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Electric Car Sales Climb Sharply Despite Shortages

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Americans are buying electric cars at record paces, further demonstrating the impending twilight of internal combustion engines, aside from rising prices and long waiting times for delivery.

Vehicles running on batteries 5.6% According to industry consulting firm Cox Automotive, new car sales from April to June are still small, but their market share doubled a year ago. Overall, new car sales fell by 20%.

Companies such as Tesla, Ford Motor, and Volkswagen could have delivered more electric vehicles if they could build them faster. Automakers are suffering from a shortage of semiconductors that are more essential to electric vehicles than gasoline-powered vehicles, and the prices of raw materials needed for batteries, such as lithium, have skyrocketed.

Ford’s Chief Financial Officer, John Lawler, sold 15,300 electric vehicles between April and June, an increase of 140% year-on-year. “Demand for electric vehicles far exceeds what we can supply.”

At the same time, the popularity of electric vehicles has hit the industry with surprises and exposed flaws that can delay the transition to battery power, which is considered essential to curb climate change.

One lesson for Ford and other automakers is that switching to electric vehicles requires a radical restructuring of factories and supply networks. For the transition, we are dealing directly with mining companies to secure rare raw materials, such as advanced battery underwriters. Ford plans a $ 5.6 billion complex near Memphis to build electric vehicles.

According to consultancy AlixPartners, automakers and suppliers have announced plans to invest more than $ 500 billion worldwide by 2026 to upgrade their factory networks and supply chains. However, it will take several years for manufacturing capacity to meet demand.

The lack of public chargers is another obstacle, especially for residents of apartments that do not have a garage or driveway to plug in. Many companies are competing to build networks, and the Biden administration is funding but catching up.

“The market is ahead of the charging network,” said Cathy Zoi, CEO of EVgo, which operates more than 850 fast charging stations in the United States.

Electric cars are much more expensive than gasoline cars and are out of reach of many buyers, even when considering fuel savings. The average price of an electric vehicle in the United States is about $ 66,000, compared to $ 46,000 for all new cars. .. One of the reasons is the cost of batteries, which have risen in price due to lack of raw materials after many years of decline.

“To reach 15%, or 25% or 50% of the market, we need to reach a much wider segment of the market,” said John Bozzella, president of the Alliance for Automotive Innovation, an industry group. .. “That’s the challenge for me.”

Sales of electric vehicles in the United States are growing rapidly, but Europe and China are still far ahead. Battery-powered vehicles account for more than 10% of new vehicles sold in Europe and about 20% in China. Government allocations and subsidies play a big role, but there are more options for low-priced models.

Government policy also plays a major role in the United States. California requires manufacturers to sell a certain number of zero-emission vehicles, and California residents drive nearly 40% of electric vehicles on US roads. But Parliament’s efforts to promote electric vehicles nationwide, for example by offering tax credits worth up to $ 12,500 to electric vehicle buyers, are facing strong opposition in Congress.

Felipe Smolka, a partner at EY, a consulting firm that follows the electric vehicle market, said sales in the United States will gain momentum as battery-powered vehicles become more commonplace. People will hesitate to buy fossil fuel-powered cars, he said, out of fear that they may become obsolete and lose their resale value. Automakers have significantly stopped investing in internal combustion engine technology.

“The energy behind this transition is already at a point where there are no returns,” Smolka said.

Not all automakers share the electric vehicle boom equally. There is an increasing disparity among traditional car makers between those who have begun to sell cars that can compete with Tesla’s popular models and those who have not.

Major automakers such as Jeep, Chrysler and Lamb car makers Toyota, Honda and Stellantis have announced plans for battery-powered models, but they rarely exist in the pure electric vehicle market in the United States. Hmm. Toyota started selling the battery-powered sports utility vehicle bZ4X this year, recall Some of those cars in June due to the risk of the wheels coming off.

Entering the market early does not guarantee success. The Nissan Leaf was one of the first electric vehicles to be mass-produced, but sales in the United States in the second quarter were only 3,300 units, down 30% year-on-year. Nissan will replace Leaf with Ariya, an electric SUV that will be launched in the fall.

Once considered the leader in EVs among traditional automakers, General Motors went off track last year with a recall of electric bolts. There was a danger that the battery would catch fire. GM sold less than 500 volts in the first quarter of 2022. Second-quarter sales recovered to 7,300, but were still down 20% from the second quarter of 2021.

For companies with an electric vehicle lineup, ongoing technological changes are an opportunity to raise their profile. Hyundai and Kia, the car makers of Ford and South Korea, are brothers of the company and are the most popular EV brands in the United States after Tesla.

Tesla continues to be a winning company, but shows signs of vulnerability.Company Delivered more than 254,000 vehicles In the second quarter, it was down from 310,000 in the first quarter due to shutdown and supply chain issues that affected the Shanghai plant.

Tesla’s second-quarter sales increased 26% year-over-year, and the company said it built more cars than ever in June, indicating that supply problems have eased.

Still, Tesla faces fierce competition in China, which has the world’s largest car market. BYD, a Chinese car maker that also produces batteries, sold 70,000 pure electric vehicles worldwide in June alone. In Europe, Tesla lags behind Volkswagen, Stellantis and Hyundai / Kia in selling electric vehicles for the first five months of 2022, according to Schmidt Automotive Research in Berlin. (Tesla’s Model 3 and Model Y continued to be Europe’s most popular electric vehicles.)

Bank of America analysts said in a recent report that Tesla’s market leadership would be delayed as traditional automakers introduce dozens of electric models. They predicted that Tesla’s share of global electric vehicle sales would plummet from 70% last year to 11% by 2025.

“Tesla’s dominance in this still early market segment may be nearing its end,” said an analyst at Bank of America.

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