Serious Concerns About Money

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By Gary S. Vasilash

Although it isn’t exactly “buyer’s remorse,” according to a survey conducted in the U.K., 50% of vehicle buyers in the past 12 months express concern about whether or not they’re going to be able to afford the financing.

Specifically, when asked “How concerned are you about whether you can afford the payments under your current finance agreement?”

  • 10% responded “very concerned”
  • 40% responded “somewhat concerned”

Notably, in the “somewhat concerned” cohort, 55% were younger buyers. Perhaps reflecting a certain financial conservatism, only 16% of those 65 or older expressed that.

The survey was sponsored by ALPHERA, a part of BMW Group Financial Services.

While not auto-specific, findings of research conducted in the U.S. by Experian are more concerning.

It found that 68% of U.S. adults have or are suffering from “financial trauma.”

Including “negative thoughts, flashbacks and anxiety.”

And, again, the younger cohorts stand out:

  • 73% of Gen Z adults
  • 77% of Millennials

Seems like greater consideration before hitting the “buy” button might alleviate some concerns, both in the U.S. and the U.K.

The Coming EV Cost Challenge

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By Gary S. Vasilash

B-segment cars are not big in the U.S. Of course, these cars, which are under compacts (e.g., Honda Civic, Toyota Corolla, Hyundai Elantra), are physically small, as in things like the Honda Fit, Toyota Yaris and Hyundai Accent, all of which have departed the scene in the U.S.

However, the B-segment has a solid following in Europe probably not because Europeans just like to wedge themselves into smaller vehicles but because of things like high gasoline prices and parking challenges.

The Boston Consulting Group (BCG) recently performed an analysis of the costs of producing B-segment electric vehicles (EVs) for the European market.

This is apparently quite a challenge, as they found:

“the price difference between a B-segment EV and a similar ICE vehicle is greater than the price differential for other EV and ICE vehicle segments. An analysis of recent French price data found that the average retail price premium on a B-segment EV compared to its ICE counterpart is around 75% (€36,800 vs. €20,900). In the C- and D-segments, the premium is 47% and 11%, respectively.”

People who might be inclined to buy a B-segment EV would likely be disinclined once that price delta is seen at a dealership.

BCG finds that material costs are a big driver, with the material costs for an EV being about 65% higher than the materials for an ICE vehicle.

Batteries play a big role in this.

So as the BCG analysts looked at how prices can be managed, they pointed out, of course, that reduction in battery costs through things like using lithium iron phosphate batteries (LFP) instead of nickel-manganese-cobalt are beneficial.

But there needs to be more done, from reducing the number of vehicle variants to sharing parts across models.

And then there is the manufacturing cost input that must be managed.

The BCG analysts note:

“In the manufacturing realm, restructuring assembly lines to focus solely on producing EVs will automatically lower assembly costs. In both greenfield and brownfield EV plants there are 75% fewer engine preparation and 25% fewer mechanical preparation steps per vehicle compared to ICE factories. This, in turn, improves productivity and factory output while decreasing the number of full-time employees.”

Again, this is about B-segment EVs in Europe.

But it makes one wonder about the recent tentative agreements between the UAW, Ford, GM and Stellantis.

In the BCG model, “decreasing the number of full-time employees” is arguably a positive in that it would reduce costs.

In the new model created by the UAW-OEM negotiators, that is something that is not likely to be realized.

Which could prove to be challenging to the OEMs in the U.S., even when producing much larger EVs.

Faced with competitors who can, this could be rather problematic when pricing those new domestic EV models.

Honda Motocompacto: Ridden

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By Gary S. Vasilash

The starting price of an iPhone 15 Pro is $999.

Which puts the starting MSRP for the Honda Motocompacto electric scooter–$995—into some context.

Chances are, the kind of people who’d opt for that phone model would be ideal for the personal transportation device—and yes, it is more of a device than a traditional scooter, especially given that the Motocompacto can be folded into an easy-to-lug (it weighs 41 pounds, so while you’re likely able to carry it, it probably won’t be for a great distance, which is where the lugging comes in) rectangular (self-) container measuring 3.7 inches wide, 21.1 inches high, and 29.2 inches long: think of it is a narrow suitcase.

The scooter folds into itself so there is a tidy package ready to be put in the truck of a car (ideally a Honda or Acura, as dealers of those brands are where the scooter is sold) for the next last-mile journey.

You meet the nicest people on a Motocompacto. (Image: Honda)

But the point of the scooter is to provide quick urban transport, not to be transported (although that folding is quite clever).

It has a range of 12 miles, a top speed of 15 mph, and it can accommodate a rider who weighs 265 pounds.

Once the battery is exhausted, it takes 3.5 hours to recharge from a traditional plug in the wall.

The typical electric scooter is designed for the rider to be standing up when riding it.

The Motocompacto is designed so the rider is sitting.

This does a couple of things.

  1. It lowers the center of gravity, which facilitates balance
  2. It allows the rider to be able to use their legs to recover if they feel they’re going out of balance

If you’re standing and the platform under your feet is traveling at speed and something goes awry, it could be the makings of a serious tumble.

If you’re sitting on a Motocompacto that is moving along, it is far easier to maintain one’s physical composure (even though one may be thinking “Holy sh**!”).

Riding Is Easy

It really is. No instructions required.

Need for Speed

While 15 mph might seem snail-slow, when your posterior is comparatively close to the wide open ground, it is quick. The Motocompacto is FWD, and it can get to that top speed in 7.5 seconds.

You’ve Heard of Honda

According to data analysis company Tracxn, there are some 450 electric scooter manufacturers. Odds are you’ve heard of not many of them. And odds are you’ve seen reports of late that indicate some e-scooters are bursting into flames. Seems to me that it would be a better investment—even if that investment is higher—to go with a Honda than something built by a company that started up a few months ago and very well may cease to exist a few months from now.

Hyundai and Hybrids

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By Gary S. Vasilash

In reporting its October sales, Hyundai noted that the company that was once thought of mainly in the context of its style-setting Sonata sedan (remember when the 2011 model came out with its “Fluidic Sculpture” styling that made all other sedans seem as though they came from an earlier age?) had 81% of its retail mix in. . . SUVs.

Of course, that has a little something to do with the fact that in the car category there are the Sonata, Elantra and recently introduced IONIQ 6 EV sedan, while in the SUV category there are:

  • IONIQ 5
  • Kona
  • Nexo
  • Pallisade
  • Santa Fe
  • Tucson
  • Venue

(There is also the Santa Cruz pickup, for purposes of providing a look at the entire showroom.)

Hyundai Tucson PHEV (Image: Hyundai)

While there were 9,456 Elantras sold—an 11% increase compared with October 2022 sales—there were 9,700 Santa Fes sold—and that’s a decrease of 10% compared to last year and it still is more than the Elantra sales.

But what is more interesting in some regards is this observation from Randy Parker, Hyundai North America CEO:

“This was the best-ever October for total and retail sales for our segment-leading Tucson HEV, Tucson PHEV, Santa Fe HEV and IONIQ 5 SUVs along with our Elantra HEV.”

Yes, hybrids are doing increasingly well at Hyundai, though there is also that full battery-electric IONIQ 5.

Overall, electrified vehicles represented 21% of Hyundai’s October sales, a 49% year-over-year (YoY) increase.

In terms of the hybrid YoY increases:

  • Elantra HEV:          +15%
  • Santa Fe HEV:        +81%
  • Tucson PHEV:         +170%
  • Tucson HEV:           +14%

Odds are those OEMs that decided to deemphasize hybrids to promote full electric vehicles are giving their portfolio strategy a hard re-think.

Biden and Belvidere

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“Congratulations to Stellantis and the UAW for their dedication and focus in coming together to reach a hard-won tentative agreement. The significance of this historic achievement coming just days after the UAW and Ford reached an agreement cannot be overstated.

 “This tentative agreement includes a number of important provisions including a commitment to reopen the Belvidere plant in Illinois, which will bring good, union jobs back that community. The parties are also charting a future of good middle-class jobs in battery manufacturing, consistent with the President’s vision for a just transition where building a clean economy and creating good union jobs go hand-in-hand.

 “Today’s agreement demonstrates what is possible when workers have a voice and a seat at the table. On behalf of the most pro-worker, pro-union administration in history, we applaud the parties on what they have achieved.”—Julie A. Su, U.S. Acting Secretary of Labor

A couple of considerations.

  1. What does it matter that there is the self-proclaimed “pro-worker, pro-union administration in history”? Wasn’t this contract worked out by the UAW and Stellantis? How was the Biden Administration involved? One of the points that the UAW used in bargaining was that the Administration is shoveling money into battery plants and while the OEMs can take advantage of that, there was no certainty that the workers would benefit from it, as that wasn’t written into the language of the Fed’s largess, only geography and material sourcing, not worker representation. Pro-labor?
  2. That plant in northern Illinois had been closed earlier this year because the Jeep Cherokee that was built there wasn’t selling. Obviously, making something that someone doesn’t want to buy is not a good idea. (OK: that only a few people want to buy.) According to UAW vice president Rich Boyer, the plant will build a midsize pickup and there will also be jobs at a battery plant in Belvidere. Should that midsize pickup be an electric pickup, given what’s happening in the market right now, that may put the workers back in the situation that had occurred with the Cherokee. EVs are not selling at the rate that had been anticipated, which is causing Ford to cut a shift from its F-150 Lightning production and GM to push back the construction of an EV assembly plant. Seems like more EVs isn’t what’s required at present. However, UAW president Shawn Fain pointed out: “We not only won the right to strike over plant closure, we won the right to strike over product and investment. That means if the company goes back on their word over any of these plans, we can strike the hell out of them.” Stellantis better hope its product planning is on target for Belvidere as well as its other U.S. plants.

Fisker: Emotional or Updateable?

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By Gary S. Vasilash

Henrik Fisker is an automotive designer whose work includes the BMW Z8 and the Aston Martin DB9. And, of course, there was the Fisker Karma, the car that continued long after the Fisker Automotive ceased to exist. In 2016 Fisker Inc. was established.

Fisker Inc. says of itself: “Passionately driven by a vision of a clean future for all, the company is on a mission to create the world’s most sustainable and emotional electric vehicles.”

Fisker Inc.’s first vehicle, the Fisker Ocean, is an electric SUV. (The Karma was part of the way to clean: a hybrid.)

Fisker Ocean (Image: Fisker Inc.)

Henrik Fisker recently said something interesting (well, he’s probably said plenty of interesting things of late, but this one, in particular):

“In the 21st century, our vehicles are more like rolling computers than the cars of the past, so we need to ensure that our customers are seeing frequent improvements and updates to software.”

He was talking about having over-the-air (OTA) update capability for the Ocean.

When one thinks of a computer, the word emotional probably doesn’t come to mind (unless something has just gone seriously awry and there is a thought about throwing it against a wall).

Although Apple once designed computers that had form factors that were far more appealing (or off-putting) than the run-of-the-mill IBM or Dell—think of the colorful iMac G3, iMac G4, PowerMac G4 Cube—today the products are well-designed, but not particularly emotional.

Henrik Fisker is a chairman and a CEO as well as being a designer.

Consequently, he has to be concerned with what sells.

Which seems to be things that are OTA-capable.

Let’s hope the design doesn’t become an occasional afterthought.

EVs and Oil Investments

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By Gary S. Vasilash

Although there seems to be a propulsive inevitability of the electric vehicle such that by the time 2030 arrives we’ll all be rolling around in electron-powered machines, there are a few things that are making this seem less. . .inevitable.

Last week ExxonMobil announced it is acquiring Pioneer Natural Resources, an oil and gas exploration and production company, for $59.5-billion.

As ExxonMobil described this: “Together, the companies will have an estimated 16 billion barrels of oil equivalent resource in the Permian. At close, ExxonMobil’s Permian production volume would more than double to 1.3 million barrels of oil equivalent per day (MOEBD), based on 2023 volumes, and is expected to increase to approximately 2 MOEBD in 2027.”

Or simply put: More access to more oil.

Today Chevron announced it is buying Hess Corp. for $53-billion. Hess “is a leading global independent energy company engaged in the exploration and production of crude oil and natural gas with leading positions offshore Guyana, the Bakken shale play in North Dakota, the deepwater Gulf of Mexico and the Gulf of Thailand.”

Chevron “produces crude oil and natural gas; manufactures transportation fuels, lubricants, petrochemicals and additives; and develops technologies that enhance our business and the industry. We aim to grow our traditional oil and gas business, lower the carbon intensity of our operations and grow new lower carbon businesses in renewable fuels, hydrogen, carbon capture, offsets and other emerging technologies.”

With Hess it will most certainly grow its traditional oil and gas business.

McKinsey & Company just released its “Global Energy Perspective,” which looks at the likelihood of the industrialized world meeting the goal of keeping global warming growth below 1.5°C. There are four scenarios about the energy transition, ranging from “Fading momentum” to “Achieved commitments.”

In all cases they predict that oil will peak in 2030.

But then there is a question of what happens next: what is the angle of decline by 2050?

It could be big: as much as a decrease of barrels of oil by 50%

It could be small: as little as a 3% decline.

Odds are ExxonMobil and Chevron are betting on something closer to 3 than 50.

Which leads to a bit of wonder about the rate of adoption of EVs in the U.S.

As of August, J.D. Power had the share of EV sales in the U.S. at 8.6%. That number is a bit opaque because Tesla accounts for 63% of all of those EV sales, so it is not like EVs that aren’t Teslas are growing in ubiquity. (Even Ford has taken a shift out of the production of the F-150 Lightning, and F-150s (well, with combustion engines) are otherwise produced at such a rate that other vehicle manufacturers can only look on with envy.)

So while the number is easily going to be greater than 3% come 2030, perhaps the idea that EVs will be 50% of the market by 2030 is a bit too optimistic.

Robo Woes

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As the National Highway Traffic Safety Administration (NHTSA) begins an investigation into Cruise based on a couple of incidents regarding the self-driving vehicles and their protocols (behaviors?) around pedestrians, there is more not-so-good news for the purveyor of driverless taxis rides.

Cruise driverless vehicle at night. (Image: Cruise)

J.D. Power has released results of a survey, the J.D. Power U.S. Robotaxi Experience Study, the indicates consumers are not all that chuffed with the prospect of driverless rides and aren’t all that keen on having the vehicles rolling around in their neighborhoods.

As in:

  • Only 20% of all consumers are comfortable with automated vehicle tech being tested on the streets and highways in their locale.

What’s more, although Cruise never fails to point out that it maintains its vehicles are safer than humans, J.D. Power found that “nearly 60% of both riders and non-riders say they don’t think a robotaxi drives any better than a human.”

While those who have never taken a ride can be dismissed (e.g., would you believe someone who never ate chocolate ice cream who said it isn’t as good as vanilla?), that even riders are in that cohort isn’t good from a PR point of view.

Kathleen Rizk, senior director of user experience benchmarking and technology, J.D. Power:

“Automated vehicle technology is built on the promise of alleviating distracted driving, impaired driving and collisions attributed to human error.

“However, the benefits result from consumer acceptance, which is why it’s imperative to ensure these first deployments are flawless—not only for the riders but also especially for those who are not early adopters, including non-riders who are experiencing AVs in their community and those learning from a distance through social media and other news outlets.”

When people are learning about things like NTHSA investigations, that can’t be good for Cruise (and to be fair, Waymo).

Best Elon Musk Quote from the 2023 Q3 Earnings Call

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While discussing how to reduce the cost of building vehicles. . .

Musk:

“We’re trying to be very rigorous about improving the quality and capability of the car because it’s like any fool can reduce the cost of a car by making it worse and just deleting functionality and capability and that’s how I call this sort of any fool like—if you want to like lose weight and you said, ‘Well, I need to lose over 15 pounds right away,’ well, you could chop your arm off, but then you’re sitting with one arm.

“You know, you’re still fat.

“So, sort of like, yes, you actually have to eat less food and work out. That’s the actual way. And doctor’s advice. Yeah.

“It’s not super fun because food is delicious. And personaly, I’m not–I don’t love working out. I know I say I do. I wish I did, but I don’t.

“Unless moving the mouse consists of working out. In which case, I love moving the mouse.”

Underwhelming Domestic OEM EV Sales

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If you listen to the pronouncements of traditional OEMs about their EV efforts, you’d think that there is probably some sort of parity vis-à-vis their internal combustion engine business.

As in GM (remember: “All in” on EVs) selling plenty of EVs, and the Ford F-150 Lightning being in demand the same way the ICE versions of the truck are.*

So it comes as a surprise how few EVs the traditional OEMs are selling in the U.S.

According to the just-released Kelley Blue Book “Electric Vehicle Sales Report” for Q3, when it comes to General Motors, year-to-date it has sold:

  • 49,531 Chevrolet EVs
  • 5,334 Cadillacs
  • 1,216 GMCs

That’s a total of 56,081 EVs over nine months. If we include Brightdrop commercial vehicle sales, it boosts the number to 56,414.

The GMC HUMMER EV was introduced in October 2020. During the past three years, there have been 2,071 of them sold. (Image: GMC)

GM sold 65,255 Chevy Trax models, or 15,761 more units than sales of the Bolt EV/Bolt EUV sold through Q3.

Meanwhile, over at Ford:

  • 46,671

To put that in perspective: during the first three quarters of 2023 it sold 56,427 of its giant Expedition SUVs. So the Mustang Mach-E, Lightning and E-Transit commercial van summed are nearly 10,000 fewer.

And while adding things together: GM and Ford combined sold 103,085 electric vehicles.

Meanwhile, according to KBB Tesla sold 493,513 EVs.

Think about that: two of the biggest, most legendary OEMs in the U.S. together sold about a fifth of a company that was established 20 years ago.

*To be fair, Stellantis brands (Chrysler, Dodge, Jeep) sold 0 EVs.