What a difference a decade makes. Ten years ago, at the Old Lightning Site, Matt and I spent a considerable amount of internet ink tracking public investments into “green loans” for goofy shit like Solyndra and an inflatable car. Now it’s 2023 and Ford’s getting a huge, huge loan to build battery factories in America in a gigantic electric push, as if the “green” promises made after the Great Recession are having a kind of New Industrial Revolution moment. But expect a lot of chaos along the way, a new report tells us.
A very happy Friday to you all, Autopians. Also on tap as we close out the week: J.D. Power has strong words over “vehicle quality,” traffic deaths are down in America and, yes, the new cars are overly expensive to fix. Let’s get started.
Tesla, Ford Still Poised To Lead America’s EV Race—For Now
One topic of conversation this week has been us wondering just how serious—I mean, really serious—the automakers are about transitioning to electric vehicles. Oh, they’ll say they’re all-in on EVs, but behind the scenes, they have backup plans in case that doesn’t work out; varying levels of reluctance and displeasure about the changes coming; and will likely finance it by selling gas trucks and SUVs for a long time.
Can you blame them? This transformation we’re seeing is the biggest shift the business has seen since the creation of the assembly line. It’d be a lot easier to just not do any of that. In the meantime, we as consumers can expect a good amount of chaos—and plenty of winners and losers.
That’s part of what’s covered in Bank of America Securities’ Annual Car Wars Report, which this time focuses on 2024-2027. (Note: I’m still trying to get a copy of this report myself, so what you’re about to read is pieced together from other news reports. If I get it and anything’s noteworthy, I’ll update this post.)
First off, the report predicts Tesla will keep its EV lead for the next few years, leaving General Motors and Ford to fight for second place. That’s a shift from previous years, Bloomberg reports:
The forecast marks a shift after Murphy said last year that Tesla was likely to be overtaken by Ford and GM in 2025. The landscape has changed due to Tesla’s price cuts, the latest report said. Tesla Chief Executive Officer Elon Musk has been willing to take lower profits as he reduces prices to keep market share.
With affordability an increasingly important factor in wider EV adoption, Tesla is in line to protect its market-leading position through additional price reductions and new models. The report predicts the company will launch a new, low-priced vehicle in 2026 and a revamped Model 3 the following year.
BofA’s analysts say Tesla cut prices much more than they anticipated, and this buys the company some breathing room before it needs to launch new cars (that are presumably more mainstream than the Cybertruck) in 2026. Personally, I’m not sure I agree; I’ve said this before but I think Tesla’s greatest weakness is its ability to launch new products. Can price cuts carry the Model 3 and Model Y another three years, and probably become most people’s first EV?
Over at the Detroit Free Press, they frame the report around what it means for the home team: GM, Ford, and American-Italian-Franco-Dutch conglomerate Stellantis. And it focuses on “replacement rate:” the percentage of the automaker’s sales volume to be replaced with new or next-generation models, which in this case would probably mean at least some gas cars getting replaced by EVs.
According to the Freep, the report puts Ford in the lead, GM in the middle and Stellantis in the back with regard to replacement rate. Coming in last means a lineup of older cars that could drive buyers to fresher competitors:
“We believe replacement rate drives showroom age, which drives market share, which in turn drives profits, and ultimately stock prices,” the BofA Global Research report says.
And while it forecasts a competitive stretch that could challenge profits in some cases, the report also shows a silver lining for the industry in terms of U.S. auto sales, projecting “a relatively steep increase” from 14.3 million vehicles in 2023 to a new peak in the auto cycle at about 18 million by 2028.
Before then, however, the industry will be in a bit of scramble.
“The challenging macro and shifting powertrain strategies are wreaking havoc on product planning. There is a significant acceleration of EV launches, greater uncertainty around new (internal combustion engine) launches, and likely more last-minute product cancellations. The next four-plus years could be some of the most uncertain and volatile for product strategy ever,” the report says.
Emphasis mine up top. In layman’s terms, this means the automakers are probably going to spend the next five years or so really figuring out what the hell’s going on, where the actual product demand is, and shifting plans at the last minute—something this industry isn’t always built to do. Think about it: EV demand is going to depend on so many factors, including battery development, manufacturing costs and charging infrastructure rollout.
More on this if we get it.
JD Power Throws Punches Over Tech, ‘Quality’
“Car Quality Is Getting Worse,” the headlines proclaim on the heels of a new J.D. Power Initial Quality Study report. But is it really? Are these manufacturing/mechanical quality and reliability issues, or software-related problems? I’ve always considered them to be separate things; you can have a very reliable, well-built car with an annoying and broken infotainment system. But maybe I’m wrong. Maybe that distinction doesn’t matter anymore and customers consider those things to be the same. After all, it’s the sum total of their user experience that matters most.
Turns out, it’s a mix of both. Here’s Insider to walk us through the study, which is based on 93,000 survey responses from new owners:
Quality declined year over year across all categories apart from driving experience. The two categories where problems increased the most were features, controls, and displays, along with infotainment.
Door handles, historically a non-issue, have become increasingly problematic, according to the study. They’re particularly troublesome in electric vehicles, the study said.
Quit messing with the damn door handles, car companies! Some things don’t need to be rethought!
Some drivers reported that wireless charging pads frequently overheated and sometimes wouldn’t deliver a charge.
Oh yeah, actually. I drive new cars for work all of the time and the charging pads never work right; they’ve cooked my phone a few times, too.
They also experienced issues with safety systems like lane-keeping assistance and forward-collision warning.
New cars, even bargain-bin models, have more technology baked into them than ever before. Large touchscreens and advanced driver-assistance technology like blind-spot monitoring are becoming the norm in the auto industry.
Basically, you’re now getting what used to be luxury-car problems on more “affordable” vehicles, which used to be much simpler all around.
What a weird world we’re in, too. Of the brands surveyed, Dodge, Ram and Alfa Romeo (????) had the fewest owner complaints; Toyota and Lexus were pretty mid-pack; and Tesla and Polestar ranked at the very bottom. I’m not sure I buy the Alfa report, but sure, whatever.
Traffic Deaths Down So Far In 2023
Now, here’s some good news: at least for the first three months of this year, traffic fatalities in America are down after spiking during the worst of the pandemic—even though we’re actually driving more since 2020. Here’s Automotive News:
The agency estimated 9,330 people died in vehicle crashes in the first three months of the year, down 3.3 percent from the 9,645 fatalities reported during the same period in 2022. The decrease occurred alongside a 2.6 percent increase in vehicle miles traveled.
The first-quarter data marks the fourth-straight quarterly decline in traffic deaths after seven consecutive quarters of increases that started in the third quarter of 2020.
“This is very good news, but we know that far too many people are dying on our roadways in preventable crashes,” Ann Carlson, NHTSA’s chief counsel, said in a statement. “We are taking significant action to reduce traffic fatalities, including moving forward on new vehicle standards to make cars even safer, investing millions of dollars to improve infrastructure and roadway safety, and working with our state and local partners to help drivers make safe decisions on the road.”
What I don’t see in the report is a breakdown of who died in these crashes: drivers, passengers, pedestrians or cyclists. The last few years have been especially brutal for the last two groups. While modern cars have gotten much safer, they are also bigger and heavier, and it may be more dangerous than ever to be outside of a car these days. Still, any downward trend is good news.
Yes, Car Repairs Are Getting Absurdly Expensive
In the UK, the cost of vehicle repairs paid for by insurers jumped by one third in the first quarter; Direct Line Insurance Group Plc warned last month that adverse damage claims would continue to pressure earnings this year. No wonder UK car insurance costs jumped by a staggering 43% year-on-year in May, according to official inflation data published this week.
In the US, car repair prices are increasing at a 20% annual rate, or around five times the overall rate of inflation. One of the better performing auto insurers, Progressive Corp., last month blamed higher than anticipated costs to fix cars for a deterioration in its underwriting performance, adding it would be “aggressive” in raising customer premiums.
Auto electronics may also require diagnostic scans and recalibration following a crash, adding several hundred dollars to repair bills. “It’s not just inflation, it’s really the average repair today has more labor hours on it and likely more calibration on it than an average repair did even two years ago,” Tim O’Day, the chief executive officer of Canadian collision repair chain Boyd Group Services Inc., told investors last month.
The answer is very simple: if you own a car, never crash it into anything. And make sure it never gets damaged, ever. Especially make sure nobody ever crashes into you, either.
What’s the most annoying or most expensive “quality” issue you’ve ever dealt with on a newer car, tech-related or otherwise? Besides an R56 Mini Cooper S with a CEL that would check in on me every few weeks like an old friend, I’ve been mostly fortunate in this regard. But I’ve driven plenty of new cars with weird issues, including one that lost power on the freeway and had its infotainment system shut off repeatedly during driving.
It was an Alfa Romeo if you’re curious.
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