What It Means That Even The World’s Biggest Electric Carmaker Is Slowing Down

To read today’s TMD you need to hold three thoughts in your head that don’t feel like they fit, but they do. Carmakers that are focused on building on electric cars are slowing down production. Carmakers that want to sell in America are going to have to build more electric cars or plug-in hybrids by 2032. Americans will probably buy more electric cars this year than any other year in history.

What’s going on? We are in the in-between times. BYD is reportedly slowing down its plans to open up a plant in Vietnam where it was expected to expand its global electrification efforts. Ford is cutting back at the factory where it makes the F-150 Lightning. At the same time, automakers have dialed back their kvetching over the planned EPA rules, but they’re still kvetching a little.

And, finally, BEVs (electric cars) are likely to make up about 8% of the total sales in March, an increase over prior years.

BYD Looks Abroad For Profits, But Slows Down Its Global Expansion

Last year, Chinese electric carmaker BYD officially overtook Tesla as the biggest maker of electric vehicles and, well, it’s probably not looking back anytime soon.

Here’s how the company’s chairman explains it in this story from the South China Morning Post:

Wang Chuanfu, the Shenzhen-based carmaker’s chairman and president, told an investors’ conference on Wednesday that deliveries in 2024 could top 3.6 million units, 20 per cent more than last year’s 3.02 million units, according to the meeting’s minutes seen by the Post. The projected year-on-year increase would represent just a third of the 62.3 per cent jump recorded last year.

Wang also forecast that exports will more than double to 500,000 units this year, as BYD steps up its go-global campaign.

But heavy is the head that wears the crown, and some are concerned that BYD is not going to be able to achieve its goal of 20% year-over-year growth amid wavering consumer sentiment in its home market of China. From the same article:

“Overall demand for EVs [in China] is set to fall in 2024, as consumers refrain from buying items such as cars due to concerns about job prospects and incomes,” said Zhao Zhen, a sales director with Shanghai-based dealer Wan Zhuo Auto. “A 20 per cent increase will not be easy to achieve, given the current weak market sentiment.”

The way to achieve more growth, of course, is through rampant price-slashing, which is what’s currently happening in China as the country’s EV price war enters its second year. And the way to achieve profits, in theory, is to expand in other markets, which BYD is actively trying to do. Expanding in other markets while also simultaneously cutting prices at home puts profits in peril, so it sounds like BYD is slow-rolling at least some of its plans:

Chinese electric vehicles maker BYD, has slowed down its plans to build an EV factory in Vietnam, a manager of the industrial park where the plant would be built told a shareholders meeting on Thursday.

Vietnam’s government said in May that BYD had decided to build a factory to manufacture and assemble electric cars in the northern Vietnamese province of Phu Tho, where the company has already a plant that produces tablets for Apple

“Due to its strategy and the slowdown of the electric vehicle market, BYD slowed down (plans) to start construction,” said Luong Thanh Tung, Vice Chairman of Gelex Group, the company that runs the industrial park where BYD would build the new factory.

It doesn’t sound like the plan is canceled, but with wavering growth, it’s logical that BYD might try to slow itself down a bit and preserve some money, especially in a tough borrowing environment.

Ford Cutting Back F-150 Lightning Production

Ford managed to get to the electric truck market fairly quickly, but the F-150 Lightning is mostly just an F-150 with an electric powertrain and not the ground-up EV design that’s coming from Ford next year. So, unsurprisingly, Ford is cutting back significantly at the place where the F-150 Lightning is built according to the Detroit Free Press:

Of the 2,100 workers who make up three work crews at the Rouge Electric Vehicle Center in Dearborn, one third will remain on-site after April 1, Ford spokeswoman Jessica Enoch told the Detroit Free Press on Wednesday. A crew of 700 will be transferred to the Michigan Assembly Plant in Wayne to build the Bronco and Ranger while the remaining 700 or so will either take the $50,000 retirement package negotiated during the 2023 contract talks or accept reassignment in southeast Michigan. Ford is adding a third crew at Michigan Assembly.

The F-150 Lightning is cool, but it’s a transitional product, and in a tough EV market it’s sensible to build more Broncos.

Automakers Now Only Lightly Complaining About EPA Regulations

The Biden Administration did what automakers asked for and slow-rolled its stricter emissions regulations, but they’re still pretty strict and automakers will have to build a lot of EVs and PHEVs to meet them. Our pal David Shepardson of Reuters did the thing where he walked around the New York International Auto Show and asked a bunch of automakers how they felt about them.

Pablo Di Si, head of Volkswagen’s North American business, called the 2032 requirements “extremely tough.” He said the automaker will not change “one product launch” as a result of the softer rules, which will “not change the end game for the U.S. and for VW,” and will continue with EV rollout plans.

Hyundai Global Chief Operating Officer Jose Munoz said on Wednesday that the EPA revised standards are “a little bit less demanding but is still challenging.” The company is spending $12.6 billion to ramp up EV and battery production.

It’s interesting to see automakers grumble a little but, at the same time, realize they got most of what they asked for and thus can’t grumble too much.

Battery Electric Vehicles Likely To Be 8% Of Market In March

It’s easy to understand growth. If you have two bunnies in your yard this spring and 10 bunnies in your yard next spring you have a lot more bunnies. The pace of growth is a little harder to understand intrinsically. If the following spring you have 16 bunnies, well, you’ve still got a lot more bunnies than you started with, but your rate of bunny growth has slowed down (maybe there’s only so much food or very well-fed coyotes).

That’s where we are with electric cars. There’s been an explosion in models in the last few years and so we have more and more cars being sold, but we’re not doubling EV sales every year anymore. In the good chart from S&P Global Mobility above, you can see it’s still growing, but it’s only growing so much and is off year-end peaks:

Continued development of battery-electric vehicle (BEV) sales remains an assumption in the longer-term S&P Global Mobility light vehicle sales forecast. In the immediate term, some month-to-month volatility is anticipated. March BEV share is expected to reach 8%, similar to the month prior reading as automakers, dealers, and consumers continue to digest the changes to IRA Federal tax credits to begin the new year. BEV share is expected to advance over the next several periods, pending the rollouts of vehicles such as the Chevrolet Equinox EV, Honda Prologue, and Fiat 500e, all scheduled for market introductions over the first half of 2024.

That’s about where we are, roughly maximized with the product we have, but expecting some growth from new products.

What I’m Listening To Right Now

I’m in Corpus Christi visiting family and, well, it’s gotta be Selena. Tomorrow it’ll probably be Robert Earl Keen.

The Big Question

There are about nine million Texas Edition trucks out there on the road by my count. Does your state have a special edition/dealer edition vehicle? What is it?