The company that gets the fastest insight into this information will generate the most returns for investors.
As 2024 begins, the battle for market share between Tesla, Ford (F), General Motors (GM) and other automakers will no longer depend on the ability to produce the most advanced electric vehicles, but on the ability to produce cheaper vehicles – both electric and non-electric – in the future.
The company that gets the fastest insight into this information will generate the most returns for investors.
Earlier last week, the Chevrolet Colorado truck won Motortrend's 2024 Truck of the Year Award, the first gas-powered truck to win an award since 2021. The winners for 2023 and 2022 are the Ford F-150 Lightning and Rivian R1T, respectively.
Motortrend is not a rejection of all-electric models. Midsize Colorado trucks are much cheaper than those electric winners—starting at about $30,000 and costing up to $50,000 for a well-equipped model. In comparison, either the F-150 Lightning or the Rivian R1T can easily sell for more than $80,000.
The same trend is seen in the car segment. In November, Motortrend presented the Toyota (TM) Prius with the 2024 Car of the Year Award. The Prius** is quite affordable, with a starting price of around $2$80,000. Over the past few years, Motortrend has awarded the award to a range of luxury cars, including the Genesis G90, Mercedes E-Class, Chevrolet Corvette, Genesis G70 and Alfa Romeo's Giulia.
In the past 12 years, the Motortrend Car of the Year Award has been awarded to luxury cars nine times, dating back to 2013 when the Tesla Model S won the title. Since then, the Car of the Year award has been awarded to electric vehicles three times, including the Chevrolet Bolt and Lucid Air.
There is some evidence that the demand side of the car wants to reduce luxury and improve value for money. According to automotive data provider EDMUNDS, a record 17 percent of consumers paid $1,000 or more per month for a new car in the third quarter5%。In 2019, the figure was close to 4%.
As interest rates rise and car*** buyers pay more. In October, the average transaction volume of new cars was about 4$80,000. According to Kelley Blue Book data, this figure is higher than in December 2019, before the pandemic and high inflation** (about 3$90,000).
Luxury car buyers don't feel the pressure that comes with ***. In October, the average luxury car ** was about 6$30,000, up from about $5 in December 2019$80,000. The average non-luxury car** is around 4$40,000, up from about $3 in December 2019$40,000.
From Tesla to Toyota, the message from automakers is clear: make more affordable cars – including electric cars.
In the third quarter, pure electric vehicles accounted for about 25% of luxury car sales in the United States and about 3% of non-luxury car sales. It's not because there's no demand, it's that there aren't many affordable electric models. A lot of car buyers are crying, "Please give me a cheaper electric car!".”
Contrary to the demands of car buyers, car companies such as Tesla have spent years developing the CyberTruck, an electric pickup truck, rather than a smaller, lower-than-the-box model. The electric pickup is impressive, but ** more than $100,000.
In 2024, Cadillac, Audi and Acura will all launch new all-electric vehicles in North America, and they are all luxury brands.
At the same time, there are more affordable cars on the horizon: Chevrolet is launching its all-electric Equinox, which is a lower-priced model with a starting price of around $3 before tax$50,000.
Overall, battery electric vehicles are getting cheaper – the most expensive component of an electric vehicle, the battery costs almost one-tenth as much as it did in 2013 when the Model S won Car of the Year.
GM also plans to reduce battery costs from the current $133 per kilowatt-hour to about $70 per kilowatt-hour. The Chevrolet Bolt has a range of about 260 miles per charge and a battery pack capacity of 65 kWh. These cost reductions could reduce the bolt** by almost $5,000, starting at around $2$70,000.
In the third quarter, the average selling price of Tesla's single car was about 4$40,000, down from $5 a year agoIt's about $40,000, but it still achieves an operating profit of about $4,000 per car. Theoretically, Tesla's profitability could be doubled if the cost of batteries reached a similar level to that of General Motors, while cutting costs by nearly 10%.
Today, batteries are cheap enough for profitable electric vehicles. In the third quarter, BYD (1211.HK) bicycle revenue is about 2$70,000. The company is already profitable, with an operating profit of about $2,000 per bike.
BYD produces batteries as a way to control costs and why General Motors, Tesla and others are building their own battery capacity.
When the U.S. auto industry needs to sell hundreds of thousands of electric vehicles each year, launching luxury models is a good idea;Today, when automakers are trying to sell millions of electric vehicles every year, the market needs cheaper models.
Text |Al Root
Edit |Cao Yan
Copyright Notice: Barron's original article, without permission, may not**. For the English version, see "Electric Isn't the Word for Ford, Tesla, and Other Auto Makers in 2024." it’s this.”。
The content of this article is for informational purposes only and does not constitute any form of investment and financial adviceThe market is risky and investors should be cautious. ）