The signs of an electric vehicle revolution were all there, but it seems consumer demand for all-electric vehicles was still able to surprise seasoned automakers. With Tesla currently controlling around 70% of US electric vehicle sales in the first half of the year, the race to catch up with the pioneer is on, but that’s a lot easier said than done.
It’s a pretty crazy thought today, but when Tesla announced plans to build a dedicated battery factory to support the Model 3 ramp, many were skeptical. At the time, many still wondered if there was really a demand for electric cars. This is no longer the case today. If auto executives didn’t know if there would be buyers for electric vehicles before, now they’re wondering if they can build them fast enough.
Electric cars make up only about 6% of overall vehicle sales in the United States, but that percentage has tripled in the past two years. Meanwhile, sales of other types of cars have declined, according to information from research firm Motor Intelligence. This was represented by the fact that five of the six best-selling cars in the United States were electric or plug-in hybrids. Tesla’s Model Y, a crossover, is on its way to becoming one of the best-selling cars in the world.
All-In on electric vehicles
Veteran automakers have expressed their intention to bet on electric vehicles, and some, like GM CEO Mary Barra, have even said in the past that she thinks General Motors could overtake Tesla in the future. The same goes for Ford and Volkswagen executives. But insofar as it is easy to announce such an ambitious objective, achieving it is an entirely different matter.
GM, for example, kicked off its recent EV push with the GMC Hummer EV and Cadillac Lyric. GM has received a lot of support from the Biden administration for its electric vehicle efforts, so much so that Biden has dubbed Barra as a leader who electrified the auto industry. Yet, according to The Wall Street Journal, people familiar with the matter noted that production of the Hummer EV and Lyriq are still happening at rates of less than a dozen a day. And this despite waiting lists for both vehicles that stretch into the tens of thousands.
And it’s not just GM. Ford is somewhat in the same boat. The Ford F-150 Lightning is an acclaimed vehicle and its order books are extremely long. Demand for the vehicle was so great that Ford had to double its production target twice. In 2020, the company expected its lighting factory to produce 40,000 mics per year, a goal that doubled last year. Last January, as Lightning order books continued to grow, Ford again doubled its goal to reach 150,000 trucks by the summer of 2023.
Ford EV Programs Manager Darren Palmer gave an idea of how quickly Ford needed to adjust its Lightning goals. “The cement had barely reached some of the walls, and we were already expanding,” he said.
A rush for supplies
Many challenges faced by seasoned automakers were due to a lack of supply chain parts, as well as a struggle to secure as many batteries as possible. Electric vehicles use more computer chips than combustion cars, which has made things very difficult during the chip crisis facing the entire industry. Electric cars also depend on batteries, so automakers are now in something of a battery arms race to ensure their electric vehicles can be accelerated.
Ultimately, the Log noted that automakers are in their current predicament because many underestimated their early EV production estimates. So when electric vehicles took off during the pandemic, many auto industry executives were caught off guard. Add to that the fact that newcomers like Rivian and Lucid are also entering the fray, and the auto industry increasingly seems on the cusp of real change.
In a way, it’s simple. If veteran automakers want to catch up with Tesla, they need to make electric cars people want to buy. The success of non-Tesla EVs such as the F-150 Lightning, Mustang Mach-E, and Hyundai Ioniq 5 shows that the EV market has enough space for several automakers. But with the current surge in demand for EVs, some automakers may end up seeing EV-only rivals like Tesla increase their lead in the coming years.
The question of whether there is a demand for electric vehicles has long been settled. In a statement to WSJ, Earl Stewart, a Florida-based Toyota dealer, noted that there was actually a lot of interest in the bZ4X. However, the availability of the vehicle is simply not there. Stewart noted that mass adoption of electric vehicles would require affordable electric cars. That being said, he has already made the leap to electric vehicles – he currently drives a Tesla Model S Plaid.
“Until they lower the price, it’s only going to be people like me who can afford electric vehicles and want to be the first to drive one,” Stewart said.
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