Why EV Sales Are Falling | CNBC Marathon
CNBC・34 minutes read
EV sales in the U.S. are slowing down due to consumer anxiety, high prices, and usage limitations, despite significant industry investments. Hertz's EV strategy faces challenges from high repair costs, low resale values, and a shift towards legacy automakers in their fleet, impacting investor opinions on the program's future.
Insights
- The EV market in the U.S. is experiencing a slowdown, with concerns over range anxiety, lack of knowledge, and high costs hindering mainstream adoption despite significant investments in the sector.
- Tesla's aggressive price cuts have had a substantial impact on the EV market, leading to a decrease in average EV prices and influencing overall market dynamics, while regional variations in EV adoption are influenced by economic factors like gas prices and home energy rates.
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Recent questions
Why are EV sales slowing in the U.S.?
Consumers express range anxiety and lack of knowledge.
What is the average price of an EV in the U.S.?
Between $53,000 and nearly $60,000.
How much has the auto industry invested in EVs?
$6.5 billion with projections of $1.2 trillion by 2030.
What are the challenges faced by Hertz in its EV strategy?
Pricing issues, repair costs, and low resale values.
What is the impact of Tesla's price cuts on the EV market?
Used EV prices have dropped by 30%.
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Summary
00:00
"EV Market Slows Despite Industry Investments"
- In August 2023, EV sales in the U.S. took twice as long as in January, indicating a slowdown in the market.
- Consumers express anxiety over EVs due to range concerns and lack of knowledge, hindering mainstream appeal.
- The cost and usage limitations of EVs contribute to their lack of popularity among consumers.
- The auto industry has seen a significant investment of $6.5 billion dedicated to EVs, with projections of $1.2 trillion spending on commercial EVs by 2030.
- Despite global spending of nearly $400 billion on electric cars in 2022, EV sales are slowing, with the U.S. expected to add 1 million new EVs in 2023.
- Automotive companies have committed $616 billion in investments from 2023 to 2027, but sales have hit a speed bump.
- EV sales have softened, with legacy brands and luxury EVs experiencing weaker demand, leading to a rise in unsold EV inventory.
- The average transaction price for an EV in the U.S. is between $53,000 and nearly $60,000, higher than traditional vehicles.
- Tesla's aggressive price cuts have significantly impacted the EV market, with the average price for an EV decreasing to $53,376 in August 2023.
- Regional variations in EV adoption are influenced by economic factors like gas prices and home energy rates, impacting consumer preferences.
14:35
EV Market Trends: Prices, Demand, Challenges
- EV prices in the market have been increasing due to mismatched consumer demand and dealer offerings.
- Government regulatory pressures and incentives through the IRA need reassessment.
- EV inventory is rising alongside the auto industry launching more EVs at the $50,000 to $60,000 price point.
- Demand for EVs exists, particularly for lower-priced Teslas.
- Used EV prices are falling, indicating potential demand faltering.
- Affordability is a key issue hindering EV adoption despite lower maintenance costs and no gas expenses.
- Used EV prices have dropped significantly, with Tesla's price cuts impacting the market.
- New federal tax credits for EVs have influenced pricing and market dynamics.
- Residual and resale values are crucial in determining the total cost of owning a vehicle.
- EV sales growth outpaces combustion engine sales growth, but challenges remain in market saturation and consumer adoption.
28:32
2024 EV Tax Credit Shift Sparks Interest
- In 2024, a tax credit will shift to a point of sale rebate, offering $7,500 for new EVs and $4,000 for used EVs.
- A surge in EV purchases is expected in January due to the immediate cash rebate at the point of sale.
- Tightened eligibility requirements for the $7,500 tax credit on new EVs in 2023 may impact those who bought in that year.
- Manufacturers could offer the credit if buyers leased the vehicle, leading to a rise in lease rates and used EV availability.
- Skeptics like Karl Brauer suggest EVs must match combustion engines in cost, range, and refueling speed to gain wider acceptance.
- Economic factors like high interest rates and oversupply of new EVs currently impact used EV pricing.
- EV battery longevity exceeds expectations, with varying ranges after years of use based on charging habits and conditions.
- Hertz's move to purchase 100,000 Tesla Model 3s for $4.2 billion aimed to distinguish the company in a competitive rental market.
- Hertz's EV strategy faced challenges like pricing issues, repair costs, and low resale values despite investor division on its continuation.
- Hertz's partnership with Uber to rent EVs to rideshare drivers reflects a shift towards electrification in the rideshare industry, despite lower rental revenues compared to consumer rentals.
41:51
Hertz faces challenges with EV program
- Hertz faces challenges due to a high number of vehicles on the road without sufficient service centers, leading to long wait times for spare parts and appointments.
- To mitigate repair costs, Hertz has taken more repairs in-house, negotiated for cheaper parts, and shifted some EVs from rideshare to leisure, impacting revenue.
- Used EV values have dropped by 30% due to Tesla's price cuts, affecting Hertz's balance sheets and leading to investor split on the EV program's future.
- Hertz plans to reduce the share of Teslas in its fleet, favoring GM and other legacy automakers, and only rents Teslas to experienced drivers in rideshare.
- Hertz's overall rideshare rental business has grown by 50% year over year, with increased revenue per unit and premium pricing in the leisure segment.
