Legacy autos vs EVs

Investment Analysis Clubs Macro Economic Trends and Risks
41

That’s where they are putting them, along with places like malls and other shopping centers. Basically, where people are going to be parking away.

I predict we are going to see an increase in the number of dumb, unmetered chargers in those locations. Why? Because they don’t cost very much.

Here’s another reason - they soon might be required. In my practice (zoning and development), we’re starting to see local governments start requiring infrastructure for electric charging as part of every new development. In one big local government, every new non-residential parking area (either new development or an upgrade to existing) has to be wired with a sizable fraction of the spaces for EV charging stations. The actual chargers don’t have to be put in yet - but the local government has signaled that once there’s a larger proportion of EV’s on the road, they’ll be requiring the chargers to be installed.

Who knows how it will shake out. If dumb, free chargers become ubiquitous, then it’s hard to see how they would be much of an amenity to attract “extra” customers. You might still be able to charge a premium for super-fast charging…but probably not enough for those things to make sense as a stand-alone business, like a filling station. Instead, you might be looking at more of the “vending machine” type model - where the charging company takes a small amount of space in an existing business.

Regardless, it’s not really a market segment that cries out for the company running the chargers to be an automobile manufacturer, any more than gas stations are run by automobile manufacturers.

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42

Yeah, but I think [Toyota] also got seriously side-tracked by hydrogen and fuel cells as an alternative power source…more than almost any other major incumbent. Some of their public comments about the EV market indicate some real institutional skepticism about whether there’s really a big market demand for BEV’s, especially in the U.S.

Yeah, the focus on hydrogen was puzzling, and a bad bet that surely cost them a lot of money on the hydrogen cars and on lost sales from failing to compete with a BEV, especially notable was the loss of market share in the luxury sedan market to Tesla. You’d think they would have seen that happening, bought a Tesla and driven/tested/tore it down, and gotten a BEV Lexus out as soon as possible. Yet here we are 10 years later and they are only now rolling out a BEV, and it’s not targeted at that market.

It’s hard to be sure whether Toyota is just talking their book about BEV demand or if there is still ongoing institutional resistance/skepticism.

I’ve been shopping for a potential new car recently, and no one has a new BEV or plug-in hybrid to sell. Can’t even order one from most places. Ford was willing to take a pre-order for an Escape plug-in hybrid, as was Nissan for a Leaf.

I’m not a big fan of the Leaf, but they’re fairly affordable, somewhat available with a wait, and they still qualify for the full $7500 tax credit this year, so I’m thinking about it. I wish they’d swapped out the ChaDeMo fast charge hardware for CCS by now, though, it’s the definition of obsolescent.

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43

Yeah, the focus on hydrogen was puzzling, and a bad bet that surely cost them a lot of money on the hydrogen cars and on lost sales from failing to compete with a BEV, especially notable was the loss of market share in the luxury sedan market to Tesla. You’d think they would have seen that happening, bought a Tesla and driven/tested/tore it down, and gotten a BEV Lexus out as soon as possible.

It is weird - but it may be a function of their home market. It isn’t limited to Toyota. Apparently Japan, even more than the U.S., just hasn’t been that receptive to EV’s in general:

Today, electric vehicles in Japan account for just 1% of overall car sales in Japan.

There are several reasons for this. First, the market has leaned towards hybrid cars, as they are much cheaper than electric vehicles, with government subsidies being similar for both types of vehicles.

Japan and its vehicle market have long been wary of electric vehicles. The government’s organised push for a hydrogen-based economy actively tolerates hybrid cars and hydrogen-powered cars. Speaking to Energy Tracker Asia, Daniel Read, Climate and Energy Campaigner at Greenpeace Japan, says that consumer perceptions around electric vehicles in Japan also play a significant role.

https://energytracker.asia/japan-ev-sales-boom-the-hunger-fo…

Only 20K EV’s sold in Japan last year? Ouch. Forget Tesla - Ford sold more than that of its Mach-E’s - just in the U.S. - last year. Their consumers just weren’t buying EV’s, and no one - not even Tesla - felt it was worth the effort to push them otherwise. Not surprising that the Japanese automakers held back.

Albaby

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44

Actually, it is the gas that is low margin. Gas stations added the stores because the food and drinks are high margin items. The store is where a gas station makes most of their money.

Agreed. Grocery stores are pretty low margin, on average. The convenience store stuff like drinks is high margin.

The logical thing for EV charging stations is to be located in a restaurant parking lots and hotel parking lots.

Most of the Interstate Superchargers (at least that I’ve been to) are at restaurants (see Harris Ranch; although they have a hotel too). Hotels…not really for Superchargers. There are lots of hotels with Tesla destination chargers and are generally free…typically 6 to 19 kw.

https://driveteslacanada.ca/news/tesla-has-started-its-harri…
Tesla is almost completed the Harris Ranch upgrade, from 18 stalls to 98!

And 35 miles to the North there are 56 stalls.
27 miles south there are two locations, 40 and 55 stalls

Mike

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45

As noted upthread, even when GigaBerlin “gets rolling,” Tesla’s still going to have lower market share than they used to back in the day.

This is not really a meaningful statement. Yes, there are more EVs being made now than there used to be so, by definition, Tesla then had a bigger market share because there was little competition. Now, there are more competitors and more EVs, so naturally Tesla has not held on to the market share from back then. But they are selling LOTS and LOTS more cars and growing at a ferocious pace.

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46

This is not really a meaningful statement.

Of course it’s a meaningful statement.

It’s not an especially useful fact if you’re going to try to figure out, say, whether investing in TSLA at current prices is good or bad. But I’m not trying to make that point. I was trying to show that Legacy Automakers are making EV’s like gangbusters - vigorously adopting the power train without any apparent reluctance to shift from ICE machines.

In that context, the fact that Legacy Auto is making a greater and greater proportion of EV’s in the market with the greatest EV adoption - even as Tesla expands its manufacturing base in that market and even if we just assumed they were today at production levels they won’t reach until next year - is enormously meaningful. While in 2019 Tesla was the runaway market leader in Europe, today there’s at least five legacy automakers that had greater sales in Europe in 2021 than Tesla: VW, Stellantis, BMW Group, Daimler, and Renault-Nissan:

https://cleantechnica.com/2022/01/30/29-of-cars-sold-in-euro…

That doesn’t mean Tesla’s not doing great! They are! It just means that all the Legacy Auto incumbents are producing lots and lots of EV’s, even though that means changing their production lines and arranging for battery suppliers (even for PHEV’s) and retooling their factories and for most of those vehicles abandoning ICE’s altogether. There’s no evidence of any “Innovator’s Dilemma” reluctance or recalcitrance.

Albaby

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47

…isn’t going to get Tesla’s European market share back to the old days…

Again, there’s no EV market, there’s a car market. Tesla’s share is going up significantly every year. Everybody else’s share is going down. Eventually, the new car market will be all EVs and this posturing about EV market share will have to stop.

VW, as we all know, is a criminal organization. They’ve been cheating at every level for years (see Diesel-gate, executives in prison, etc.), and show no sign of slowing down. As an example, note that many of their supposed sales are simply transfers to VW-owned entities, by means of which they cash in incentives (or avoid fines). Described here: https://cleantechnica.com/2021/02/19/how-many-volkswagen-id3…. As I said, they don’t particularly want to sell their inferior EVs because they lose money on every one.

And we’ve seen how they’ve used their supposed build-out of EV charging stations in the US (the result of court decisions responding to VW criminal behavior), as just another way to discourage EV sales. They don’t maintain their charging stations, and so make the ownership experience crappy (https://fordauthority.com/2022/06/some-ev-chargers-suffer-fr…). Once Tesla opens their charging stations to other EVs, it will just get worse for Electrify America. The only people who will use them will be EV drivers who were given free charging as an incentive.

-IGU-

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48

Put in charging stations!
Charge 3-4x the commercial rate! Big markup!
Profit problem solved. They’re buying more food and lottery tickets and beverages because it takes 10 minutes longer.

49

Again, numbers of vehicles per year per manufacturer would tell us a lot that these vague percentages don’t.

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50

Focusing on charging stations is not really to the point since many people will charge at home … or work … unless they are on long distance trips.

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51

It just means that all the Legacy Auto incumbents are producing lots and lots of EV’s,

Do you have a link for this?
How many EVs did GM sell last year? Or Toyota? Honda? I’m not thinking lots.

I agree that BYD (and maybe other Chinese companies) and the German companies are making lots.

Toyota just came out and said consumers don’t want EVs yet (in response to the CA 2035 end of ICE rule)

Mike

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52

Do you have a link for this?

Yes! The links that I’ve been putting in my prior posts. CleanTechnica compiles sales data for EV’s around the world. They also provide absolute numbers (as someone upthread also asked). So here’s what’s going on in Europe (all data from the below link):

https://cleantechnica.com/2022/01/30/29-of-cars-sold-in-euro…

In 2021, there were approximately 2.2 million EV’s sold in Europe. Of that total, approximately 143K were Tesla’s. The remaining 2.06 million EV’s were sold by other manufacturers. Since there aren’t really any ‘start-up’ manufacturers selling in Europe other than Tesla, that translates into approximately 2 million EV’s sold in Europe by Legacy Auto.

Two million EV’s! In just Europe! By Legacy Auto! That’s because in Europe, EV’s now have about 20% market penetration - one in five cars sold in Europe has a plug. More than half of those are BEV’s, as the European market has been shifting away from PHEV’s. All of the European incumbents have been completely and perfectly willing to shift away from their ICE production towards EV’s.

About 500K EV’s were sold by the VW group. They had five of the top 20 models for the year - the ID3 and ID 4 at 70K and 55K, the Enyaq at 44K, the E-up! at 41K, and the Audi e-Tron at 32K. Note that these five cars are all BEV’s. VW sold many more EV’s in Europe last year than Tesla - but they also sold many more BEV’s than Tesla as well.

So here are the approximate EV sales totals for the major automotive groups for Europe in 2021:


VW Group	500K
Stellantis	300K
BMW		200K
Daimler		200K
Renault-Nissan	200K
Hyundia-Kia	200K

Note: this is not a fluke of last year. CleanTechnica updates these figures every month, and you can find the most recent report (through July) here:

https://cleantechnica.com/2022/08/24/11-of-new-car-sales-in-…

About 1.3 million BEV’s sold in Europe through July, with Tesla having “only” about 88K - the remaining 1.2 million are all from Legacy Auto.

The illusory reluctance of Legacy Auto to embrace EV’s is solely an artifact of looking at the U.S. market (and the weirdness of Toyota and Honda pursuing hydrogen vehicles because of Japan’s promotion of that tech). The majority of the Legacy Auto groups are producing very large numbers of EV’s in Europe - again, which makes a ton of sense given the more favorable market for them there than in the U.S. and Japan.

Albaby

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53

As I said, they don’t particularly want to sell their inferior EVs because they lose money on every one.

Any evidence of that? Or is that just unsubstantiated FUD, the kind you so vigorously denounce whenever anyone says anything of the sort against Tesla? Because that’s almost certainly false.

In 2021, the “take rate” of VW’s EV offerings - the percentage that EV’s made up of their total sales - rose to about 9%. And their net profit margin rose in 2021 to the highest it’s been in almost a decade:

https://insideevs.com/news/560278/volkswagen-group-sales-202…
https://www.macrotrends.net/stocks/charts/VWAGY/volkswagen-a…

That’s almost certainly not possible if 9% of their product line shifted from being profitable to losing money.

You’re just making that up, IGU. You’re doing exactly the sort of thing you vigorously attack people for when they talk about Tesla - making a general statement with no backup in order to denigrate a company that you don’t want to be successful making EV’s, but almost certainly is. Again, VW is more profitable now that it’s converted 9% of its product line to EV’s - something that could not possibly happen if it was “losing money on every one.”

Albaby

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54

1st quarter sales 2022
https://insideevs.com/news/583538/world-top-oem-ev-sales-202…
Plug-in car sales in Q1 2022 (vs previous year):

Tesla: 310,411 and 15.5% share (vs 16%)
BYD: 285,849 and 14.3% share
SAIC (incl. SAIC-GM-Wuling): 170,454 and 8.5% share
Volkswagen Group: 154,824 and 8.8% share (vs 12%)
Geely-Volvo: 110,253 and 5.6% share
Top 5 total: 1,031,791 (51.7% share)
others: 965,557 (48.3% share)
Total: 1,997,348

All-electric car sales in Q1 2022 (vs previous year):

Tesla: 310,411 and 21.6% share (vs 25%)
SAIC (incl. SAIC-GM-Wuling): 154,623 and 10.7% share (vs 17%)
BYD: 144,203 and 10% share (vs 5%)
Volkswagen Group: 98,455 and 6.8% share (vs 8%)
Hyundai Motor Group: 81,744 and 5.7% share
Top 5 total: 789,436 (55% share)
others: over 0.65 million (45% share)
Total: about 1.44 million

55

In 2021, there were approximately 2.2 million EV’s sold in Europe.
…

But you didn’t answer the question that I thought was clear.

You said: It just means that all the Legacy Auto incumbents are producing lots and lots of EV’s,

I asked specifically how many GM, Toyota and Honda sold, because I don’t think they are part of your “all”

Maybe you mean many?

Mike

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56

As I said, they don’t particularly want to sell their inferior EVs because they lose money on every one.

Any evidence of that? Or is that just unsubstantiated FUD, the kind you so vigorously denounce whenever anyone says anything of the sort against Tesla? Because that’s almost certainly false.

The link immediately before my statement, which you so helpfully elided, is my evidence. You do think cleantechnica has some credibility, yes? VW dealers directing customers away from their EVs and trying to sell them ICEs instead. And VW selling their inferior cars to themselves to juice sales numbers. Since VW doesn’t file any documents admitting to lying and cheating, that’s what I’ve got, along with the evidence of their past behavior. They lose money on every sale of an EV because the car they would have sold instead would have made them more money today. Every EV sale is an ICE sale lost. I tried to make that clear in my post.

While it is not entirely impossible that VW can made the transition to being an EV company, to me it still looks like bankruptcy or bailouts.

-IGU-

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57

VW’s problem is its vast investment in manufacturing for the Chinese market (much of which happens to be EV) is caught up in the Chinese COVID mess and consumer financial challenges.

Jeff

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Guys. Maybe? just look at the financial statements from VWAGY’s investor relations website. Not sales, operating margin.
(they don’t allow copying from the IR doc, so…)


                                  1st half 2022
Deliveries (units)                    Down 22%
Sales Revenue                            Up 2%
Operating Margin before special            10% (up 16% over 1H 21)
Earnings before tax                   Up 25.8%
...
R&D costs                             Up 20.1%
Cash flow from operating activities Down 28.7%
Net cash flow                       Down 77.5%
  • They sold a lot less cars overall, but charged so much more for them that revenues went up a little
  • Operating margin up 25% = profitable
  • Cash flow down by that much net of R&D, and a net liquidity drop of 19.5% means they’re spending more to make less passenger vehicles.
    You’re both right?

Market share:

Tesla: 564,873 and 19% share (vs 22.7%)
BYD: 326,236 and 11% share (vs 5.5%)
SAIC (incl. SAIC-GM-Wuling): 321,289 and 10.8% share (vs 14.5%)
Volkswagen Group: 216,004 and 7.3% share (vs 10.7%)
Hyundai Motor Group: 167,305 and 5.6% share.

Tesla’s overall share dropping slightly, as would be expected, AND VW’s share dropping slightly. Look who’s share is going up - China’s BYD.

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59

They lose money on every sale of an EV because the car they would have sold instead would have made them more money today. Every EV sale is an ICE sale lost.

Again, where is the evidence that they would have made more money on a sale of an ICE car instead of the EV car? You keep saying that, without providing anything to support the statement. I mean, it’s good that you’ve clarified that you don’t think they’re actually selling those cars at a loss, and that they are making money on those EV sales (which makes me wonder why you think “bankruptcy or bailouts” are still in the cards). But I don’t see anything you’ve pointed to that shows that they’re making any less money on an EV sale in place of an ICE sale. And again, with 9% of their sales having been transitioned to EV’s, it would be very hard for that to be the case given their rising profit margins.

Albaby

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60

I asked specifically how many GM, Toyota and Honda sold, because I don’t think they are part of your “all”

Maybe you mean many?

Ah, I understand. Sorry - it should be, “nearly all” if we’re talking global incumbents. TBH, when I wrote that post I was writing about Europe, and thinking mostly of the fact that all the European incumbents were producing EV’s at volume. Not just the Germans (VW and Daimler), but all the Stellantis brands and Renault-Nissan as well. After all, among the best selling EV models in July (an off month for Tesla) were a Fiat, a Renault, and a Peugeot. But certainly my sentence didn’t make that distinction, and so should have been “nearly all” if talking about incumbents without qualification to the established European automakers.

GM’s definitely behind the pack - their sales of Bolts are minimal**. As BenSolar and I discussed upthread, Toyota and Honda sell virtually no BEV’s. It looks like that’s for the same reason that Tesla has virtually no sales in Japan (one of the world’s largest auto markets) - the Japanese government’s industrial policy towards autos has been to promote hybrids and hydrogen cars, and the manufacturers are responding to that. Toyota does sell a fair number of Prius Prime PHEVs.

Albaby

** GM does have a decent size piece of the Chinese market through their participation in China’s SAIC-GM-Wuling venture, but I don’t think that’s really what we’re talking about here.