General Motors have officially announced that the production of their 2023 Chevy Bolt EV and EUV is to end in late December 2023. This development comes despite the fact that the GM Orion plant has gone through a period of retooling.
It has also been recently reported that GM is pulling back on production of their EV trucks. It seems that the profitability for EV’s is proving a struggle for GM when compared to its internal combustion powered trucks. It’s clear to GM that it’s way more profitable for the company to produce conventional trucks for their customers than electric trucks.
Automakers including GM, Ford, Mercedes, Nissan, Toyota and Tesla are now learning an important lesson. Not all car buyers are wealthy green leaning environmentalists. This should have been obvious, which is why the auto industry is now wringing its hands over EV sales problems and slowing demand.
GM have now scaled back plans for 2024 and said it would delay the opening of its new EV truck factory. Ford is also considering cutting shifts at its F-150 Lightning plant.
Nissan is transferring more resources to hybrids rather than EVs. Mercedes has described the EV market as somewhat brutal. And Toyota’s chairman, Akio Toyoda, said last week that people are finally seeing the reality of EVs.
The problem stems from the so-called next wave of EV buyers not really cooperating. This should have been obvious. It was certainly clear for Martin Eberhard and Marc Tarpenning, founders of Tesla Motors.
In a now well-known tale in 2003, Eberhard and Tarpenning gathered consumer data for their emerging company by driving the streets of the wealthy suburb of Palo Alto, California, and looked into driveways to see what cars the wealthy owned. What they found at the $2 million homes was mostly the Toyota Prius hybrid.
Many of the driveways contained one conventional flash car and one Toyota Prius. You would see a Porsche and a Prius or a BMW and a Prius or a Lexus and a Prius. The Prius became the virtuous signal for the wealthy so that it looked like they were green.
Back in 2003 when Tesla was established both Eberhard and Tarpenning couldn’t have known about virtue signalling or the term “conspicuous conservation,” but they had the wisdom to understand what they were seeing.
Environmentalism was becoming the realm of the wealthy. They concluded, they could sell electric cars to the rich and they believed the EV would eventually trickle down to the middle class. In its early years, this was the real genius stroke of Tesla. Selling to wealthy environmentalists and enthusiasts became a goal and it kept the company afloat until its crazy stock performance shot it up in market value.
Wealthy enthusiasts bought Teslas and here we are now, the time has come for the EV to trickle down but it’s not happening. Working-class consumers just aren’t co-operating. It seems that they have their own ideas about what to do with their disposable income.
None of this is new, of course. Middle-class consumers have always had many reasons for buying cars. They need their vehicles to go to work, shopping, to family sports, to school and to go on holiday. They need them for all these things, and to be inexpensive.
What they don’t need is a costly second car. And, too often, EVs have become just that. An EV’s initial cost is still too high and its practicality too low, especially for the less affluent. The auto industry is now running head on into these realities. That’s not to say that it can’t overcome them. But middle-class adoption clearly isn’t happening at the pace automakers foresaw or want.
Tesla knew from the beginning that trickle-down would be necessary and would be a challenge, and now that promise is coming true. Buyers of the next wave won’t purchase an EV so they can park it next to their Porsche, they don’t even own a Porsche.