Some carmakers temporarily suspended production, others dropped their planned investments in new capacity, or announced list price cuts. Inventories are piling up, to such an extent that recent press article read something like “EVs were supposed to be the solution, but they are now turning out to be the problem”. Was all this just another “bubble”?
While, until recently, everyone was discussing the bright prospects of electrification (in cars and elsewhere), the latest quarterly earnings season and the indications given by many players and their suppliers seem to have shifted the consensus to a much more cautious view. What happened in-between is, rising interest rates and declining subsidies led buyers to review their priorities. Now that early adopters, who were willing to cope with a limited driving range and a lack of charging infrastructure just for the pleasure of being “modern”, are equipped, the rest of the clientele is harder to migrate from ICE. They may like the idea of “saving the planet”, but only as long as it is cheaper (or at least not more expensive) than the other options.
This said, there are a few reasons why this slowdown is most probably a soft patch rather than a long-term trend. The first one is, most of the above technical impediments are likely to be resolved over time, as progress enhances battery life and gradual adoption supports the installation of more charging stations. The second one is, governments throughout the world need to show that they are acting for the environment. In many countries, they reduced subsidies but they simultaneously took measures to force users to adopt EVs, whether they like it or not. They probably realize by now that the all-in environmental impact will be far from what had been announced but this doesn’t mean they will change the rules. Have you ever seen a politician recognize that he had made a mistake?
As a car enthusiast, I did not think I would ever write something in support of “boring” vehicles that have no mid- or rear-engine design, no high-revving flat-6 or V8, no lightweight body, … Yet, I am going to write it: I believe EVs have a bright future, at least for daily commutes and other short range trips, and it would be a mistake to write off the industry just because its growth is not perfectly linear.
HG – November 17, 2023