Not sure I’m buying this story out of the Wall Street Journal:

Automakers Have Big Hopes for EVs; Buyers Aren’t Cooperating – WSJ:

The auto industry’s push to boost sales of electric vehicles is running into a cold, hard reality: Buyers’ interest in these models is proving shallower than expected.

While EV sales continue to grow—rising 51% this year through September—the rate has slowed from a year earlier and unsold inventory is starting to pile up for some brands.

EV sales are up 51% and buyers aren’t cooperating? The reason inventory is piling up is mainly that (1) outside of Tesla most EVs aren’t terrific, (2) EVs are still too expensive compared to gas-powered cars, despite the average sales price dropping 22% in the last year, (2) except for Tesla the long-distance charging infrastructure sucks. 

Some car companies, such as Ford Motor and Toyota Motor are tempering their expectations for EVs and shifting more resources into hybrids, which have been drawing consumers at a faster clip.

Toyota is so far behind in EVs that they literally have only one EV on the US market, and it’s widely considered a turd. For reasons that turn out to be somewhat exclusive to Japan, Toyota pushed hydrogen tech and it turns out that there’s no interest in it here. Toyota’s only hope in fact is that consumers are slow to adopt EVs because they’re behind virtually everyone else—ironic given their early lead in hybrids. (I do think they have a path forward with hybrids, so I’m actually more optimistic about their chances than most.)

Ford suffers from two problems: First, their EVs are comparatively expensive. Whether this is a transitional issue, the fault of substantially higher employee wages because of UAW ties, or dealership (“stealership” in some circles) mark-ups, I dunno. Probably a combination. But a Ford Mach-E is good bit more expensive than a Tesla Model 3 nowadays (like $10k+ more expensive). You can configure a Mach-E and get the pricing within a couple thousand of a Model Y, but then you remember that the Y has a $7,500 tax credit that the Mach-E doesn’t, and you’re $10k away again. This is to say nothing of dealer market adjustments…

The first wave of buyers willing to pay a premium for a battery-powered car has already made the purchase, dealers and executives say, and automakers are now dealing with a more hesitant group, just as a barrage of new EV models are expected to hit dealerships in the coming years.

Dealers are the wrong people to talk to about EVs. Dealerships hate EVs. There’s virtually no maintenance so their service department revenue will fall off a cliff. Given the age of the internet where customers can do their own research, it’s often the case that the customer knows more about the EVs than the salesperson at the dealer. Dealers are, in fact, in many ways an artifact of a bygone era, adding nothing to the sales process except pain for the consumer. 

Case in point: For my recent Tesla purchase the total time I spent inside the showroom with the Tesla rep was five minutes. “Sign here, sign here, sign here. Here’s the card keys. Since you have a Tesla, this one is already paired with your phone. Any questions?” When I say five minutes, I’m over stating. It was actually closer to three. 

(By contrast when I bought a Honda Fit in 2012, I spent four hours in the dealership while they tried to beat me down into accepting their financing and to haggle about terms. It was perhaps the single worse buying experience of my life. So my view on dealerships is colored by this.) 

Still, many consumers are reluctant to make the switch, deterred by high sticker prices and the inconvenience of driving a vehicle that has a limited range and needs regular recharging.

Tesla’s Model 3 now starts at $39,000 and if you include the $7,500 tax credit, you’re talking $31,500. Toyota, to use an example, still has Internal Combustion Engine (aka ICE) vehicles that are cheaper—starting around $22k—but EV prices have dropped 22% in the last year. They’re closing fast on affordability, and that’s not including anything from the growing used market. 

And, look, legacy car makers have issues. Tesla is in a place now where they’ve got economies of scale. I was uncertain that they’d get here, but they did. It’s not like their cars are perfect, but they’re far and away the best electrics overall, and they’re starting to get cheap (sub-$40k). The Cybertruck is going to hit soon, and I expect it will do at least moderately well which will be enough to cause a lot of pain for legacy truck manufacturers because trucks and SUVs are their high-profit vehicles. You don’t have to steal too many of those before it hurts a lot. 

On the other side, Tesla may finally announce and mass produce an inexpensive Model 2. If they can get a compact EV with a 250 mile range on the market at or below $25k, I think the game is over. Because the charging infrastructure continues to get built out in hotels, schools, homes, businesses, libraries, apartments, etc. Once EVs can charge everywhere and prices are low, why drive gas? You enjoy the smell of pollutants? You like cars that make lots of noise? You get a special thrill by paying money to Big Oil every couple weeks? 

I think this article is driven by the fears of legacy dealerships and manufacturers who are starting to realize that their future is a lot more challenging than they imagined.