The biz of electric vehicles: the EV transition hits speed bumps

Checkin’ the traffic… The transition from gas-guzzlers to electric cars is key to reducing global emissions from fossil fuels, which last year hit a record high. But EV makers are slowing their roll after making more plug-ins than folks wanted to buy. It’s not all doom and e-gloom: EV sales grew over 50% last year, making up nearly 8% of US new-car sales. But overeager carmakers have put billions of electric investments on ice as sales growth cools: GM and Ford scaled back EV production and factory spending last year, while Rivian and Tesla walked back production targets for this year. Last quarter, Tesla had its first annual delivery drop since 2020.

Congestion ahead… Tesla is old news in the EV biz as OG carmakers and bright-eyed startups flood the space with models from electric F-150s to luxury sedans. Tesla, Ford, and Chevy have all followed in Rivian’s footsteps to roll out electric pickups. Meanwhile, startups Rivian, Lucid, and Fisker are burning cash to become the next Tesla (and losing $$ on every car they sell). But the biggest competition could come from abroad: China’s BYD overtook Tesla last year to become the world’s biggest EV seller.

The roadmap… EV makers have been slashing prices to overcome buyers’ sticker shock. (The average EV cost ~$5K more than a gas-powered whip as of last year.) But as Tesla’s shrinking deliveries show, price cuts haven’t been enough to rev demand. Folks are also struggling to overcome range anxiety as sparse charging infrastructure makes roadtrips stressful. As demand settles into a slower pace, EV makers have switched lanes to focus on hybrids. In January and February, hybrid sales surged 50%, easily pulling ahead of fully electric cars.