Companies have been pouring money into EV and battery production in the U.S. I comment on where EV sales are forecasted and what role ICE vehicles have to play. I also discuss the shift in self-driving vehicles from robotaxis to construction, agriculture, and long-range trucking. I also share my thoughts on the EV tax credit that is scheduled to be clarified by the IRS in March.
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Hot Topics of 2/3/2023
Large Investments in U.S. Plants:
- GM invests $20.5 million in customer care and aftersales plants
- Tesla plans to spend $3.6 billion more on battery and truck manufacturing in Nevada
- GM, LG end plans for fourth U.S. battery cell plant as automaker seeks new partner
- GM to invest $918 million in new V-8 gas engines and EV components
- Mercedes-Benz Plans to Build U.S. Electric Car Charging Network
My thoughts:
Investment continues to ramp up in EV and battery production capacity, but ICE vehicles still have a role to play. The forecast for EV sales in the US is expected to reach 30-40% by 2030, which means ICE sales will still command the lion’s share of the market. For legacy automakers, ICE sales fund EV investment and remain an essential part of the portfolio. Large SUVs and pick-up trucks continue to provide substantial profits while EV profitability is tenuous. The transition from ICE to EV requires diligent management of costs and innovative solutions to make EVs more affordable and profitable. In the meantime, legacy OEMs must maintain profitable ICE portfolios while improving the economics of EVs. Recently, Tesla announced a price reduction of up to 20% for certain models. Ford followed this move by reducing the cost of its Mach-E by up to $5900 for the extended-range version. Ford expects an increase in production to partially offset the price reduction. Stay tuned for pricing moves by other OEMs.
Self-Driving Vehicles:
- Supermarket Asda, startup HVS receive UK hydrogen self-driving lorry grant
- U.S. Justice Department seeks Tesla driver-assist documents
- Investors go back to basics with simpler self-driving vehicles
- Self-Driving Car Services Want to Expand in San Francisco Despite Recent Hiccups
OEMs have been tapping the brakes on robotaxi investment and deployment as the self-driving solution has been far more difficult than expected. Waymo and Cruise are the most prominent companies still developing robotaxis. Ford and VW recently shuttered Argo.AI, instead deploying engineers to Advanced Driver Assistance Systems (ADAS) programs. However, investors have not completely abandoned AVs, but are focusing on specific applications such as construction, agriculture, or long-range trucking. While this may be disappointing to AV enthusiasts, the technology will continue to be developed and refined. This means further development of sensor fusion, lights-off simulation, and hopefully, data sharing among developers. While passenger car AVs will not be available at dealerships anytime soon for consumer purchase, we can expect the technology to be refined in off-road applications.
EV Tax Credit:
- Why the $7,500 EV tax credit may be tougher to get starting in March
- U.S. Senator blocks bid to close EV tax window
- Electric car-makers have found a legal loophole to get their customers an extra $7,500 tax credit
My thoughts:
Obtaining an IRA tax credit on EV purchases and leases takes a little homework on the consumer’s part. Rules on eligible vehicles will be clarified in March as the IRS issues further guidance on battery content. One must also consider income limits for tax credit eligibility. Lease/buy decisions just got a little more complicated. Stay tuned!
Best Regards,
Alan AmiciPresident and CEOCenter for Automotive Research
