While carmakers and suppliers are betting big on future demand for electric vehicles (EVs), a near-term global slowdown is causing pain, including bankruptcies, scrapped initial public offerings and production cuts.
Investment in capacity and technology development has outrun EV demand, boosting pressure on companies to cut costs.
“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.
GM previously cut EV production targets due to the slowing demand, but Barra told analysts GM was “encouraged” by industry forecasts that EV sales in the US are forecast to rise at least 10% this year from about 7% in 2023.
Ford also previously cut EV production due to a growth rate that is rising more slowly than previously expected.
Tesla CEO Elon Musk underscored the near-term struggles, warning last week of a sharp slowdown in sales growth this year. With margins falling amid price cuts, shareholders erased $80bn (R1.5-trillion) from Tesla's stock valuation the next day.
“There's no doubt the limitations — EV charging and the lack of battery resiliency at low temperatures — are causing consumer anxiety,” said Tim Piechowski, portfolio manager with ACR Alpine Capital Research, which owns GM shares.
“The reality is the adoption curve will be slower and there will be pushback to regulators about fuel economy,” he said.
“It'll be a longer ramp than perhaps was initially anticipated.”
That slower pace was underscored this month as companies pull back on prior plans.
On Monday, France's Renault ditched plans to list its EV business Ampere because of sluggish stock market conditions. The company had said the IPO could be worth up to €10bn (R203.7bn).
Muddy waters for the economy
Suppliers are also affected.
China's CATL on Tuesday forecast 2023 profit growth sharply lower than the previous year as it grappled with slowing demand and stiff competition.
CATL, the world's largest EV battery maker, faces challenges from smaller rivals and slowing demand in China, the largest EV market.
China's second-ranked EV battery maker BYD on Monday forecast its 2023 net profit rose at a far slower pace than 2022, while last week Korean battery maker LG Energy Solution predicted slowing growth in the global EV market this year.
“Global EV momentum is stalling. The market is over-supplied versus demand,” Morgan Stanley analyst Adam Jonas said in a recent research note.
Albemarle, the world's largest producer of key EV battery material lithium, said this month it was cutting jobs and capital spending in response to slipping prices. A report put the job cuts at 4% of its workforce.
German EV sales, including plug-in hybrid models, fell 16% last year and are forecast to drop another 9% in 2024, including a 14% decline for pure battery EVs, according to German auto association VDA.
“Subsidies have run out and at the same time we are in muddy waters across the economy. Consumers' propensity to buy is not particularly pronounced,” said VDA chief economist Manuel Kallweit.
However, German production of EVs is forecast to increase by 19% this year to 1.45-million, with much of the output destined for export, VDA said.
EV demand in Europe has weakened and the region's carmakers face competition from Chinese rivals. Those feeling the pain hardest in the sector seem to be the EV start-ups.
Britain's Arrival on Monday said it received a delisting and stock trading suspension notice from the Nasdaq. Lordstown Motors, Proterra and Sweden's Volta Trucks have gone bankrupt as a tough economy weighs on demand and hinders access to capital.
Polestar last week said it planned to cut about 15% of its workforce, or 450 people, due to the challenging market.
The long-term is where carmakers are placing their bets with EVs, even as they benefit from strong demand for internal-combustion engine (ICE)-powered vehicles.
“We know the EV market is not going to grow linearly,” GM CFO Paul Jacobson said on Tuesday.
“We are prepared to flex between ICE and EV production.”
Motor industry pain abounds as EV demand hits slowdown
While carmakers and suppliers are betting big on future demand for electric vehicles (EVs), a near-term global slowdown is causing pain, including bankruptcies, scrapped initial public offerings and production cuts.
Investment in capacity and technology development has outrun EV demand, boosting pressure on companies to cut costs.
“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.
GM previously cut EV production targets due to the slowing demand, but Barra told analysts GM was “encouraged” by industry forecasts that EV sales in the US are forecast to rise at least 10% this year from about 7% in 2023.
Ford also previously cut EV production due to a growth rate that is rising more slowly than previously expected.
Tesla CEO Elon Musk underscored the near-term struggles, warning last week of a sharp slowdown in sales growth this year. With margins falling amid price cuts, shareholders erased $80bn (R1.5-trillion) from Tesla's stock valuation the next day.
“There's no doubt the limitations — EV charging and the lack of battery resiliency at low temperatures — are causing consumer anxiety,” said Tim Piechowski, portfolio manager with ACR Alpine Capital Research, which owns GM shares.
“The reality is the adoption curve will be slower and there will be pushback to regulators about fuel economy,” he said.
“It'll be a longer ramp than perhaps was initially anticipated.”
That slower pace was underscored this month as companies pull back on prior plans.
On Monday, France's Renault ditched plans to list its EV business Ampere because of sluggish stock market conditions. The company had said the IPO could be worth up to €10bn (R203.7bn).
Muddy waters for the economy
Suppliers are also affected.
China's CATL on Tuesday forecast 2023 profit growth sharply lower than the previous year as it grappled with slowing demand and stiff competition.
CATL, the world's largest EV battery maker, faces challenges from smaller rivals and slowing demand in China, the largest EV market.
China's second-ranked EV battery maker BYD on Monday forecast its 2023 net profit rose at a far slower pace than 2022, while last week Korean battery maker LG Energy Solution predicted slowing growth in the global EV market this year.
“Global EV momentum is stalling. The market is over-supplied versus demand,” Morgan Stanley analyst Adam Jonas said in a recent research note.
Albemarle, the world's largest producer of key EV battery material lithium, said this month it was cutting jobs and capital spending in response to slipping prices. A report put the job cuts at 4% of its workforce.
German EV sales, including plug-in hybrid models, fell 16% last year and are forecast to drop another 9% in 2024, including a 14% decline for pure battery EVs, according to German auto association VDA.
“Subsidies have run out and at the same time we are in muddy waters across the economy. Consumers' propensity to buy is not particularly pronounced,” said VDA chief economist Manuel Kallweit.
However, German production of EVs is forecast to increase by 19% this year to 1.45-million, with much of the output destined for export, VDA said.
EV demand in Europe has weakened and the region's carmakers face competition from Chinese rivals. Those feeling the pain hardest in the sector seem to be the EV start-ups.
Britain's Arrival on Monday said it received a delisting and stock trading suspension notice from the Nasdaq. Lordstown Motors, Proterra and Sweden's Volta Trucks have gone bankrupt as a tough economy weighs on demand and hinders access to capital.
Polestar last week said it planned to cut about 15% of its workforce, or 450 people, due to the challenging market.
The long-term is where carmakers are placing their bets with EVs, even as they benefit from strong demand for internal-combustion engine (ICE)-powered vehicles.
“We know the EV market is not going to grow linearly,” GM CFO Paul Jacobson said on Tuesday.
“We are prepared to flex between ICE and EV production.”