Nearly Half Of All New EVs Are Leases
Good morning! It’s Tuesday, August 27, 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.
Even EVs Can’t Get A Break From The Heat
1st Gear: EV Shoppers See The Big Benefits Of Leasing
It has become abundantly clear that Americans prefer leasing when getting behind the wheel of a new electric vehicle, according to second-quarter data from S&P Global Mobility and TransUnion. In the second quarter of 2024, 48.7 percent of all new EVs were leased. 34.7 percent were financed and just 16.6 percent were bought with cash.
Those numbers have changed a lot since the same quarter of 2023 when 33.6 percent were leasing, 21.9 percent were buying in cash and a plurality (44.6 percent) were financing. Going back even further, to the second quarter of 2021, just 20.9 percent of EVs were leased. From Inside EVs:
The shift toward leasing is a market-wide trend, but the EV sector saw the biggest change in this direction. In Q1 of this year, the auto loan volume for the entire industry was 1.68 million, down from 1.75 million year-over-year, while leasing went up from 539,000 to 714,000. The percentage of leases attributed to EVs in Q2 2024 was 16.5%, while in Q2 2022 it was 11.0%.
“Consumers are once again returning to leasing as an attractive and affordable alternative to financing new vehicles. This allows them to have the features they want at a subscription-like payment model they have become familiar with across products and services today,” said Jason Laky, executive vice president and head of financial services at TransUnion.
When it comes to EVs, the proliferation of more budget-oriented models, higher inventory levels and the fact that the $7,500 federal tax credit can be applied to any EV when leasing, not just American-made ones, were the main factors at play.
That said, there are fewer people out there who are willing to take the leap and sign the contract for a lease for the first time. According to the data, the rate of first-time lessees has gone down from 33% in 2019 to 30% currently.
The shift toward leasing is even starker when you look at German luxury EVs. Just about all of them are leased. I’m not exaggerating. Roughly nine out of 10 customers who get a new Audi, BMW or Mercedes-Benz EV are choosing to lease rather than purchase.
In my opinion there are two factors leading toward this uptick in leasing. 1) Most car shoppers know better electric vehicles are coming in the near future, and they’re looking at EVs as far more disposable than gas cars. 2) Cars are really goddamn expensive, man.
2nd Gear: Ford Has Big Plans For Subbrands, Cheap EVs
Ford is apparently in the midst of a major pivot to smaller, more affordable electric vehicles. At the same time, the automaker is planning to expand Ford’s portfolio of Mustangs, Broncos and Mavericks, all while working to hybradize its lineup by the end of the decade. Oh, and it’s expected to drop the Escape soon. There’s a lot going on.
We reported Monday that Ford was losing a hell of a lot of money on every EV it sells. That isn’t stopping The Blue Oval from trying, though. It intends to scale up production and eventually make money from these cars.
Here’s a breakdown of what we can expect from Ford in the near future. From Automotive News:
F-150 Lightning: The F-150 Lightning was key to establishing Ford as the No. 2 EV brand by volume in the U.S., and sales are up 79 percent this year through July, but the truck has otherwise faced a tough 2024. First, Ford slashed its production targets by half and cut the workforce at its Rouge Electric Vehicle Center in Dearborn, Mich., by two-thirds. It also issued a stop-ship order in February over an undisclosed quality issue that lingered more than nine weeks. While Ford has continued to update the truck, including with a new Flash trim for the 2024 model year, it already has its eye on what’s next. The automaker intends to end production of the F-150 Lightning in Dearborn within months of launching a next-generation full-size pickup at its Blue Oval City plant in Tennessee in the second half of 2027, leaving the future of the Rouge EV Center in doubt.
Next-generation pickup: Ford on Aug. 21 said it would push back production of its next-generation pickup by about 18 months from 2026 to the second half of 2027, the truck’s second delay this year. The vehicle, codenamed T3 — short for “trust the truck” — is expected to require significantly fewer parts than today’s vehicles. Farley has said the design is “awesome,” hinting it will have a more aerodynamic design than today’s pickups. It’s unclear whether Ford will call it an F-150 Lightning, although the plan to discontinue the current truck after production begins is a sign that it could continue using the name.
Midsize pickup EV: The first product on Ford’s upcoming affordable EV platform — under development by a skunk works team based in California — will be a midsize pickup, the company said Aug. 21. Ford intends to begin building the vehicle in 2027 at its Louisville Assembly Plant, after discontinuing production of the Escape and Lincoln Corsair by the end of 2025. It’s unclear if the product would be badged as a Ranger or get a new name.
E-Transit: U.S. sales of Ford’s electric commercial van are up 92.5 percent this year, following a range boost last year. Ford plans to redesign the E-Transit on a new platform in 2026, shifting production to its Ohio Assembly Plant.
Three-row hybrid crossover: Ford has canceled its long-planned three-row electric crossovers and plans to create a family of three-row hybrids instead. CFO John Lawler said given the size of the segment, battery costs and customer preferences, Ford no longer believed it could deliver profitable three-row EVs, despite efforts to reduce costs. He said the hybrids would feature “a range of propulsion options” but did not elaborate. That could indicate Ford is planning an extended-range electric vehicle variant — an electric-drive vehicle with a gasoline-burning onboard generator. The automaker said it would share more about timing and production locations next year.
Mustang Mach-E: Ford continues to push the boundaries of what its EVs are capable of with the Mustang Mach-E nameplate, adding the Rally variant this year. Meant to go off-road and tear up autocross tracks, it generates 480 hp and 700 pound-feet of torque. Expect the automaker to continue adding Mach-E derivatives and special editions, much like it does with the gasoline-powered Mustang. Ford plans to redesign the Mach-E on a new platform in 2027, continuing production in Mexico.
Small crossover: Ford’s low-cost EV architecture is meant to underpin multiple products, including a compact crossover. The automaker expects to build it by 2028, although those plans could change as the EV market rapidly evolves. Ford does not yet have a home for the crossover, although it would be logical that production would happen alongside an upcoming small pickup at the Louisville Assembly Plant. While Ford intends to discontinue the gasoline and hybrid Escape by the end of 2025, it’s unclear whether it would transfer that name to the compact EV. Maverick: Ford has big plans for its smallest pickup. The automaker freshened the Maverick for the 2025 model year, adding a feature customers have asked for since the truck launched in 2021: all-wheel drive on the hybrid powertrain. It also expanded the Tremor package into a separate trim and added a lowered Lobo street truck variant aimed at tuners and customizers. Expect Ford to continue expanding the Maverick line into its own subbrand akin to the Mustang and Bronco. It will redesign the pickup in 2028.Maverick-based van: Ford’s decision to exit the compact van market in the U.S. by no longer importing Transit Connect vans from Spain will be short-lived. The automaker surprised dealers at an August meeting by showing a physical prototype of a Maverick-based van. Attendees said it resembled a regular Maverick pickup with a tall bed cap. One said it looked like a tall Chevrolet HHR. Ford is expected to introduce the van as early as next year. At the meeting, executives said they did not yet have a name for it, so it’s not known whether Ford will revive the Transit Connect moniker or market the vehicle as part of the Maverick family. The van is expected to have both hybrid and gasoline powertrains and be built in Mexico alongside the Maverick and Bronco Sport.
Ford also has plans laid out for the Super Duty, ICE F-150, Ranger, , ICE Transit, Expedition, Bronco, Bronco Sport, Explorer and Mustang. You should really head over to Automotive News for the full rundown of what’s going on in Dearborn.
3rd Gear: US Industry Wants Chinese Tariffs Eased
This week, the Biden-Harris administration is expected to announce the final steps for steep tariff increases on certain Chinese products. As you may have imagined, not everyone is on board with this idea, and if U.S. industry gets its way, many of these planned increases would be softened to a degree. From Reuters:
Manufacturers from electric vehicles to electric utility equipment have asked for the higher tariff rates to be reduced, delayed or abandoned, and for potential exclusions to be greatly expanded.
President Joe Biden in May announced a quadrupling of tariffs on Chinese electric vehicles to 100%, a doubling of duties on semiconductors and solar cells to 50%, as well as new 25% tariffs on lithium-ion batteries and other strategic goods including steel to shield U.S. firms from Chinese excess production.
The White House had said initially the new tariffs would take effect on Aug. 1 but that was delayed until some time in September as the U.S. Trade Representative’s office studied more than 1,100 public comments, opens new tab. A final determination is due by the end of August.
Whether to ease the tariffs is the administration’s first major trade decision since Vice President Kamala Harris emerged as the Democratic Party’s presidential nominee after Biden stepped aside in late July.
The decision is politically tricky. Dialing back the duties could draw criticism from Republicans that Harris will take a softer stand on China trade in a campaign where Trump has vowed to hit Chinese imports with hefty tariffs. Proceeding with the original hikes would draw complaints about higher costs, even from some Democrats in Congress.
These tariffs could also cause a backlash in China. The government there has vowed retaliation against the “bullying” tariff hikes. Foreign Minister Wang Yi said they’re an indication that some in the U.S. government may be “losing their minds.” Sharp words.
The decision will coincide with U.S. National Security Adviser Jake Sullivan’s meeting with Wang which is aimed at keeping U.S.-China tensions in check as the November elections approach.
The Biden-Harris tariffs include a new 25% levy on Chinese-made ship-to-shore cranes, a China-dominated sector with no U.S. producers. The Port of New York and New Jersey said it has eight cranes on order from China’s state-owned ZPMC at $18 million apiece, and a 25% tariff would boost the cost of each by $4.5 million, “causing a significant strain on the Port’s critical and limited resources.”
Democratic senators Tim Kaine and Mark Warner from Virginia and Raphael Warnock and Jon Ossoff from Georgia also raised concerns about the impact on ports in their states, calling for existing orders for Chinese cranes to be exempted.
Warnock and Ossoff also urged USTR to reconsider the planned 50% tariff on syringes, saying they could disrupt supplies for those used to feed newborn infants.
Ford Motor asked USTR to reduce proposed tariffs on artificial graphite, a key material used in the production of anodes for electric vehicle batteries. Ford said it still “almost exclusively” uses Chinese secondary-particle graphite.
Autos Drive America, a group representing foreign-brand automakers, called for tariff rates on batteries, modules, cells, and critical minerals to be kept stable through at least 2027 to allow automakers to “fulfill investments in U.S. production and to bolster consumer adoption” of EVs.
It’s already fairly clear that these tariffs are going to play a big role in November, so it’ll be interesting to see where all of the cards end up when all is said and done. Mom, I’m scared.
4th Gear: Toyota, BMW Strengthen Fuel Cell Alliance
Toyota and BMW are gearing up to upgrade their fuel cell vehicle partnership. The two automakers will sign a memorandum of understanding on the partnership next week, and an official announcement is set for September 5, according to a Nikkei Asia report. From Reuters:
A Toyota spokesperson said Nikkei’s report is not based on a company announcement, declining to comment further.
A spokesperson for BMW said the information contained in the media report was not based on an announcement by the BMW Group.
“The BMW Group and Toyota Motor Corporation have been working together for several years on fuel cells and other technologies with the common goal of offering another zero-emission mobility solution,” the BMW spokesperson added.
Listen, I don’t know if fuel cell tech in everyday cars is ever actually going to catch on, but with BMW and Toyota behind it, I wouldn’t be surprised. Between the Mirai and the BMW iX5 Fuel Cell Vehicle (which I’ve driven), the two automakers certainly know how to build a good FCEV, but it remains to be seen if they’re actually viable on the market.
Reverse: Nothing Good Happens In Brooklyn
Neutral: I Yearn For This Truck
Restomodded EMC Mercedes 250GD Wolf Is A Class G-Wagon Come Back To Life
On The Radio: Oasis ‘Champagne Supernova’
Oasis – Champagne Supernova (Official Video)
We’re so back, baby.
