The Present State of the EV Market

It’s not good

Great time to get a bargain on an EV - in the middle of a big winter storm - if you’re brave enough! (…or foolish enough?)

Sales of Battery Electric Vehicles (BEVs) are still rising, but at a slower pace, leaving car manufacturers somewhat in the lurch. There’s really no problem with hybrids (HEVs), although they are more expensive than comparable all gas engine cars. Hybrid sales make up the bulk of so-called EV sales, masking the slow sales of the all electric vehicles. Hybrids are OK in any kind of weather and on any length trip and they keep running even when the grid is down, as long as you have a spare gas can in the trunk. Plug-in hybrids (PHEVs) are less desirable because they cost more and their batteries are about 10X bigger than regular hybrids, thus much more expensive to replace.

The slow down in BEVs was a surprise to car manufacturers who had been convinced by oodles of media hype saying BEVs were the future and they would replace Internal combustion Engines (ICEs).

Large dangerous lithium battery fires that are extremely hard to put out haven’t helped EV sales either. Nor have reports of the destructive and toxic effects of lithium mining.

The automotive industry has always been very competitive, with each company trying to get ahead of the curve – so they allocated vast amounts of capital to building for the “future” – all electric vehicles.

The governments’ promises of endless subsidies made it seem like a no-brainer, so they didn’t even bother to worry about due diligence in regards to marketing research. It was not only premature, it may turn out to be a mistake with long-lasting consequences for profitability.

One of the factors in this equation is China. China’s electricity is less expensive than others because they make so much of it with coal power plants. China also has pretty close to a corner on the sourcing of critical materials needed for electric batteries, which account for about half the cost of an EV. Not only that, but China has highly subsidized EV production, and one manufacturer, BYD, is now producing EVs both cheaper and many say better than Western manufacturers. This could have been foreseen, in my opinion.

The miscalculation is not entirely the fault of our car manufacturers. I mentioned the influence of media hype and government subsidies, but on top of that, some states, like California, are mandating the phase-in of EVs, and quickly. If the mandates became national, and it was looking like that might be the trend, then what was a car manufacturer to do?

The one most crucial part of the EV equation was, of course, the consumer. Nobody asked the public what they wanted. That’s the trouble with top down government – trying to force people to buy something they don’t want doesn’t work very well.

There are many reasons why people might not want electric vehicles, and they’ve been well publicized by other substack writers. I’ll just mention one for an example. “Energy Security and Freedom” had a guest post from Jason Isaac yesterday, 2/19/25. Here’s an excerpt:

“Take cobalt, a key mineral in electric vehicle batteries and energy storage. The Democratic Republic of the Congo produces over 70% of the world’s cobalt, much of it extracted in dangerous, inhumane conditions. Thousands of children labor in hazardous mines, inhaling toxic dust and risking deadly cave-ins, all so Western countries can feel virtuous driving electric vehicles. How is that “green”?

Lithium, another essential battery component, is no better. Extracting it requires massive amounts of water, depleting scarce resources in places such as Chile’s Atacama Desert, leaving behind toxic waste.”

I don’t know about you, but for me, just the environmental destruction of mining these minerals that are used in the batteries is reason enough not to buy an EV.

The battery is everything in a BEV, which is nothing but a big, heavy battery on wheels. BEVs introduced a whole new meaning to depreciation - guaranteed to become less efficient every year as the battery declines and range decreases and the ominous cost of replacement nears. The fact that it’s a potentially spontaneous fire hazard that can hardly be put out, endangering everything it’s close to, might discourage buyers a little, too, don’t you think?

Yesterday, in My Two Cents, I wrote about crypto, comparing BTC, ETH, and SOL. One of the problems with BTC (Bitcoin) is thast ti taskes aroiund 10 minutes for a transaction to be confirmed. So it’s not practical as a substitute for money. The same argument can be used for BEVs - it’s not practical when it takes too long to charge the battery.

Also from Thomas Shepstone’s Energy Security and Freedom, 2/9/25 - “According to a report by Wood Mackenzie, Trump’s executive actions could reduce the market share of EVs by 28 percent by the end of the decade compared to earlier forecasts.”

The last time I checked, in 2024, Ford was projecting a loss on their EV section of about 4.7 Billion. Yes, that’s a B for Billion.

But their year end figures were even worse than that, coming in at an incredible loss of 5 Billion.

The Daily Caller looks at GM’s report of a loss of 1.7 Billion on EVs. In that report, GM made an interesting statement that they became "variable profit positive last year, earning more money than the labor and material costs.”

“Variable profit positive” was a brand new terminology for me. It sounds like an optimistic way of looking at the situation, but it doesn’t count the huge capital investments for new assembly lines and re-tooling, etc.

The Daily Caller article goes on:

“The term "variable profit positive" comes with a slight caveat. This metric, as reported by Reuters, means that revenue for GM's EVs was higher than the variable costs, which includes money spent on labor for building the vehicles and the material required to assemble them. What it doesn't account for are fixed costs such as creating new assembly lines, so GM's massive investments in its EV factories and the engineering of the new models are taken out of the equation.” emphasis mine

Germany is in trouble ever since they shut down their nuclear plants and prioritized wind and solar. The cost of electricity affects all industries.

Automotive manufacturing solutions writes “VW is planning on trimming it’s labor force in Germany by about 15%” (or approx. 100,000 jobs.)

“In a move that has sent shockwaves through the automotive sector, Volkswagen has announced the potential termination of a job security agreement that has been in place since 1994…

This agreement, which was designed to protect employees from layoffs until 2029, has been a cornerstone of labour relations at Volkswagen for nearly three decades. Its abrupt discontinuation highlights the severity of the challenges facing the carmaker as its production levels take a hit amid its push to shift to Electric Vehicles (EVs).”

VW owns Audi and Porche.

Autoblog.com: “Volkswagen’s state-of-the-art EV plant spirals toward collapse.

The Brussels plant that produces the Audi Q8 E-Tron may soon shut its doors as electric vehicle sales falter in Europe.”

Detroit news.com “Porsche AG will trim its workforce by 1,900 employees by the end of the decade in response to weak electric vehicle demand...”

As I said, it doesn’t look good for the future of EVs.