Hybridized CUVs Matter

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By Gary S. Vasilash

Here’s a fun fact: the Honda CR-V hybrid was the best-selling hybrid vehicle, bar none, in the U.S. market in 2023.

197,317 were delivered.

Honda CR-V Hybrid under its skin. (Image: Honda)

Meanwhile, over at Toyota, 161,125 RAV4 Hybrids were sold and an additional 26,073 RAV4 Primes, the plug-in hybrid, for a total of 187,198 hybrids.

GM has zero hybrids.

Ford has hybrid versions of the Escape, Maverick, Explorer, and F-150.

Combined, it delivered 133,743 hybrids.*

Ford sold 140,986 Escapes in 2023. That’s with all powertrain options.

Fewer than the Honda and Toyota hybrids.

Chevy sold 212,701 Equinoxes—none of which are electrified, and not all that many more than the CR-V hybrid (15,384, non-trivial, but when you take into account that Honda sold 361,457 CR-Vs in 2023, well. . . ).

Clearly, compact CUV hybrids are appealing.

Surprising GM is ignoring the market and Ford probably needs to ramp up its output.

Dodge has a hybrid version of the Hornet available, a crossover that launched last Spring, so its efforts are still nacent in this space. It sold a total 9,314 Hornets in 2023, of which 3,591 were the hybrid version, so there’s evidently some traction.

(Jeep has the Wrangler 4xe plug-in and the Grand Cherokee 4xe plug-in, of which it sold 67,429 and 45,684, respectively. Neither, of course, is likely cross-shopped with a CR-V or RAV4, but still nice numbers.)

*Here’s a big number–the electrified Toyotas sold in 2023: 565,800. With the exceptions of 2,737 Mirai fuel cell electric vehicles and 9,329 bZ4X BEVs, all hybrids.

Cheap EVs & The Steak Mentality

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By Gary S. Vasilash

Admittedly the BYD Seagull (a.k.a., “Dolphin Mini” in Brazil and Latin America) is a small car—98.4-inch wheelbase, 148.8-inch length, 67.5-inch width, 60.6-inch height—there are two other characteristics worth knowing: (1) it is an electric vehicle with a range ranging from about 190 miles to 250 miles, depending on the battery used; (2) it has a starting price that’s approximately $11,000.

The BYD Seagull. Small. Cheap. Electric. Competitive? (Image: BYD)

Which leads to two other considerations:

  • Good thing Americans don’t like small cars
  • Good thing it isn’t available in the U.S. because while Americans may not like small cars, they do like low prices

And Kristin Dziczek, policy advisor, Federal Reserve Bank of Chicago, speaking at the 30th annual Automotive Insights Symposium, speaking on her own behalf, not the Fed’s, said that a car like the Seagull is something that worries her.

Dziczek said that BYD could conceivably sell the Seagull in the U.S. market for ~$15K, including the 27.5% tariff that the U.S. imposes on vehicles built in China, and still make money.

Given that the average transaction price for an EV in the U.S. in December was $50,786 according to Kelley Blue Book, given that $48,759 was the average transaction price for vehicles of all types last month, doesn’t well under $20,000 look appealing—even for a small EV?

Let’s say that a Chinese company builds a factory in Mexico. Isn’t it possible that, increased costs compared with China, it could take advantage of the USMCA and avoid the big tariff?

While there are some who argue that people want the amenities that are characteristic of vehicles with higher price points, some people prefer porterhouses over McDonald’s.

Seems as though the traditional domestic OEMs are interested in those who want steak.

Chevy, once the GM brand that was more economical, has a starting price for the Blazer EV at $56,715. . .just $1,875 less than the starting price for the Cadillac Lyriq EV.

Remember when the Chevy Silverado EV was announced and it was said that the starting price would be around $40,000? The actual MSRP is $74,800.

Affordability is a key concern for most people. Sure, there are those who buy far beyond their means for purposes of fashion.

But fashion is fickle.

And in the short and long run for many people, it is about what will get the job done at a price that meets their means.

While politics may impede the entry of Chinese vehicles in high numbers in the American market (the Buick Envision and the Polestar 2 are built in China and you can buy one at a dealer near you right now, but the sales for both are still somewhat small: for 2023 there were 44,281 Envisions sold and 10,350 Polestar 2s) it is going to likely happen at some point.

The question is how competitive the U.S. builders are going to be when that happens. Given that they’ve pretty much abandoned midsize and small cars (Toyota sold 290,649 Camrys last year and 232,370 Corollas, so it is not like there isn’t a market for those types of vehicles), there should be some serious concern.

Electric Big Rigs?

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By Gary S. Vasilash

Although it seems as though the only electric truck that is garnering outsized attention is the Tesla Cybertruck, big trucks-as in medium- and heavy-duty cargo haulers—have considerable upside.* (Of course anything starting from a low base can have a big upside.)

As is the case with light-duty vehicles (trucks and otherwise) research firm IDTechEx finds that innovations in battery tech and a build-out of more charging are essential for the growth of battery-electric trucks. (Its new report “Electric and Fuel Cell Trucks 2024-2044: Markets, Technologies, and Forecasts” also looks at fuel cells, but we’ll let that go.)

No surprise that a lot of electric heavy-duty trucks were sold in China between January and June 2023: 11,500 of them.

By comparison, between Q1 and Q3 ’23 there were just over 6,000 electric trucks sold in the European Union, European Free Trade Association and United Kingdom, combined.

And in the EU, Germany and the Netherlands accounted for 65% of the 3,918 electric trucks sold during the first three quarters of ’23.

However, it is worth knowing that electric trucks represent a mere 1.5% of the EU market.

As for the U.S., IDTechEx forecasts that zero-emissions trucks could represent 13% of the medium- and heavy-duty truck sales by 2030.

Generally, estimates have light-duty EV sales being on the order of ~30% by 2030, so that 13% may say something about the durability, capability, usability, and economy of diesel engines.

However, zero-emissions they aren’t.

==

*Yes, there is the Tesla Semi. But it is, comparatively speaking, somewhat stealthy at this point.

Gas Effects

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By Gary S. Vasilash

During his “Forecast: 2024” webcast presentation, Jonathan Smoke, Cox Automotive chief economist, made a number of observations and predictions that ought to make potential vehicle purchasers happy.

Like the likelihood that the unemployment rate will stay at 4.0-4.1% throughout the year; that inflation will slowly decline; that interest rates will go in the right direction for those who need a loan.

Charlie Chesbrough, Cox senior economist, pointed out that new vehicle inventory in 2023 was up 51% compared with 2022, and one consequence is that incentives are rising, so it appears that there is going to be a shift from a seller’s market to a buyer’s market.

And speaking of buyer’s market and inventories: Stephanie Valdez Streaty, Cox director of Industry Insights, noted that at the end of 2023 the day’s supply of ICE vehicles on dealer lots was 69 days—but it was 113 days for electric vehicles. There is likely to be some dealing.

But there was one point that Smoke made that shows just how important vehicles and costs associated with them are to people.

As the graph below shows, as the price of gasoline goes down, the state of consumer sentiment rises.

Simply stated: Cheap gas makes people happy.

(Image: Cox Automotive)

EVs and Pricing Parity

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By Gary S. Vasilash

In December 2023 18 of the 35 brands that Kelley Blue Book analyzed had year-over-year price declines.

This is understandable, given that it was the end of the year, and there is a tendency for product manufacturers of all types, not just vehicles, to want to move out as much inventory at the end of a period as possible (e.g., the classic recommendation about buying a car at the end of the month when the dealer wants to move just one more to make a quota and consequently provides a better deal).

So there was Volvo, which reduced its price by 6.7% and Land Rover, with a 10.2% reduction.

It should be noted, however, that both of those brands have a very minimal (<1%) share of the U.S. market, so it is not like their combined numbers have much of a consequence on the overall average retail price for vehicles in 2023.

KBB calculated that in December the average transaction price (ATP) for vehicles was $48,759.

Notably, the ATP was $50,798 for electric vehicles.

Said Stephanie Valdez Streaty, director of Industry Insights at Cox Automotive, “2023 was a milestone year with 1,189,051 pure battery electric vehicles sold, accounting for 7.6% of all new-vehicle sales.”

So that is good for the EV producers.

What’s more, the point at which price parity between vehicles with combustion engines and those with electric motors is reached is something considered by industry to be the point at which there will be a huge rise in the number of EVs purchased.*

An ATP difference of $2,039 for an EV is almost that, and certainly just a few bucks per month on a lengthy load.

But going back to the companies that had price cuts in December, there’s the company that accounts for 55.1% of the EV market, Telsa. (Tesla has, per Cox Automotive, 4.2% of the entire vehicle market, which is more than Mercedes, Volvo, Jaguar-Land Rover, Rivian, and Lucid combined.)

According to KBB it cut its prices an average 25.1%.

Let’s see: a price reduction of that magnitude, the possibility of getting as much as a $7,500 tax credit for a Model X or Y—well, were Chevy capable of providing those kinds of benefits to customers Malibus would be flying off lots.

People read books about negotiation strategies in order to get a few percent taken off the price of the vehicle they want to buy, coming in ready to take on the dealer by being wise to its tactics, and there was Tesla, slashing prices, presto-change-o. And the Feds offering serious money, too.

Amazing!

No other OEM can afford to make—or take—the kind of cut that Tesla made.

At some point (let’s not forget about the presidential election in a few months) those tax cuts are going to go away. And Tesla may simply being to ratchet its prices back up.

What then?

Perhaps that parity may be fleeting.

==

*Of course, given the continued issue regarding infrastructure, which an increased number of EVs would only exacerbate. . . well, people who have to drive around looking for available, working chargers are not likely to want to repeat that experience when they look for a new vehicle.

What To Do In Congested Traffic

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By Gary S. Vasilash

“Traffic congestion occurs when demand for roadway travel exceeds the supply of roadways. As vehicular traffic builds, drivers, freight movers and bus riders lose time and spend fuel unproductively.”—INRIX 2022 Global Traffic Scorecard

INRIX calculated that U.S. cities were among those that had significant levels of congestion.

As in having five of the top 10 urban areas that have plenty of hours lost. What’s more, there is no other country that has more than one spot in the top 10.

The cities where people crawl along during commutes for too long a time are:

2. Chicago (155 hours lost)

4. Boston (134)

5. New York (117)

8. Philadelphia (114)

9. Miami (105)

So one assumes that people optimize their time as best they can by eating, applying makeup, getting in a few pages of War and Peace, and doing other things that probably aren’t ideal for the situation.

Mercedes has a better alternative. It has developed the MBUX Virtual Assistant that the company says “is in tune with customer needs and uses generative AI and proactive intelligence to make life easy, convenient and comfortable.”

Certainly better than stewing in traffic.

What’s more, Mercedes has created more apps for its cars, like the one named MBUX Collectables, which allows the driver to check in on the world of NFTs, like Mercedes’ own NXT Superdackel collection, a digital riff on bobbleheads and the like.

One slight issue might be that the interest in NFTs seems to have waned considerably, so perhaps they may be developing an app for those interested in philatey or other image-oriented exercises.

Bored? Mercedes has developed what it calls a “hyper-personalized user experience” that even allows a bit of game playing. (Image: Mercedes)

Mercedes-AMG also announced this week at CES MBUX SOUND DRIVE, an audio execution that “uses software that allows music to react to the way the car is being driven, creating a harmonious relationship between motion and melody.”

The company worked on the development of this system with will.i.am, who said of it:

“Imagine a world where your car can become an instrument creating musical journeys. MBUX SOUND DRIVE enhances driving and sound technology, letting motorists reshape music just by driving. I’m excited to see how composers, producers, and songwriters will harness this to create new works and reimagine classics for motorist to drive to. MBUX SOUND DRIVE is not only a new frontier for music creation, but also opens up fresh, exciting and interactive listening experiences for drivers.”

Although Las Vegas is way down on the INRIX list at 127, with 41 hours lost per year to congestion, given the traffic on the Strip most people would probably prefer if drivers were paying attention to their driving rather than using something that lets “motorists reshape music just by driving.”

Attending CES was somewhat convenient for will.i.am as the Black Eyed Peas played the Venetian for New Year’s.

What Do EV Drivers Want?

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By Gary S. Vasilash

Maybe it is listed in no particular order, but on a page headlined “Electric Vehicle Benefits and Considerations” on the U.S. Dept. of Energy’s Energy Efficiency & Renewable Energy, Alternative Fuels Data Center (whew!) site, those benefits and considerations are listed  as follows:

  • Energy Security
  • Costs
  • Fuel Economy
  • Infrastructure Availability
  • Emissions
  • Batteries

It would seem that there are more in the way of “considerations” than benefits here.

I suspect not a whole lot of people think “geopolitics” when they buy a new vehicle.

In the “Costs” section it explains:

“Although energy costs for EVs are generally lower than for similar conventional vehicles, purchase prices can be significantly higher. Prices are likely to equalize with conventional vehicles, as production volumes increase and battery technologies continue to mature. Also, initial costs can be offset by fuel cost savings, a federal tax credit, and state and utility incentives.”

The “purchase prices can be significantly higher” is probably a red flag for many people. And that costs will go down with greater volume doesn’t help someone who is buying an EV today. The free money from the government is certainly something that is a bonus compared to buying an ICE vehicle. And the fuel cost savings go to the next two points on the list, with fuel economy being better for light-duty vehicles, although there is the issue of charging, with the acknowledgement that “Public charging stations are not as ubiquitous as gas stations,” something of a massive understatement.

While people generally consider batteries in the context of the range provided, the folks at the Alternative Fuels Data Center acknowledge “The advanced batteries in electric vehicles are designed for extended life but will wear out eventually.” And it points out that should a battery need to be replaced outside of warranty “it may be a significant expense.”

And then there’s the “Emissions” item. Presumably the one that is of most interest to people who are concerned about the environment. According to the Center, “Electric and hybrid vehicles can have significant emissions benefits over conventional vehicles.” Note the can. The outfit goes on to note the life cycle emissions for EVs in areas where the electricity is generated with “low-polluting energy sources” have better performance than those that are operated “In regions that depend heavily on conventional electricity generation, electric vehicles may not demonstrate a strong life cycle emissions benefit.” Note the conventional.

A question that arises is that of how many people—regular everyday people—consider buying an EV because of its environmental benefits versus other characteristics, like its generally peppy off-the-line performance or the opportunity to forego visiting gas stations or because it is a Tesla and that’s considered cool?

Goodyear tire specifically for EVs. (Image: Goodyear)

This week Goodyear introduced a replacement tire for EVs, a tire that is available in sizes to fit an array of EVs from The Model Y to the Mustang Mach-E to the Audi Q4 e-tron.

About the tire, David Reese, vice president, Product Development, Goodyear Americas, said: “We know EV drivers prioritize performance and a more-sustainable tire. The ElectricDrive 2 was designed with at least 50% sustainable materials, a focus on providing greater traction and maintaining a quiet ride.”

Tires are a big concern for EVs because (a) the propulsion system is much quieter than a vehicle with combustion propelling it and (b) they are comparatively heavy:

While not an apples-to-apples comparison, the heaviest Mustang Mach-E EV has a curb weight of 4,838 pounds; the heaviest ICE ’23 Mustang is 3,932 pounds.

Heavier vehicles have an effect on tire wear.

While it is absolutely laudable of Goodyear to be using sustainable materials in its new tire, arguably people who drive vehicles that aren’t EVs could benefit from the fitment of such tires.

And it gets back to the question of whether performance, traction and a quiet ride are really what EV drivers are looking for in a tire rather than its environmental characteristics.

BMW and EVs

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By Gary S. Vasilash

When it comes to discussions of electric vehicles, the topics seem to be, in order of frequency:

  1. Tesla. Anything. Mileage recalculations. Musk’s recreational habits. Labor issues. Massive number of vehicles being sold (which actually doesn’t get the attention that it should: when you subtract Tesla vehicle sales from electric vehicle sales, things don’t look quite as bullish as one might think).
  2. GM. Mainly its failure to produce notable volumes. For 2023 it delivered 9,154 Cadillac LYRIQs, 483 Chevy Blazer EVs, 461 Silverado EVs, 3,244 HUMMER EVs, 14 Zevo 400s, and 483 Zevo 600s (the last two are commercial vehicles). That is a total 13,838 vehicles. Out of 2,594,698 sold.
  3. Ford. One thing is the refocus on hybrids. The other thing is the changing prices for the F-150 Lightning, with the recent notable rise in MSRP. You might have imagined that when the vehicle launched the perceived demand was such that they would have quickly hit economies of scale that would cause prices to, well, not rise. For 2023 it sold 24,165 Lightnings, which is excellent in the context of GM. But when you take into account the total 750,789 F-Series trucks sold, that’s about 3%.

A company that gets little attention is BMW when it comes to EVs.

BMW i5: one of the electric vehicles in the company’s offerings–there are also the i4, i7 and iX. (Image: BMW)

Which is surprising given that in 2023 it delivered 45,417 EVs into the U.S. market.

That’s more than the GM EV sales and the Ford Lightning sales combined (38,003).

BMW 2023 EV sales account for 12.5% of its total sales.

If the number of plug-in hybrids BMW sold in 2023 (25,318) are added in to the EV number (so the number of “electrified vehicles”), it is 70,735 or 19.5% of BMW’s total sales in the U.S.

Those are some big numbers for BMW.

Seems like the lack of discussion isn’t keeping people from buying the company’s EVs.

Conti Demos Crystal Display

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By Gary S. Vasilash

“With the Crystal Center Display as a key component, we want to turn the world of interior design on its head and create an innovative focal point for premium vehicles of the future – one that grabs attention and stirs emotions. We are moving away from the straightforward display of information and elevating it to a highly personalized user experience,”–Dr. Boris Mergell, head of the User Experience (UX) business area, Continental.

Conti’s collaboration with Swarovski. (Image: Continental)

Dr. Mergell is talking about an infotainment display that Continental has developed with crystal company extraordinaire Swarovski. Turns out that in addition to producing necklaces, rings, bracelets, and the like, there is another part of the company, Swarovski Mobility.

Continental developed a microLED display that is integrated into the crystal panel. The microLEDs provide the brightness and contrast for the 10-inch infotainment display. The information displayed seems to float in the slim crystal slab.

Seems like Conti is going for something of a Steampunk aesthetic for its displays: classic decorative crystal meets the cloud.

Self-Driving Is Desirable. So Is Cake Without Calories.

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By Gary S Vasilash

The “Consumer Attitude’s Around Autonomous Vehicle Technology Survey” indicates that there is a solid base of consumers who are ready to spend money to buy self-driving capability for their next vehicle.

Perhaps.

That is, there is a blur between advanced driver assistance systems (ADAS) and autonomous driving, even though the survey conducted for Ghost Autonomy, a developer of autonomous driving software, provides definitions of both, with ADAS including “automatic emergency braking, blind spot and pedestrian detection, lane keeping assist, surround view, parking assist, driver drowsiness detection and gaze detection” and autonomous driving technologies based on the SAE five levels, but claiming “L3-L5 is considered fully autonomous driving that does not require human backup,” which is not the case, because L3, while it lets the driver do other things, also requires that the driver be capable of reassuming, well, driving.

BMW Pesrsonal Pilot L3: yes, a driver is still required to regain control when needed. (Image: BMW)

For example, BMW has launched “BMW Personal Pilot L3,” which will be available to purchasers (adding 6,000 euros to the sticker) of the BMW 7 Series—in Germany only.

According to BMW this system provides “Level 3 capability as defined by the Society of Automotive Engineers,” and it “allows drivers to redirect their focus to other in-vehicle activities when travelling at up to 60 km/h (37 mph) on motorways with structurally separated carriageways.”

However, the driver “still has to be ready to reassume the task of driving at any time – i.e. as soon as the situation on the road requires them to or the stretch of road suitable for using the BMW Personal Pilot L3 comes to an end.”

In other words, “human backup.”

According to the Ghost Autonomy survey, 52% of those who have experienced self-driving (which arguably would be those who have ridden in a Cruise or Waymo vehicle, as FSD’s name notwithstanding, Tesla’s product isn’t self-driving, at least not within the existing classification, and it actually requires that the driver keep hands on the wheel) would “consider buying a car with full autonomy sooner if the technology was available today,” which is sort of a moot point because (a) it isn’t and (b) its not likely to be anytime soon.

What’s more, those “drivers who’ve experienced self-driving,” 78% of them, are willing to pay $5,000 or more upfront. Arguably this will be a lot more than $5,000 because the aforementioned BMW system would be about $6,600, and the Tesla FSD package (“Your car will be able to drive itself almost anywhere with minimal driver intervention and will continuously improve”) adds $12,000 to the sticker.

One finding in the survey that is certainly laudable is that when asked to rank the factors considered when they purchase their next vehicle they are:

  1. ADAS
  2. Keyless or phone-based entry and start
  3. Premium infotainment screen and sound
  4. Premium interior/exterior trim
  5. EV/battery powertrain

Yes, safety systems rank first.

But one wonders whether that answer isn’t analogous to what people say at the dentist office when asked about their brushing and flossing habits.

Who is going to say even on a survey that awesome audio is more important to them than safety?