Decoding The Chaos In The Market For Electric Cars

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Headwinds for electric cars are increasing as higher interest rates make them less affordable for mainstream buyers.

These are troubling times for legacy automakers trying to make the transition to building electric cars. In the US, Ford and General Motors have bothto manufacture electric pickup trucks. Now, Mercedes Benz said during its Q3 earnings call this week it is finding the market for electric cars to be “brutal,” as a flood of inexpensive Chinese EVs has come ashore in Europe. Price cuts from Tesla have also roiled the market further, putting additional financial pressure on automakers.

The company on Thursday reported a 12.4% adjusted return on sales in its cars division in the third quarter. Also this week, shares in Porsche, which surged after the company went public recently, have fallen back to earth and are hovering at or near their lowest price ever.the company has largely overcome the supply chain issues that plagued the industry during Covid and has trimmed inventories.

Rowan said the newly introduced EX30 would be as profitable as the company’s gasoline- and diesel-powered cars. Volvo said in September it willearly next year. Volvo had a 9% profit margin on its electric cars in the period, and the EX30 will increase that to between 15% and 20%, Rowan said. “The EX30 gets us to price parity,” Rowan said. “That’s really a big pivot point for us. We’ll be one of the first that gets to BEV/ICE parity.

Lawler said that Ford will postpone about $12 billion in planned spending on manufacturing capacity for electric cars, including a planned second battery plant at a new campus in Kentucky. Despite that pullback, construction of Blue Oval City — Ford’s new EV manufacturing campus in Tennessee — will continue as originally planned.

 

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