EV Industry Shock: The Bumpy Road Ahead
Earlier this week, Apple canceled its decade-long project to build an electric car and, in the process, burned more than $10 billion.
The news from Apple is one of many in a string of bad headlines for the EV industry:
- Tesla warned of slowing growth before new model launch
- Ford reported a double-digit decrease in EV sales for January 2024
- Mercedes-Benz pulled back expectations on EV sales
- Lucid cut prices of their luxury EVs for the third time in seven months
Supply has outpaced consumer demand, largely driven by two factors – price and the performance of EV charging stations.
EVs are still considerably more expensive than gas-powered vehicles. The average transaction price for EVs was $53,469 in July 2023 vs. gas-powered vehicles at $48,334, per Cox Automotive. The Apple car was expected to be sold to consumers at a price of $100,000, and still only generate “razor-thin” profits, per The New York Times. Tesla, the leader in EV sales, has been lowering prices on its vehicles and implementing a new manufacturing process that could make its factories more cost-effective and allow it to pass more savings on to consumers.
On top of the prices, the performance of EV charging stations is suboptimal. In a report from J.D. Power in Q1 2023, they found more than 20% of EV drivers who used a public charging station experienced difficulties that prevented them from charging their vehicles. Most of the problems stem from connectivity issues. Since most public EV stations use cellular links, they are subject to the same outages you would experience with your cell phone.
While many still predict EVs to overtake gas-powered cars in the near future, some of the aggressive timelines have been pulled back due to these challenges.
