The First EV Price War

[macarose]

We're about to hit our first serious price war in the EV market.

Volvo, which is the first Chinese government subsidized brand in North America, is launching the Volvo EX30.

Imagine a hamster driven Kia Soul with triple the horsepower, an upscale entry level luxury interior, and a sports car performance level of a 0-to-60 time of only 5.2 seconds.

Imagine getting all of that for only 65% of the price of a new car in today's market. Only then do you get a full understanding why Tesla just decided to lower their prices again.

Tesla is on course to hit their annual production target of 1,8 million. That's not their problem. The challenge for Tesla is that the Model 3 will be eight model years old by the time the 2024 model year is in full swing, which is right now.

The Model 3 design is gradually slipping into the 'dated and cheap' side of the car market. We see several of them. We know instantly what it is. A Tesla. A common sight. Now with millions bought and one on nearly every subsurban street in America.

The novelty of owning a Tesla is slowly eroding away.

So what's next? Will Ford or GM soon pose a serious threat? No. Their EV programs have been colossal failures. This new Volvo EX30 will likely do to Chevy Bolt sales the same thing that Tesla Model Y is now doing to the Ford Mustang Mach-E.

In this war GM and Ford don't have any good ammo, and they're losing billions. Ford needs new products. GM needs new leadership.

I do believe that Volkswagen will compete well in the coming years, Companies such as Geely, which owns the Volvo brand and receives billions in direct 'loans' from Chinese provinces and state owned banks will be a force.

The real threat? It will come from Toyota.

Once Toyota launches their solid state battery, Tesla will find themselves with a limited growth trajectory. Tesla hasn't embraced the idea that most Americans want a high-mile car that has exceptional reliability and is inexpensive to fix.

For Toyota that is a religion. Toyota already launched their Sputnik with the hybrid car. They dominate sales with nearly 25 million sold. An EV with a solid-state battery will be their moon landing.

If you do want an EV, or even if you want a gold standard for figuring out when a new gas car no longer offers a competitive value, take Tesla's purchase price for the Model 3 or Model Y that interests you, Apply 10% of that price for the down payment, and then use a financial calculator to plug in the interest rate and the length of your loan.

Subtract $100 to $200 a month for fuel savings, and then cross most of that off once you factor in the increase in your insurance costs. There it is. Your price at which a gas powered car doesn't make sense so long as you have easy access to charging. Call it Lang's Equilibrum.

 

[cptbarkey]

I agree with your Toyota assessment, but also content to sit the sidelines for a few years (2029'ish) as solid state starts spreading even further and is refined. In other words trying my best to stay far away from companies shrugging off economies of scale products onto its customers.

 

[Leo99]

I agree with your Toyota assessment, but also content to sit the sidelines for a few years (2029'ish) as solid state starts spreading even further and is refined. In other words trying my best to stay far away from companies shrugging off economies of scale products onto its customers.

I think you're correct to wait a few years. I'm also not getting any younger and getting itchy to buy a new car. Nothing really excites me for what I want to pay.

 

[Leo99]

One manufacturer not mentioned is Stellantis. I don't know what they're doing. Since Dodge is marketed as an anti-establishment anti-progressive brand it seems they'd be perfect to shun EVs and produce larger vehicles with larger displacement engines. They'd get a lot of sales from the folks that shun EV, hybrids, and turbos. They seem lost.

 

[97prizm]

A few years ago while strolling through the local Lowe's with my dad he mentioned that "Tesla is here to stay and a full-fledged manufacturer. Where are the Tesla killers?" I reminded him that Atari owned between 75-78% of the home console market in 1978. They should have been able to weather the console crash of 1982. After various owners spin-offs etc I don't think anything of the original Atari is even around. Tesla with Musk running things seems to be on this track. Dated products, still lower than average fit and finish (look at the cybertruck), every new product is or has been late by a significant margin, more competition, And Tesla needlessly changing parts or designs to "improve ".

 

[Oillover]

While this all sounds fine and dandy, the reality is that it's just a theory.
In reality, the ICE vehicle is still the cheapest, most reliable and practical means of personal transportation.

 

[Kira]

Nothing really excites me for what I want to pay.

That's a nice way of putting it.

Dated products, still lower than average fit and finish (look at the cybertruck), every new product is or has been late by a significant margin, more competition, And Tesla needlessly changing parts or designs to "improve ".

It's ironic. Knee-jerk sales tools (yearly model changes, goofy options) helped build the demand profile of cars.
Today, when smarts count more, recent electric vehicles are old fashioned too.
Gotta love it.

Nowhere is any 'standardization' of battery-pack shape or protection for changing technologies mentioned.
"Buy this and in four years you're on your own", kinda thing.
I do realize the early days of electric cars (smaller production numbers) all but necessitates obsolescence, but come on.

On the other hand, how do you even describe the intricacies and tech trends to a population which can't calculate miles per gallon?

Heck, even BITOGers say, "I push the button on the dash and I read inaccurate mileage".

 

[JeffKeryk]

You might be right, @macarose, the Model 3 may be getting long in the truth. But the flip side is, Tesla is not a traditional car company. The Model 3 and Model Y sell like hotcakes. People like me are waiting for the Highland. Other car companies continue to lose billion$ in their EV business. The Model 2 just might be the dagger.

Everyone is jumping on the Tesla Supercharger network; that will only allow for faster expansion. Tesla is synonomous with EV.
Has Toyota even produced a solid state prototype? So far Toyota has misread the EV forecast and produced a terrible EV. They are 10 years behind Tesla. All they have produced is talk.

Time will tell.

 

[fsdork]

Starting at $53,600 CAD. That's still a lot.

For some, the difference in variable cost may offset the fixed cost premium vs. ICE. For me, it's still not there yet. I do look forward to the day it happens.

 

[IndyIan]

Starting at $53,600 CAD. That's still a lot.

For some, the difference in variable cost may offset the fixed cost premium vs. ICE. For me, it's still not there yet. I do look forward to the day it happens.

-$5k from the federal government and another $7k off in Quebec! Hurts a bit less!

 

[cb_13]

I think that your biggest incorrect assumption is that people want a reliable vehicle. People want features…ALL the features. I can remember a million times of friends asking my opinion since I worked in a dealership and I’d tell them don’t buy this it’s new and we’re already seeing problems. Guess what? They bought it anyway because problems be ****ed they wanted all the whiz bangs and doo dads.

I also remember about 5 stripped down fleet Rangers the dealership sat on for months back in 2010 or 11. Where were all the internet tough guys who just wanted a manual transmission, hand crank windows, heat and AC?? I’m guessing angrily typing because they sure weren’t buying! But one of those hideous Tuscany Black Ops trucks would be sold in a few hours.

Most consumers buy what catches their eye or features that wow them. They’ll worry about breakdowns later.

 

[CKN]

I think that your biggest incorrect assumption is that people want a reliable vehicle. People want features…ALL the features. I can remember a million times of friends asking my opinion since I worked in a dealership and I’d tell them don’t buy this it’s new and we’re already seeing problems. Guess what? They bought it anyway because problems be ****ed they wanted all the whiz bangs and doo dads.

I also remember about 5 stripped down fleet Rangers the dealership sat on for months back in 2010 or 11. Where were all the internet tough guys who just wanted a manual transmission, hand crank windows, heat and AC?? I’m guessing angrily typing because they sure weren’t buying! But one of those hideous Tuscany Black Ops trucks would be sold in a few hours.

Most consumers buy what catches their eye or features that wow them. They’ll worry about breakdowns later.

Except that don't break on as often as those think on here. The start/stop thing was supposed to burn through starters like crazy-been around for over a decade (at least) at thats not happening. EV's have any less moving parts-about 95% less. So now the naysayers are throwing the mud against the walls that include, the relays will break, the battery regulators will break, etc.,etc.,.
It's a big bowl of "what Ifs" and time will tell.

 

[JHZR2]

Sad that Volvo is subsidized that way, if they actually dump product into the US market.

I would love a PHEV Volvo station wagon. Every other mom around here drives an xc90, they’re nice, but I like the wagon that I saw a lot of in Norway a year ago better.

More competitive options in the phev and EV space is good. But I’m not for money getting back to the Chinese war machine.

 

[cb_13]

Except that don't break on as often as those think on here. The start/stop thing was supposed to burn through starters like crazy-been around for over a decade (at least) at thats not happening. EV's have any less meoving parts-about 95% less. So now the naysayers are throwing the mud against the walls that include, the relays will break, the battery regulators will break, etc.,etc.,.
It's a big bowl of "what Ifs" and time will tell.

You’re correct that we’re dealing with what ifs now BUT people still bought terrible examples of quality that were already proven to be junk.

GM trucks with AFM, Ford’s 1.6 ecoboost were junk from the start at least the 2.0 had the courtesy to make it to 50k miles before failing, Focus DCT automatics, those Tuscany trucks I mentioned??? 5.4 3v engines, Chevy Cruze and their engine problems the list goes on and on those are just the two brands I saw the most. I don’t believe that all the others were trouble free across their line up but I tend to believe you can pick and choose out of each segment or even options from a manufacturer to get a relatively reliable vehicle.

 

[alarmguy]

We're about to hit our first serious price war in the EV market.

Volvo, which is the first Chinese government subsidized brand in North America, is launching the Volvo EX30.

Imagine a hamster driven Kia Soul with triple the horsepower, an upscale entry level luxury interior, and a sports car performance level of a 0-to-60 time of only 5.2 seconds.

Imagine getting all of that for only 65% of the price of a new car in today's market. Only then do you get a full understanding why Tesla just decided to lower their prices again.

Tesla is on course to hit their annual production target of 1,8 million. That's not their problem. The challenge for Tesla is that the Model 3 will be eight model years old by the time the 2024 model year is in full swing, which is right now.

The Model 3 design is gradually slipping into the 'dated and cheap' side of the car market. We see several of them. We know instantly what it is. A Tesla. A common sight. Now with millions bought and one on nearly every subsurban street in America.

The novelty of owning a Tesla is slowly eroding away.

So what's next? Will Ford or GM soon pose a serious threat? No. Their EV programs have been colossal failures. This new Volvo EX30 will likely do to Chevy Bolt sales the same thing that Tesla Model Y is now doing to the Ford Mustang Mach-E.

of course, the countries largest American car company poses a threat to the EV marketplace.
Calling a failure is ridiculous. It took Tesla 10 years to get up and running actually more than that.
Yet GM is a threat and they only started a year or two ago just wait until 2025
What do you think is going to happen when every GM car dealership has electric vehicles on their lots on every corner in America. to ignore that possibility would be hiding in the sand
By the way, I’m not debating you I agree agree with a lot of what you said.

I am in no way disparaging anybody who likes Teslas but every time I look at my neighbors Tesla I think personally it’s to me, a generic looking economy car, and there is nothing wrong with that but I do think they’re gonna get buried in the coming years.
I mean just look at an EV6 it’s an absolutely gorgeous car and it’s like Kia got it to market almost overnight. Well, GM and the others will have much of the same hitting the market over the next few years.

I personally think the markets gonna be saturated in the real profit margin is gonna come from ice vehicles

 

[PandaBear]

I don't think 1 or 2 model release like the Volvo EX30 would be changing the world just like that. What is needed to do that is the fundamental underlying logistics to make that happen. Tesla invest a lot (almost too much) to change their designs very fast under the same sheet metal despite it is still sold as the same, even mid year change. Gigacast, new battery, self driving update (despite you believe in it or not, it is a radical change), dual motor, etc. Volvo Geely partnership is more about asking Volvo to help Geely R&D their vehicles better than Geely rebadging to dump their own Chinese cars into the US, so I would expect the Geely platform improve significantly instead of Volvo being improved significantly.

Plus, Tesla spend a ton R&D and improve manufacturing of their own battery. I don't think the US big 3 does the same other than licensing the design from Korean, Japanese, Chinese and build a new plant to make them. GM is improving real fast in their platform, but how much do they control the core chemistry in the battery is my main concern in the long run. Same goes for Volvo, VW, Honda, etc. I wish Toyota would pull off their solid state bet, but until it is mass produced it is not yet proven.

 

[Leo99]

of course, the countries largest American car company poses a threat to the EV marketplace.
Calling a failure is ridiculous. It took Tesla 10 years to get up and running actually more than that.
Yet GM is a threat and they only started a year or two ago just wait until 2025
What do you think is going to happen when every GM car dealership has electric vehicles on their lots on every corner in America. to ignore that possibility would be hiding in the sand
By the way, I’m not debating you I agree agree with a lot of what you said.

I am in no way disparaging anybody who likes Teslas but every time I look at my neighbors Tesla I think personally it’s to me, a generic looking economy car, and there is nothing wrong with that but I do think they’re gonna get buried in the coming years.
I mean just look at an EV6 it’s an absolutely gorgeous car and it’s like Kia got it to market almost overnight. Well, GM and the others will have much of the same hitting the market over the next few years.

I personally think the markets gonna be saturated in the real profit margin is gonna come from ice vehicles

Beauty is in the eye of the beholder. I think Telsas look very nice. Futuristic without being too weird. That's the cars. The SUV Teslas look too much like an egg.

 

[Rmay635703]

On this subject Volvo is enabling Geely to sell Chinese EVs without tarriffs into the us

Despite the commentary they really aren’t selling “cheap”, at $35,000 I’m not really sure why the proposed EV would sell in anything close to mass market numbers

 

[alarmguy]

Funny how fast things changed since last fall. I agree with the OP 100% on the generic look of Tesla and why part of the reason that they have monumental problems right now with no solution in site.

But the come from behind thing that NO ONE saw coming was from Toyota. Oh my, the vast majority agree that gasoline is conveinant and EVs way to expensive for a compact car. Toyota thought the world was moving too fast. I suspect they knew it was the media and not the general population. Now they are the heroes.

Since the OP, all of a sudden the world is turning upside down in the USA. We dont want these things forced on us and the solution is the HyBrid. I wouldnt be surprised (not that it will happen) to see Tesla maybe figure this out and come out with one, if it's even possible with their efficient ridged auto making machines.

Hang tough, it's fun to watch and see what happens next. I just wish they would stop taking my money and giving it to other people to buy EVs.

 

[alarmguy]

On this subject Volvo is enabling Geely to sell Chinese EVs without tarriffs into the us

Despite the commentary they really aren’t selling “cheap”, at $35,000 I’m not really sure why the proposed EV would sell in anything close to mass market numbers

WOW, great post. I had no idea Volvo was owned by a Chinese country. (the things you learn in BITOG)

No, not really cheap but seems like the profits so high I wouldnt be surprised to never see price increases and maybe price decreases.
Either way, the consumer wins. Sad for the country but we compete on the world stage. Ford blew it, mismanaged Volvo from almost day one when they acquired it. I found this article from back then. Volvo welcomed the Chinese with open arms to save them from Ford. Then they started re-thinking that, then back on track for full merger. Turned out great for Volvo.

To the credit of the Chinese they held up their end of the bargain with Volvo.
What a success story of growth after disconnecting with Ford ownership.

Hey, Im more American (REALLY) than most can imagine but I don't give excuses for mismanagement and short sited visions and decisions of American companies who royally mess things up. Also because (no politics) these EV things are being pushed on us by the people we vote for I should be pushed to spend more of my income for them?. SO thank you for the lower cost version. Looks like it is going to sell like hotcakes. Competition is good.
Hold onto your hats!

Great, great post!