The past year was marked by news about EV manufacturers who drastically reduced their prices in order to somehow bring their electric vehicles to the public – with moderate success, as the latest quarterly results of electric car top dog Tesla showed. Is the era of electric cars already over before it has even really begun?
• Tesla caused long faces with its latest balance sheet
• EV sales in the US grew at an increasingly slow pace in 2023
• Is the success story of electric cars already over?
Not long ago it seemed as if the future belonged to electric cars. The rapid growth of electric car manufacturer Tesla seemed to be symbolic of the increasing success of EV vehicles. For the full year 2019, the group delivered under visionary Elon Musk a total of only around 367,500 vehicles. In 2023 there were already 1.81 million electric vehicles delivered. Meanwhile, production grew to 1.85 million vehicles. Tesla shares have also shown remarkable development since then. It ended 2019 at a price of $27.89. At the end of 2023, the price was 248.480 – an increase of 790.96 percent.
Tesla’s fourth quarter 2023 numbers disappoint
Nevertheless, the past year proved to be particularly challenging for Tesla, with the US top dog’s growth weakening significantly. The company achieved a gross profit margin of 17.6 percent in the fourth quarter of 2023 – a year ago this was 23.8 percent, and in the previous quarter it was 17.9 percent. There were also long faces among investors in terms of sales. Although revenues rose by three percent to $25.2 billion in the fourth quarter of 2023, this growth rate was the lowest in three years and also fell short of expectations.
What was even more important, however, was the fact that Tesla did not want to set a sales target for 2024 and simply stated that the growth rate in sales was likely to be “significantly lower” than in 2023. The reason given was a new generation of vehicles that is currently being worked on being worked on. We are currently between two waves of growth. In the past, Tesla had targeted an average annual growth rate of 50 percent over several years. This was no longer mentioned in the most recent quarterly presentation.
In order to achieve the sales target for 2023 of 1.8 million vehicles delivered, the Musk Group massively reduced its prices in 2023. The popular Model Y, for example, was offered 26 percent cheaper in the USA. The US car manufacturer is not the only EV manufacturer that suffered from weak demand.
US EV sales are growing more slowly
Figures from the automotive research company Kelley Blue Book show that although EV sales in the USA rose to a new record of 1.2 million vehicles in 2023 as a whole, the sales rate fell from quarter to quarter. In the fourth quarter of 2022, EV sales in the USA increased by 52 percent compared to the previous year. However, in the third quarter of 2023 it only increased by 49 percent, and in the fourth quarter of the same year it only increased by 40 percent. So even though the EV market in the US continues to grow, the growth rate has still slowed.
The American economist Todd G. Buchholz argues in an article for the news portal MarketWatch that it seems as if the trend towards electric cars is already waning again, for which in his opinion there are several reasons, with the main one being: relates to the situation in the USA.
Charging infrastructure inadequate
The inadequately developed charging infrastructure in the United States continues to be a major issue. According to Buchholz, it would simply be more convenient for many people to use the expanded network of gas stations to supply their gasoline or diesel vehicles with fuel than to go looking for a functioning charging station. In addition, according to a survey of EV owners in the US, 21 percent of public charging stations are not working, auto data analytics company JD Power found. JD Power expert Brent Gruber emphasized to Bloomberg that this percentage would have been 14.5 percent two years ago: “It’s definitely going in the wrong direction,” commented Gruber.
Power grid unreliable
In addition, the USA’s power grid is prone to errors, which makes it even more difficult for consumers to set up the necessary charging device for an electric car at home. As the US Energy Information Administration reports, according to MarketWatch columnist Buchholz, the average length of power outages doubled to more than seven hours between 2013 and 2021. The frequency of power outages has also increased to almost 20 percent. Given this background, Buchholz says it is not surprising that consumers have little faith that having their own charging station is even an option.
Change of strategy at some car manufacturers
To underscore the larger trend away from EVs, Buchholz also points to the drastic strategy change of the rental car company Hertz, which recently announced that it would sell around a third of its EV fleet, which primarily consists of Teslas. The company had previously said that it planned to convert at least 25 percent of its own car fleet to electric vehicles by the end of 2024. Hertz joins the ranks of car manufacturers General Motors and Honda, which also canceled their plans to jointly advance the construction of affordable EVs in October 2023. The companies all pointed to weak demand.
One car manufacturer that did not jump on the EV bandwagon, but did rely on hybrid models, was Toyota. The Japanese automaker’s former CEO, Akio Toyoda, known as an electric car skeptic, said that given Tesla’s third-quarter 2023 numbers below expectations, according to Fortune, people are “finally waking up to reality.” His rejection of electric cars led Toyoda to resign from his position last year.
According to Buchholz, it now remains to be seen whether the electric car industry can recover or turn out to be a fad.
Editorial team finanzen.net
Selected leverage products on General Motors
With knock-outs, speculative investors can participate disproportionately in price movements. Simply select the lever you want and we will show you suitable open-end products on General Motors
The leverage must be between 2 and 20
Advertising