(Reuters) – Ford Motor’s decision to halt its plans for a $3.5 billion battery plant in Michigan has shed light on a challenge faced by Tesla’s competitors in the U.S. market: most of them are being pushed into unprofitable, low-volume niches by Tesla.
Automakers around the world are introducing numerous new electric vehicles (EVs) in the United States and investing billions of dollars in new EV and battery plant projects. However, according to a Reuters analysis of U.S. EV sales data for the first half of 2023, other than Tesla’s Model Y and Model 3, only a few are selling at volumes high enough to support a full-scale assembly plant.
Based on S&P Global Mobility data, Tesla outsold its next 19 competitors by at least 10 to one during the first half of the year.
From January to June, Tesla sold 325,291 vehicles in the United States. General Motors’ Chevrolet brand, with its aging Bolt EV, came in second with 34,943 units sold, followed by Ford, Hyundai, and Rivian.
When looking at individual models, all four of Tesla’s models ranked in the top 12, with the Model Y and Model 3 taking the first and second spots, respectively, with first-half sales of 200,000 and 160,000 vehicles.
In comparison, the Bolt sold 35,000 units and Ford’s Mustang Mach E sold 13,600 units, which is nowhere near the volume needed to fill a profitable assembly plant operating at 80% capacity or more.
The Alliance for Automotive Innovation, an industry trade group, compiled data showing that electrified vehicle sales, including plug-in hybrids and fuel cell vehicles, accounted for 8.9% of the U.S. market in the first half of 2023, a 2.6 percentage point increase from the previous year. However, this market share was divided among 103 different models.
Ford’s decision to temporarily halt the construction of a $3.5 billion electric vehicle battery plant in Michigan raises concerns among analysts about whether the U.S. EV market will grow fast enough to sustain all the new battery and assembly operations currently being launched or under construction.
In July, Ford projected a full-year loss of $4.5 billion for its EV unit, which is 50% higher than previously estimated. This prompted a slowdown in the company’s EV production ramp-up. Like its competitors, Ford has invested billions in additional EV and battery plants in the U.S.
According to Cox Automotive’s presentation, although Tesla’s share of U.S. EV sales has slightly declined with the entry of more competitors, it still dominates nearly two-thirds of all EV sales, whereas no other brand holds more than a 10% share.
Cox Automotive estimated that EV sales will account for 8% of total U.S. vehicle sales in the third quarter, up from approximately 6.5% in the previous year. This growth is partly attributed to falling prices, a trend initiated by Tesla, which has used its higher profit margins to lower prices and expand sales. Cox stated that average EV retail prices dropped to $53,376 in July 2023 from a peak of nearly $70,000 a year ago.
(Reporting by Joe White and Paul Lienert in Detroit; Editing by David Gregorio)
Credit: The Star : Tech Feed
