EV market slowdown: a bump in the road for Tesla?

The electric vehicle market has stalled – with worrying consequences for carmakers

Tesla is warning of "notably lower growth"
(Image credit: Getty Images)

This year was supposed to be a crucial one for electric vehicles (EVs), and "a turning point" for an industry that has pledged to move away from the combustion engine, said Ryan Felton and Christina Rogers in The Wall Street Journal.

So far, it hasn't turned out that way. As a flood of new battery-powered models hits the showrooms, there are signs that the industry has got "ahead of buyers" – with potentially alarming consequences for carmakers and dealers. The latest bad news came from the big daddy of EV-makers, Tesla, which warned last week of "notably lower growth this year", spooking investors so badly that "more than a quarter" of its value was erased in January. That's quite some loss, said Katie Martin in the Financial Times: equating to "a stonking $240bn" – or the equivalent of "the whole of Coca-Cola". 

EV carmakers 'feeling the pain'

Tesla is far from the only carmaker feeling the pain, said The Wall Street Journal. Ford has "slashed production" of its electric F-150 Lightning pickup truck, despite a "major buzz at launch". Other carmakers are "reconfiguring plans to sell more hybrids", deeming them a more realistic "interim step" for consumers; the Swedish electric-car start-up Polestar is cutting 15% of its workforce. And this week, Renault scrapped plans to float its EV unit, Ampere – bigged up as a €10bn future "Tesla rival" – on the stock market, said Matt Oliver in The Daily Telegraph

The listing had been seen as "a strategic move to separate Renault's legacy car business from the faster-growing EV division". Even the car rental giant Hertz is backtracking "on its big EV bet", said Business Insider – dumping 20,000 vehicles, or a third of its electric fleet, "partly due to repair and maintenance costs". That should serve as a warning to EV owners everywhere, already baulking at high prices and patchy charging networks.

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.


Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

A 'car crash' for Elon Musk

This really isn't surprising, said Irwin Stelzer in The Sunday Times. Despite price cuts, the price differential between the average EV and combustion-engine car is about $20,000 ($68,000 compared with $48,000). As one motor journalist noted: "There's a limited number of customers for cars that cost more while offering less, and most of those customers have already bought one." 

Prices will have to fall, but meanwhile BYD and other Chinese carmakers are eating Tesla's lunch. It's "a bit of a car crash" for Elon Musk, said Alistair Osborne in The Times. He chose this week to demand that "the board finds a way" to hand him 25% control of the business. At the same time, a Delaware judge ruled that his record-breaking $56bn pay package can be scrapped, calling it "an unfathomable sum", unfair to shareholders. It looks like a bumpy ride ahead.

To continue reading this article...
Continue reading this article and get limited website access each month.
Get unlimited website access, exclusive newsletters plus much more.
Cancel or pause at any time.
Already a subscriber to The Week?
Not sure which email you used for your subscription? Contact us