Ah California, the land of Hollywood stars, electric cars, and a constantly sick David Tracy. It should be the one place where electric car sales never stop rising, but that hasn’t been the case in the last two quarters.
Indeed, Germany, which is our resident consumptive David Tracy’s second home, also, has seen declines in electric car volume. What’s going on here? Why is this happening?
At the same time, Volvo is looking at Polestar and thinking: This was fun, but maybe we should just give it away like Anthony Keidas?
You know who might be in the market for more carmakers who have faltered in the EV transition? Carlos Tavares! I love that Carlos Tavares is becoming a character in The Morning Dump because he’s a shrewd, seemingly caustic and occasionally funny operator. I don’t know him, but that’s the vibe I get.
The California Electric Car Stumble
In theory, all new cars sold in California by 2035 will be electric cars. That hasn’t happened yet, though the state has seen plug-in sales (including PHEVs) rise to cover about 1-in-4 cars in 2023. That’s a big step in the right direction.
You know what’s not a step in the right direction? Only 89,993 electric light passenger vehicles were registered in the fourth quarter of 2023, which is down about 10% from the third quarter, which itself was down from the second quarter of 2023.
What’s going on here?
I think all of those things are true, obviously. There’s an additional point in there about Tesla not updating its cars, which is partially true (but the new Model 3 is out and a cheaper model is maybe coming).
While many federal tax incentives were still in place in Q4 of 2023, it wasn’t particularly straightforward and it wasn’t yet POS for automakers.
Ok, let’s see what’s happening in Europe, another place full of environmentally-minded people.
Germans Think EV Sales Will Drop This Year For First Time In Seven Years
Welp. Things are not super ideal there either. The German car lobby (the VDA) assumes that sales of EVs will drop in 2024, with shipments declining 14% to 451,000 units. When it comes to EVs, Germany is the biggest market in Europe.
While there’s still demand, there’s also a specific reason that’s not necessarily the case in California, as Bloomberg reports:
In December, Chancellor Olaf Scholz’s coalition government discontinued a subsidy for EVs at short notice, a year earlier than previously planned.
EV sales in Germany last declined in 2016 and have climbed each year since. The country sold over 524,000 fully electric cars in 2023 — more than any other market in Europe.
Yeah, that cut in subsidies didn’t help.
So, to answer the question in the headline: What’s going on here?
I’m not going to continue to beat the dead horse of EVs being too expensive, because we all know that EVs are too expensive.
This all feels like a pretty normal development in the hype cycle of expensive new technology. We are well past the initial gust of wind from early adopters, the second wind from new federal subsidies, and even the third wind of price cuts.
With gas prices low and interest rates high, it doesn’t really matter how good the economy is. People will buy what they can afford and 2024 could easily be a lost year for electric cars, even as more come to the market and more vehicles begin to qualify (or re-qualify) for federal tax incentives. A “lost year” when the market sells more EVs isn’t a terrible outcome.
If I had to guess, by 2025 many automakers will be on the way to sorting their battery-sourcing issues, we’ll have more affordable EVs on the market, and interest rates will probably be down.
There’s also upside this year for an automaker (ahem GM) that can get good, cheap EV products here quickly that also qualify for point-of-sale tax credits.
Volvo Admits It’ll Probably Give Up Polestar
Volvo had the most profitable year in the company’s 97-year history, with profits up a whopping 43% year-over-year as the Swedish carmaker pushed past supply woes and sold a record 708,716 cars.
What of Polestar, its EV-making subsidiary with parent company Geely?
There’s a hint in the press release that Volvo sent out today:
As we move into the next phase of our transformation, including deploying large-scale investments in the creation and adoption of new technologies and future-fit production facilities, our focus is on developing Volvo Cars and concentrating our resources on our own ambitious journey.
We are therefore evaluating a potential adjustment to Volvo Cars’ shareholding in Polestar, including a distribution of shares to Volvo Cars shareholders. This may result in Geely Sweden Holdings becoming a significant new shareholder.
Geely will continue to provide full operational and financial support to Polestar going forward, and as a result Volvo Cars will no longer provide further funding to Polestar. We will, however, extend the repayment period for the existing convertible loan by 18 months to the end of 2028. This will be subject to relevant approvals and further information will be provided in due course.
That’s a nice way of saying the company might give Polestar to Geely and isn’t giving it any more money. The result has been an increase in Volvo’s stock and a decrease in Polestar’s pretty lousy post-SPAC shares.
European Brands Are Losing Their Minds Over EVs And Stellantis Wants To Reap The Benefits
Stellantis CEO Carlos Tavares, pictured here, is a stone-cold dude. Fresh off dunking on the Italian Premier, Tavares is clearly positioning his Franco-Italian-American-Dutch-Tahitian conglomerate car company to swallow up some more brands.
Here’s an update on that from Bloomberg via The Detroit News:
The 65-year-old chief executive isn’t taking formal steps to pursue Renault, which is virtually off-limits due to the French state’s ownership and influence over the two manufacturers. What he has done is upstage his archrival at every turn, and ready his company to capitalize on any setbacks.
Renault hit just the sort of stumbling block Tavares has been waiting for this week, calling off a multiyear pursuit of an initial public offering for its EV business. In an exclusive interview, the Stellantis CEO questioned Renault’s strategy and whether it will have the scale to compete with his company and EV leaders Tesla Inc. and BYD Co.
“It’s my job to keep my eyes open. It’s my job to understand how the industry is going to survive this transition. It’s my job to make sure that my company will be one of the winners,” Tavares said Wednesday. “And if we are one of the winners, of course there will be opportunities.”
What a killer, man. Ice-cold veins.
And where could some of that money to buy a Renault or other brand? Here’s a fun little update from Reuters:
The Italian government would be prepared to buy a stake in carmaker Stellantis (STLAM.MI), if the company asked it to do so, Industry Minister Adolfo Urso told reporters on Thursday. Urso also confirmed that Stellantis, owner of the Fiat brand, had committed to lifting annual production in Italy to one million vehicles.
I’m not going to lie, the Tavares strategy is also, to some degree, my strategy. Sports Illustrated obliterated its staff, The /Drive‘s owners shot themselves in the foot with a private equity deal, and Jalopnik might be for sale.
We’re trying to build something sustainable here to ride out this transition and then flourish after it. Consider becoming a member and getting in on the ground floor!
What I’m Listening To While Writing This
The super weird sophomore album from Remi Wolff, which includes this jam about the pandemic and Anthony Kiedis.
The Big Question
What’s a good nickname for Carlos Tavares? What do you think of the guy? Is he doing it right? Is he screwing up by ignoring his domestic brands and skating on EVs? Let’s talk about this dude.