The big Western automakers are in a mess. And the Chinese are in a spot of bother too but still laughing.
Basically it’s about supply, demand, most governments working to a wish-driven strategy, then displaying embarrassing hypocrisy and the time where the commies’ not worrying about three or four-year election terms pays off.
Over the last two weeks the share prices of most automakers have been heading the same way as the Titanic. Ford, Tesla and Stellantis posted crook results and together with GM, Mercedes, BMW, Porsche and the others, were plumbing new lows.
They had been telling investors they were “leading the electric vehicle revolution”; helping “put everyone in an EV, bringing the world to an all-electric future”; “leading the charge in electrification” and our favourite get-your-hand-off-it word “electro mobility”.
Western governments, who of course would never subsidise their auto industries, saw EVs as a way to display their energy transformation credentials and suck up to what they thought would be millions of climate change-fearing voters. “Electric vehicles may be the most subsidised product in America. Federal taxpayers wheel out $11,000 every time a new eligible electric vehicle is purchased. State and local taxpayers chip in an additional $2100 for each EV purchase. Then, there’s the tens of billions of dollars ‘invested’ by policymakers into building EV plants,” the Realcleanenergy blog says.
Our very own territory of Wakanada is this nation’s bastion of highly advanced technology in almost every conceivable field. The wellspring of this spectacular achievement? Handouts. ACT residents purchasing an EV get up to $15,000 in interest-free loans for eligible households to purchase an EV under the luxury car tax threshold ($89,332 currently), or EV charging equipment.
Let’s pause here.
The Australian car industry was killed off by a heap of complex factors including mining boom-induced exchange rates, a global oversupply of cars, ineffective subsidies, and the removal of tariff barriers. Some manufacturers and commentators blamed the unions but industrial relations was a minor player, even though one local maker tried hard to provoke workers. A bigger contributor was constantly changing government policies that saw constant inquiries and investment uncertainty.
Anyway, Western governments and automakers thought they tapped a rich vein of green when EVs suddenly became bestsellers despite no places to charge up, relatively high prices and general derision from non-EV persons. But then again post-Covid demand made any available car a bestseller and shortages of stock pumped margins to the stars.
Then there was the Musk effect best demonstrated in 2021 when Hertz bought 100,000 Teslas for $6.2bn. Of course as soon as the EVs turned up at Hertz, Musky slashed the price of new Teslas. Now hire car companies make a lot of money selling their used cars for more than they paid for them. But big supply in the market combined with lower prices meant moving to electrification only meant red not green so the CEO got the flick.
So what did Hertz do? Sold the fleet at 50 per cent off adding to even more EVs in the market and even lower prices. Musky has done the lower price trick here in Gondwana land, effectively dudding Tesla owners who have just paid a higher price.
And the players in the market keep doing weird stuff. If you own a Nissan Leaf, say goodbye to your resale hopes. Australian prices won’t be helped by Uber bringing second-hand Japanese EVs, Leafs (or Leaves) for their drivers to use for as little as $124 per week. If you paid $40k to $50k for your new Leaf yesterday, today the resale of your new car has tanked because everyone knows the second hand market will be flooded with old Japanese leafs or leaves.
A BYD owner? Now the world’s biggest EV maker is joining with Uber to put 100,000 electric cars into lots of markets (but not Septic land where Joe and Don put a 100 per cent tariff on Chinese EVs) including Australia. Don’t worry if you haven’t heard of BYD they are just one of 200 EV-making companies in China battling for a share of the local market but more importantly politically for a share of the global market.
How come China became the Henry Ford of EVs? China started investing in the EV supply chain in 2001. EV technology was a priority science research project in China’s five-year plan. Eight years later, the government gave subsidies to EV makers. It wasn’t an immediate success. Only 500 out of 14 million cars sold that year were EVs. In the first three months of 2024, nearly 1.9 million electric cars were sold in China. That’s up 35 per cent compared to sales in the first quarter of 2023.
There’s a constant stream of new Chinese EVs being released in Australia. Our view is, if you want to be green, buy a hybrid until the all-EV market settles.
While you’re waiting, head out to Pebble Beach next week for some custom-built definitely non-electric metal. Frontline cars will be launching their new wide-bodied MGB with a 280KW V8. Only 30 cars, 0 to 100km/h in 3.6 seconds and only $350k. Also built of a donor body, Italy’s Touring Superleggera will unveil a new model at Pebble Beach. No one knows what it looks like but if it is a sensuous as the Arese RH95 it will be a must buy even at $1.5m.
Needing something meatier? The new 2025 Chevrolet Corvette ZR1 is the fastest, most powerful Corvette ever! So who cares? Well the current Corvettes are super buys in Australia, if you can get one at a proper price.
The 2025 Corvette ZR1 is even better. A European supercar slayer. Inside is the most powerful V8 ever produced in America at 800KW. It hits 355lm/h and 0 to 100 off the traffic lights in less than three seconds.
