WSJ: The Electric-Vehicle Bubble Starts to Deflate
It’s ironic, to say the least, that the U.S. is seeking to imitate China’s economic model at the moment that its industrial policy fractures. Look no further than its collapsing electric-vehicle bubble, which is a lesson in how industries built by government often also fail because of government.
Tesla last week slashed its prices in China to boost sales in an oversaturated EV market. In July Tesla and other auto makers in China agreed to stop their EV price war, only to scrap the cease-fire days later owing to government antitrust concerns. While lower prices may benefit consumers, auto makers in China are bleeding red ink and going bust.
A plethora of Chinese EV start-ups launched in the past decade, fueled by government support, including consumer incentives and direct financing. Auto makers churned out EVs to suck up subsidies. Giant property developer Evergrande Group launched an EV unit as its real-estate empire began to implode, but now the EV unit is foundering too.
About 400 Chinese electric-car makers have failed in the past several years as Beijing reduced industry subsidies while ramping up production mandates. Scrap-yards around China are littered with EVs whose technology has become outdated, redolent of its unoccupied housing developments created by government-driven investment. […]
Cox Automotive reported this month that EV inventory had swelled to 103 days of supply in the U.S., about double that of gas-powered cars. Auto makers and dealers are discounting EVs to sell their growing supply. The average EV price paid by consumers has fallen 20% compared with a year ago to $53,438, driven by Tesla’s price cuts and dealer incentives.
Ford recently reduced its EV production targets as its losses and unsold inventory grow. At the end of June, it had 116 days of unsold Mustang Mach-Es, and GM’s electric Hummer had more than 100 days of supply. And this is in a growing economy.
Traditional auto makers will have to raise prices on gas-powered cars to compensate for their EV losses. A United Auto Workers executive said Sunday that Stellantis is threatening to move production of its Ram 1500 trucks to Mexico from suburban Detroit, no doubt to reduce costs. The EV jobs President Biden touts will come at the cost of union jobs building gas-powered vehicles.
Meantime, EV start-ups are floundering as interest rates climb, and they struggle to scale up manufacturing. Lordstown Motors filed for bankruptcy in June. Nikola Corp. warned this year that it had “substantial doubts” about its ability to stay in business.
No one is buying the ugliest “Mustang” in the history of the marque? The nerve of some people.
The C E O managed to lose 4.5 billion on the electric F150. Man, I wish I was that smart.
It’s called the CAFE standards … which are even stricter in CA … if you want to sell cars there. The government is forcing their hands.
And if the government bankrupts the auto industry? … mission accomplished.
My wife’s friend had her 5yr old Civic written off last week. She told us that there isn’t much on the lots and the wait times are 4 to 6 months for new cars. There are electric cars available, however.
Jamie, confirming that, I just ordered a new company vehicle (ICE, of course. You can’t do 1400 miles a week in an EV!), and the wait time is said to be 25 weeks.
This horrid waste of money is going to fade away like so many other government initiatives. EVs like Covid Vaccines do not work and are a burden.
Stop the green energy train until you have something that actually works. EVs, windmills and solar panels are NOT the answer, they are a growing part of the problem.
I look forward to the vanishing of the EV scam and the resit of this ‘jerk and twitch’ save-the-planet period of our existence. I should add the covid vaccines to that mix. The are also a government pushed failure.
DO NOT COMPLY … your future health and well-being is at stake.
“Green energy train.” Green gravy train is more like it. At least for connected Liberal cronies.
FYI, 100 days supply of Electric Hummers is about 6 vehicles.
Which is at least seven more than the world needs.
Exactly.
I am amused that any government thinks they know better than the market. Government intervention has been going on since the early 80’s (probably sooner, but that is when I started to pay attention). Then it was hydroponic greenhouses in Newfoundland/Labrador. Huge press attention at the beginning and bankrupt about 1-2 years later.
the sprung greenhouse debacle , engineered and faked right out of Calgary . do newfies even eat cucumbers?
“Traditional auto makers will have to raise prices on gas-powered cars to compensate for their EV losses.”
Splendid.
Not if they sit on the lots unsold, they won’t.
Central planning, industrial strategy, subsidies, green theocracy, it’s all a repetition of the Midas touch of the dead hand of government only gold isn’t the result.
Ford can’t sell their EV trucks in NS, allegedly, can’t imagine why. Mean while Trudy is investing billions into EV batteries in Queerbec.
The entire automotive industry is headed for a major fall. Pushing a rope uphill is the world’s worst marketing.
Volvo (100% EV) isn’t going away
Nor is BMW going away
Nor is Porsche going away
“Volvo (100% EV) isn’t going away
Nor is BMW going away
Nor is Porsche going away”
Or Toyota, the only major manufacturer wise enough to hold off on producing EVs. They make great hybrids, but say that they won’t make a full EV until the battery technology is good enough for it to be feasible. Some smart people work for Toyota, apparently.
“the U.S. is seeking to imitate China’s economic model at the moment that its industrial policy fractures”
This is the real money quote. China lost the economic battle but China-ism has won the policy war in North America at least for the time being, in no small part thanks to conservaderps.