EV Registrations Are Up Big In The U.S. For Every Automaker But Tesla

Good morning! It’s Thursday, July 18, 2024, and this is The Morning Shift, your daily roundup of the top automotive headlines from around the world, in one place. Here are the important stories you need to know.

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Contents

1st Gear: EV Sales Are Up Big If You Aren’t Tesla

New electric vehicle registrations rose 9.6 percent in May, mostly due to sales promotions and good lease deals. However, not everyone is having fun. Tesla’s new vehicle registrations fell for the fourth consecutive month, according to data from S&P Global Mobility.

EVs from 31 brands were able to capture 7.5 percent of the U.S. light vehicle market. That’s up from 6.8 percent at the same time last year. In total, May EV registration totaled 104,916 vehicles. In fact, EV registrations actually outpaced the broader light-vehicle market, which was down 0.7 percent to just under 1.4 million vehicles. Not too shabby. From Automotive News:

“In terms of pure sales performance, EVs are making progress, but underneath the sales are huge incentives,” [Tom] Libby [associate director of industry analysis at S&P] said. “They are not sustainable, and they are causing losses on the part of automakers.”

Still, not everyone is having fun. Tesla may still be the EV sales leader by a long way, but the margin is shrinking.

Tesla, still the EV sales leader by a wide margin, saw its May registrations fall 15 percent to 48,587 vehicles, S&P Global Mobility said. Tesla’s share of the EV segment dropped to 46 percent from 60 percent a year earlier.

Among the strongest performers, Kia’s registrations rose 146 percent, Rivian’s numbers grew 87 percent, Hyundai increased 40 percent, and Nissan was up 87 percent year over year, the data showed.

Registration data serves as a proxy to automaker delivery numbers because Tesla doesn’t break out its U.S. sales and some other automakers don’t report EV sales by model. But the figures lag by several weeks.

Incentives seem to be a big reason for the uptick in electric vehicle sales.

Automakers in May poured on sales incentives, including subsidized financing and lease deals, with some models getting more than $15,000 in discounts, according to data from Motor Intelligence.

May incentives on the Kia EV6, a compact crossover, reached $16,812, Motor Intelligence said. Kia’s EV9 midsize crossover had $18,078 per vehicle, and the Cadillac Lyriq reached $17,732, the data showed.

Tesla’s Model Y had relatively modest incentives of $5,570 in May, Motor Intelligence said. Rivian Automotive, which hasn’t been profitable since launching in late 2021, offered incentives of $4,060 on its R1T pickup.

In all these examples, discounts rose significantly from a year earlier. The Lyriq’s May 2023 incentives were $761 per vehicle, Motor Intelligence said. The Model Y had $1,195.

One industry analyst feels electric vehicle sales may soon reach their ceiling.

EV makers have little choice but to offer attractive deals, cut production or stay mostly on the sidelines, as Toyota has done by focusing on hybrids over EVs, said Karl Brauer, executive analyst at iSeeCars.

Brauer predicted last year that EV market share would reach around 7 percent and then stall, based on a study of U.S. consumer preferences by iSeeCars.

“Here we are around 7 and a half percent, and what do we see?” Brauer said. “We see EVs stacking up at lots, we see [assembly plant] shifts being canceled, and we see massive incentives. Going from 2 to 5 to 7 percent EV market share was one thing. Going from 7 to 10 percent is another.”

Where the EV market will go is sort of an unknown, and I’m not going to speculate because I don’t have a crystal ball. However, based on incentives alone, now seems like a really good time to scoop up that electric vehicle you’ve had your eye on.

2nd Gear: Chinese Vehicle Software Limits Are Coming

The U.S. Department of Commerce plans to issue proposed rules on connected vehicles in August. Additionally, it is expected to impose limits on some software made in China and other countries it sees as adversaries. From Reuters:

“We’re looking at a few components and some software – not the whole car – but it would be some of the key driver components of the vehicle that manage the software and manage the data around that car that would have to be made in an allied country,” said export controls chief Alan Estevez at a forum in Colorado.

In May, Commerce Secretary Gina Raimondo said her department planned to issue proposed rules on Chinese-connected vehicles this autumn and had said the Biden administration could take “extreme action” and ban Chinese-connected vehicles or impose restrictions on them after the Biden administration in February launched a probe into whether Chinese vehicle imports posed national security risks.

The comments of Estevez, who is the Commerce under secretary for industry and security, are the most definitive to date about the administration’s plans on Chinese vehicles that sparked wide alarm.

Connected cars have onboard integrated network hardware that allows internet access, allowing them to share data with devices both inside and outside the vehicle.

Estevez said Tuesday the threat is serious.

“A car is a very scary thing. Your car knows a lot about you. Your car probably gets a software update, whether it’s an electric vehicle or an autonomous combustion engine vehicle,” he said.

“A modern car has a lot of software in it. It’s taking lots of pictures. It has a drive system. It’s connected to your phone. It knows who you call. It knows where you go. It knows a lot about you.”

The Chinese foreign ministry has previously urged the U.S. “to respect the laws of the market economy and principles of fair competition.” The ministry has argued that Chinese cars are popular around the world because they have emerged out of strong market competition, and they are technically innovative.

Raimondo said in May “you can imagine the most catastrophic outcome theoretically if you had a couple million cars on the road and the software were disabled.”

Right now, there aren’t many imported Chinese-made light-duty vehicles in the U.S., and that’s the way the government likes it. In just a few weeks, on August 1, the Biden administration’s proposed sharp tariff hikes on Chinese electric vehicles are expected to take effect.

3rd Gear: Volvo Points The Finger At EU Tariffs

Volvo cut its full-year retail sales forecast, and it is making the classic move of blaming others for its misfortune. The company says European tariffs on electric vehicles made in China will hit its key electric models until production can shift to Belgium.

While the Swedish automaker did report better-than-expected second-quarter results, it lowered its forecast for sales growth this year from 12 to 15 percent from a solid 15 percent. From Reuters:

“It’s really driven by tariffs,” CEO Jim Rowan told Reuters. “It’s a short term issue for us, but it is an issue and we’re just going to have to deal with that.”

Rowan said that while Volvo still hoped for 15% growth, it was now providing a range given the uncertainty.

“We wanted to put a floor on that for the markets to say we’re still going to grow but there are some headwinds,” he said.

Earlier this month, the EU announced provisional tariffs of up to 37.6% on imports of EVs made in China, saying they benefited from unfair subsidies – an allegation Beijing rejects.

Volvo is majority-owned by China’s Geely and faces a 19.9% tariff on its Chinese-made fully-electric EX30.

Rowan said the Swedish automaker faced a “minimum of six months” of tariffs until it moves EX30 production to Belgium, which is expected to start early next year.

Volvo said the main ramp-up of EX30 production at its factory in Ghent was expected during the second half of 2025.

Bernstein analysts said in a note that the new sales guidance was “sensible given today’s macroeconomic situation.”

Many automakers have seen a slowdown in demand for electric vehicles. However, automakers in the U.S. and Europe have seen strong sales for hybrids, and they are rolling out more models to meet demand.

Volvo saw a “modest decline” in orders for all-electric vehicles in the second quarter, but it noted that “demand for hybrid cars remains very strong.” In total, Volvo built 211,900 vehicles in the second quarter.

4th Gear: Stellantis Goes Golfing

Stellantis is considering turning an old golf course and farmland near the old Ford Romeo Engine Plant in Macomb County, Michigan into the site of a proposed 2.7 million square foot Mopar parts distribution center. From Automotive News:

The automaker is planning to consolidate aging warehouses in the suburban Detroit region, including those in Centerline, Warren and Marysville, into a “mega hub,” as called for in its recent labor deal with the UAW. A 230-acre site to the south of 32 Mile Road has emerged as a likely landing spot, though the deal is not done, according to sources familiar with the situation.

Real estate developer Prologis Inc. of San Francisco has pitched the project, referred to as the 32 Mile Logistics Campus, to the planning commission of Washington Township, where the Romeo Golf Course & Country Club once operated. The three-building development would be spread across the former golf course and farmland, according to planning documents.

[…]

“During 2023 UAW negotiations, the company agreed to establish a regional Megahub (parts distribution center) in the Metro Detroit area,” a company spokesman said in an email. “However, the company is not in any discussions about a specific site or property at this time.”

Prologis representatives told township officials that the development is for a single user, which they declined to name. It is not clear if the project represents new jobs or just those transferred from existing sites.

Representatives of the real estate developer told the township they are considering other sites in the area but did not specify them. Prologis spokeswoman Mattie Sorrentino told Automotive News affiliate Crain’s Detroit Business in a June email that the building “is being built speculatively, so there is not information to share at this time.”

As part of its pact with the UAW, Stellantis would invest about $30 million in a new facility that consolidates parts warehouses, and the launch date is expected to be around 2026.

“The company gave us two choices for MOPAR: to either consolidate facilities and gain jobs, or close facilities and lose jobs,” the UAW said in the summary. “The choice to consolidate these facilities was difficult, but we came out of it with the elimination of the lower wage tier at MOPAR, a guarantee of job security, and the right to bargain for an expanded moving allowance beyond the $37,500 we already won.”

If the project materializes, it would be a big win for a township looking for more tax revenue and a community in need of jobs, especially after Ford’s decommissioning of Romeo Engine Plant. The idled 2 million-square-foot factory across the street from the proposed site once built engines for tractors and Mustangs before being put on the chopping block in 2019.

Finding a new purpose for the piece of well-located industrial real estate has been a top priority for local and state officials. Ford still owns the plant and sometimes uses its parking lot to store pickups not yet ready for dealers.

The reason Stellantis would look to the golf course rather than the Romeo Plant is a simple one: the potential cleanup of the factory would cost too much and be too big of a pain in the ass.

The proposed development will consist of a 1.2 million-square-foot building, a 997,500-square-foot building and a 427,000-square-foot building. Sure, the land is currently zoned agricultural/residential, but the township’s land use plan calls for it to be converted to industrial.