteries don’t work as well in Freezing or High Temps.

        As for those in TX, people were camped out in their ICE Vehicles, Autodealers were trying to lend out Hybrids to power homes.

        Where were the TSLAs?

        I’m sure there were plenty more ICEs+Hybrids which were functional than TSLAs.

        How long could a Fully Charged TSLA Power a House in Freezing Temps? Hours?

        I know you’re a Musk Fan; and Battery Performance have improved over the Years. However, Freezing Temps and sustained Hwy+Speeds(Interstate Traffic) tend to Drain those Batteries rapidly. Those early T-Zero/Roadsters had lousy ranges at high speeds(1hr@85mph+, IIRC); and sold Trailer-GasolineGenerators for those on Road Trips.

        ICEs can keep the Engines Idling for over a Day. Buy up the Fuel, swap Cars, jump start the rested.

        Out of gas? Add a few gallons from a portable tank, get a jump if the engine won’t crank. Handheld Capacitors are available. TSLA out of Juice? Tow it Home or to a Functional Charging Station (if you’re lucky and apps are updated).

        I’m sure there were Gas Stations out there with their own Portable Generators.

        The Advantage go to Fueled Vehicles during Cold Snap related Power Outages; because Fuel Supply Chains usually work through them. The ERCOT Fail caused Cascading System Failures; but Gasoline and NatGas Pipelines to the Public tend to recover faster.

        With All Due Respect, I recommend a review of TSLA Sales by State. I did so awhile back.

        I also lived in the NYC-WDC Corridor for Years, so I’m used to the Winter RoadTrips.

        IMO, BEVs aren’t ready for Cold Winter Areas. Hybrids and FCVs will fare better.

  40. Stavros says:

    First of all, there’s no “EV market”. There’s a GOSPLAN EV. Second, every single EV that has been produced and sold hitherto has been a small financial black-hole. Third, this will continue to be the case for several more years at least. Fourth, there will be no winner out of EVs, except China. As government support for EVs and punishment for ICEs means the destruction of the Japanese, German, US auto industries for the benefit of the Chinese dragon. The western countries in their relentless crusade against Russia (the world’s number one fossil fuel exporter) is ending up handing up everything to China on a plate.

  41. john tucker says:

    Wolf, longtime no chat. Delighted to see that you are still contributing sober, useful information outside of “the narrative”. Last summer I picked up quite a few shares of Vale, the conglomerate international miner, based on interest in Brazil and on the spat between Australia and China over iron ore imports. Right after that the Tesla “army” happened to notice that Vale is the worlds leading nickel producer and since nickel is actually the primary ingredient in a lithium ion battery, its getting to be in short supply. So I’m sitting on an unexpected two-bagger. Wanta discuss the current nickel cost and supply situation? How much higher is it going to go before people start doing some more serious prospecting?

    • Wolf Richter says:

      Good trade.

      The thing is, this stuff can get pretty crazy. Lithium spiked biggly back in 2016-2017 on speculation that EV battery makers would soak up all the lithium in the world. But there was plenty of production. So the price collapsed. While it has ticked up in recent months, it’s still down 60% from the 2017 peak. The story is only good until it isn’t.

  42. Shawn says:

    Interesting. And if everyone is driving an EV, where’s all that electricity gonna come from?

  43. RedRaider says:

    I don’t know…

    I don’t think I’ll get interested in EV until you find a way to stop batteries from spontaneously combusting

Comments are closed.