Electric vehicle growth will be slow in the near term, even as the long-term future remains promising, according to recent earnings reports and analysts.
“It's true, the pace of EV growth has slowed, which has created some uncertainty. We will build to demand,” General Motors CEO Mary Barra said on an earnings call on Tuesday. Still, she said GM was encouraged by an industry forecast that EV sales in the US will rise at least 10%, compared to a 7% pop in 2023.
Recall, Barra was bullish on EVs speaking in a CES 2022 virtual keynote. How things have changed, especially since GM stopped production of the Chevy Bolt in mid-December. (GM claims it will bring the Bolt back in 2025).
The feeling about EV demand is shared across other carmakers. Ford has cut EV production while Tesla CEO Elon Musk warned a week ago of a sharp slowdown in sales growth this year.
Morgan Stanley investor analyst Adam Jones added in a recent note to investors, “Global EV momentum is stalling. The market is over-supplied vs demand.”
Other analysts have noted problems reported by buyers with the difficulty with EV charging and reduced battery resilience at low temperatures. The EV adoption curve will be slower and there will “a longer ramp than perhaps was initially anticipated,” noted Tim Piechowski, analyst at ACR Alpine Capital Research.
In the US, even the marketing of EVs seems to be down, with GM, Ford and Stellantis pulling back from SuperBowl ads, even as KIA and Volkswagen committed to such ads. At CES2024, however, KIA and Hyundai made their first appearance ever.
The slowdown situation is less clear outside the US, but Renault of France on Monday pulled back on plans to list its EV business Ampere, citing a slower market. Still, many analysts have noted a much stronger demand for EVs in China and Europe than in the US.
Some of the demand could be hurt by changes in government subsidies. In Germany, subsidies have run out. EV sales and plug-in hybrids fell 16% last year and will drop another 9% in 2024 according to the VDA, the German auto association. Despite those drops, the VDA said production of EVs is forecast to increase 19% in 2024.
Other negative indicators have surfaced with used EV car sales. One used car dealer in Virginia who asked not to be identified told Fierce that used EVs are not selling, which tends to have a drag on new EV sales. The situation for Tesla used EV sales is not as severe as for models by other carmakers.
The concerns over EV sales have been growing for months, when reports surfaced that EV prices had fallen 30% in September and October, compared to a year earlier. The main culprit was apparently Tesla’s decision to lower its prices on its new cars. Tesla controls more than 60% of the EV market.
For companies that supply parts and semiconductors to EV carmakers, lower demand for EVs will present its own problems.
Texas Instruments reported fourth quarter earnings on Jan. 23, noting “increasing weakness in industrial and a sequent decline in automotive.” Automotive makes up one-third of annual revenues for TI.
The company predicted a “weak environment” in both categories but TI spokesman Dave Pahl also noted the fourth quarter automotive decline came after customers built up their chip inventories and are planning to make corrections.
STMicroelectronics, meanwhile, saw an increase in automotive and discrete in the fourth quarter, which was offset by a 25% drop in sales of analog, MEMS and sensors, which are also used in cars and robots.