20th July 2024

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On this article, I analyze the Q1 gross sales outcomes of three main automakers and attempt to make sense of why the EV laggards did one of the best.

Picture credit score: Good Automotive, Unhealthy Automotive

I’m going to debate the electrification technique of three of the manufacturers within the US market and the way it labored for them within the 1st quarter of 2024. My expectation a yr in the past was that Tesla can be promoting many extra automobiles, Hyundai can be doing okay, and Toyota can be struggling as the general public realized they’d missed their likelihood to be a frontrunner in creating nice electrical automobiles. It appears like I (and lots of others) obtained it 100% flawed, within the quick time period at the very least. First, I’ll cowl what every of these corporations reported, then I’ll describe what labored and what didn’t, after which I’ll focus on the place they (and different corporations) will go from right here.

Tesla Had A Powerful First Quarter

As Zach lined a couple of days in the past, Tesla introduced disappointing first quarter deliveries. I’m specializing in the US market, so I’m utilizing the estimates from goodcarbadcar.web (Tesla doesn’t share US figures). At first look, the 7% decline versus the 6% achieve for the market doesn’t look too unhealthy, however it is vitally disappointing contemplating that pricing on their greatest promoting Mannequin Y has dropped significantly.

Picture credit score: Aldrich “GenSao” Bautista gensao@yahoo.com

Within the above desk, I in contrast the worth of the Lengthy Vary Mannequin Y within the first quarter of 2024 to final yr and the final quarter of 2022. I used the worth tracker to get the costs, and the place there the place many costs for the quarter, I mentally averaged the costs weighted by size of time that value was accessible. I say mentally as a result of I didn’t do it in a workbook, I simply estimated the costs and rounded to the closest thousand {dollars}. For the everyday stock low cost, I listened to some movies from the DennisCW YouTube channel to get an thought. Most of us following Tesla know concerning the huge 29.7% value drop within the first quarter of final yr, however I don’t see a lot dialogue that costs have dropped an extra 19% within the final 12 months, leading to a staggering 43% web value drop for one of the best promoting automobile on the planet! As well as, the tax credit score grew to become immediate and is now accessible to many individuals whose revenue was too low to make the most of it final yr.

I used the identical strategies for this desk, besides I listed the least costly Mannequin Y accessible in every interval. Within the first two durations, that was the Lengthy Vary AWD, however in the newest interval, that’s the RWD Mannequin Y with 260 miles of vary (as an alternative of the 310 miles of vary of the Lengthy Vary AWD). This reveals the entry degree Mannequin Y value dropped much more than the apples to apples comparability I first confirmed. So, clearly, the worth dropped significantly irrespective of the way you have a look at it. From a private standpoint, my daughter purchased a Mannequin Y a pair years in the past for about $60,000, and one a couple of weeks in the past for about $24,000 ($5,000 Colorado tax credit score and a few additional incentives provided the final week of the quarter clarify why the worth is decrease than the $32,490 quantity within the desk above). The cheaper price enabled her to afford a second Tesla, although the gasoline saving are minimal on that automobile because of solely driving it about 6,000 miles a yr. Enhancing security and lowering upkeep and restore prices had been the first causes for changing the 20-year-old gasoline automobile (2003 Honda CR-V).

So, given the MASSIVE web value decreases defined above, why didn’t gross sales enhance? That may be a complete article in itself, however some causes that come to thoughts are listed beneath.

  1. Troy Teslike has acknowledged that Mannequin three demand is powerful, however that manufacturing within the US was restricted because of ramping points associated to the Highland refresh.
  2. As well as, the Mannequin three misplaced the federal tax credit score, until you utilize the leasing loophole. I feel this can be probably the most important of the explanations and clarify a lot of the drop.
  3. Most individuals don’t know the costs have dropped a lot. That is the entire “ought to Tesla promote or simply lower costs” debate. Though Tesla does promote now, most individuals nonetheless don’t know concerning the decrease costs. [Editor’s observe: Additionally, from my expertise, most Tesla promoting doesn’t emphasize the decrease costs. —Zachary Shahan]
  4. Many individuals (together with Elon Musk) say the rise in rates of interest is answerable for the drop in Tesla gross sales, but when that was the case, we might see poorer gross sales from different makes, so I feel this can be a minor concern.
  5. All of the speak of the $25,000 Mannequin 2 is Osborning some gross sales of the Mannequin three and Y, however I feel that is additionally a comparatively minor concern.
  6. Donald Trump and different Republicans have actually elevated their assaults on electrical automobiles. Though a lot of the factors they make are both partially true or completely false, they’ve been very efficient at inflicting a large group of individuals to say they may by no means purchase an electrical automobile. See the video beneath for extra on this.
  7. Elon has made a whole lot of feedback on X/Twitter that progressives don’t like. That is the group that likes electrical automobiles probably the most. So, some individuals who would have purchased a Tesla have both purchased a unique model of electrical or simply purchased a gasoline automobile as a result of they don’t need a non-Tesla till these manufacturers us the NACS connector and have entry to most superchargers. See the video beneath for extra on this.

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Hyundai Had A Flat Quarter

As we lined in additional element on this article not too long ago, Hyundai had flat gross sales versus the 6% achieve for the market. That appears okay, however why didn’t they exceed business progress like they’ve finished for a lot of the final 30 years? I don’t know, however my guess is the provision chain points which have plagued Toyota and Honda are lastly resolved, so lots of people who wished these manufacturers might need purchased a Hyundai final yr as a result of they had been accessible however Hyundai will not be getting that additional increase this yr. Let’s focus on their hybrid and electrical automobile technique.

Hyundai is midway between the Tesla (we solely make electrical automobiles) and Toyota (we like hybrids) technique. Hyundai makes gasoline automobiles, hybrids, plug-in hybrids, and electrical automobiles. It makes a fairly good quantity of all of these in order that it’s simply as much as the buyer to purchase what they need. The standard of their hybrids and electrical automobiles are ok to win many awards, so I’d say they’re first rate. Hyundai provides two fashionable electrical automobiles designed from the bottom up — the IONIQ 5 and the 2023 CleanTechnica Automotive of the 12 months, the IONIQ 6! As well as, the corporate provides an electrical model of its Kona subcompact crossover.

Hyundai’s EV gross sales jumped 62% within the quarter versus the primary quarter of 2023, despite the truth that none of those are made within the US, in order that they don’t get the $7,500 tax credit score until they’re leased. Hyundai (and Kia) have been a lot quicker at pushing leasing to make the most of that loophole than Tesla. Additionally they let individuals purchase out the automobiles on the finish of the lease if they need. Hyundai was shocked by the main points of the Inflation Discount Act (IRA), so it’s at a significant drawback to Tesla, which has EV manufacturing within the US and a few battery contracts which have sufficient supplies from the best nations to get the complete tax credit score for many of their automobiles. Hyundai has been fast to construct capability within the US and I’m amazed it will likely be opening its megaplant in Georgia in about 6 months!

Toyota Had A Nice Quarter

Toyota’s gross sales had been up 22% for the quarter, and its “electrified” automobile gross sales (largely hybrids, however a couple of plug-in automobiles) had been up 76.4% over the primary quarter of final yr.

Picture credit score: Toyota Pressroom

Taking a look at fashions, I can see that solely 2% of their electrified manufacturing is totally electrical, whereas 7% is plug-in hybrids. Though these are very low numbers, they’re rising shortly, every growing about 100% since final yr. The Camry is Toyota’s second hottest automobile and solely about 11% go for the hybrid mannequin, however the 2025 mannequin popping out this spring will probably be 100% hybrid and may (not introduced, however rumored) be accessible as a plug-in mannequin. Clearly, having dependable hybrids and plug-in hybrids is working for Toyota within the US market (it’s failing miserably within the massive Chinese language and European markets).

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That is the most important threat for Toyota. If a market begins to go electrical shortly (as is occurring in China, Europe, and another nations), Toyota is caught with no aggressive product because it doesn’t make many EVs and those it does make aren’t that nice. However, with the polls fairly even and the betting markets a tossup as as to if Biden will probably be re-elected or Trump will return to workplace, it’s value noting that Toyota would fare very nicely within the US beneath a Republican administration. Even when Biden is re-elected, the brand new emissions guidelines give automakers the selection of constructing a whole lot of hybrids or fewer electrical automobiles. They don’t care the way you cut back emissions, so long as you do. Ted Ogawa not too long ago stated that he doesn’t even anticipate there to be demand for these not too long ago lowered targets and Toyota plans to only purchase credit as an alternative of losing assets designing and constructing electrical automobiles he’s satisfied his prospects don’t need. I feel he’s lifeless flawed and they are going to be caught with out good merchandise when the market realizes electrical automobiles are nice. However this yr, he has been proper and I’ve been flawed.


It’s a loopy world we dwell in. For my part, Tesla has one of the best automobiles and one of the best plans, Hyundai has fairly good plans, and Toyota has the worst, however the first quarter has taught us that markets don’t transfer in straight strains. Particularly because the automobile market has began to change into extra political, you may’t simply decide winners by who has one of the best long-term technique. Elections and campaigns are having all types of results on each the automakers and the consumers of automobiles, and that is inflicting some very unusual outcomes. This quarter, the outcomes are the alternative of how aligned the producers are with a fast transition to electrical automobiles.

I’m satisfied that as extra individuals uncover that electrical automobiles are nice and that they’ve been lied to by the anti-EV crowd, corporations that design good electrical automobiles (like Tesla and Hyundai) will probably be rewarded, and those who slowed progress (like Toyota and the opposite Japanese automakers) will probably be punished. But when Trump is elected, the transition to electrical automobiles within the US will doubtless be delayed a couple of years, as he discourages it.

Disclosure: I’m a shareholder in Tesla [TSLA], BYD [BYDDY], Nio [NIO], XPeng [XPEV], Hertz [HTZ], NextEra Power [NEP], and a number of other ARK ETFs. However I provide no funding recommendation of any type right here.

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