The Future of Electric Vehicles

Published June 10th, 2024 by JMSCapitalGroup

When it comes to electric vehicles, the future may be getting closer. Jack Ewing reports that the customer base for electric vehicles (EVs) is broadening. Falling prices, federal tax credits, and improving technology have put EVs in reach of younger, less affluent customers. Prices for some used Teslas are approaching $20,000, and several automakers are seeking to develop electric vehicles whose prices could be as low as $25,000.

Ewing cites research projecting that electric cars and SUVs with a range of 400 miles will cost less than cars with internal combustion engines in 2030. These figures do not include federal tax credits, and also do not take into account expected lower fuel and maintenance costs from EVs. A future Trump administration could slow the progress of EVs by slashing tax credits and relaxing fuel stands for internal combustion engine vehicles, but market forces may yet enable EVs to prevail, if companies continue to improve their production efficiency.

Ewing acknowledges a recent slowdown in EV sales, but reports that GM is expecting electric vehicles to become profitable later this year. He also cites research showing that half of all used electric vehicles sell for under $30,000, suggesting a maturing market. Overall, the outlook is that long-term promise is likely to overcome short-term problems.

Fortune’s Paolo Confino provides a perspective that focuses on short-term problems, as he discusses an interview given by Ford CEO Jim Farley. He notes that Ford’s EV segment lost $1.3 billion in the first quarter of this year. He also cites waning demand, high prices, and concerns regarding the availability of charging stations. Ford has delayed the rollout of its newest electric vehicles, and has shifted some production from EVs to hybrid vehicles. Confino also notes Farley’s comment that EVs are likely to be more expensive to manufacture than internal combustion engines at least through 2030. This timeline is consistent with the timeline described by Ewing, but Confino and Ewing have very different interpretations of this projection. Confino focuses on the concerns and obstracles Ford will have to overcome, and the losses they are likely to incur in the interim, whereas Ewing offers a more futuristic, global perspective, noting current progress while anticipating a strong advantage for EVs after 2030.

Electrek’s Peter Johnson also delves into Farley’s interview, but on a different topic—Chinese car manufacturer BYD. Ford is looking to emulate BYD’s success by producing smaller, cheaper EVs. Farley argues that Ford’s next generation of EVs will be competitive with the best, noting that the best currently comes from China. Ford has invested in lower-cost batteries as well.

Farley sees China’s bet on EVs as having paid off so far, in part due to large subsidies, investments, and tax breaks from China’s government. Electric cars are expected to comprise nearly half of total car sales this year in China. BYD’s cheapest EV model starts at under $10,000.

Despite significant challenges in the short and medium term, it appears likely that electric vehicles will become increasingly dominant over time. Whether Ford will be at the forefront of a sea change is unclear. Auto manufacturing sits at a confluence of technological advancement, governmental industrial policy, and corporate competition. The growth of EVs in the United States is likely to both be interconnected with global developments as well as the domestic preferences of legislators and consumers.

JMS Capital Group Wealth Services LLC

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This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument or investment strategy. This material has been prepared for informational purposes only, and is not intended to be or interpreted as a recommendation. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice.

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