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Continued Commentary: August 2022 Automotive News & Views

Welcome to Automotive News & Views, a quarterly publication from the experts at Anderson Economic Group.

NEWS TO KNOW: Historic Quarter for EVs – Electric Vehicles Reached 5% of New Vehicle Market in the US

For the EV market in the US, the summer of 2022 will carry some importance for a long time. In Q2 2022, battery electric vehicles sold as a share of total new vehicles sold breached a threshold of 5% for the first time; the best quarter for new EVs unit sales thus far.

Several factors helped EVs achieve a 5% market share. Tesla continues to dominate the EV market (about 68% of the market). EV models from mass-market brands, such as Ford Mustang Mach E, Hyundai Ioniq 5, Kia EV6, and Chevrolet Bolt, experienced increased sales. Most of these EV models are eligible for an electric vehicle tax credit. OEMs still face production challenges, and inventories are below historical averages for popular internal combustion engine vehicles. Recently, gas prices have been at historical levels, pushing some consumers to seek electric vehicles.

We continue to track EV trends. Aggressive goals and investment by many auto manufacturers suggest that we will see new EV models on the market soon with different price levels and battery ranges. We also expect the EV-related infrastructure to grow as the increase in vehicles on the road requires additional charging stations.

Information on the dealers’ role in selling and servicing electric vehicles in the future continues to be limited. It is essential to understand how OEMs intend to change their relationship with their franchised dealers related to electric vehicles and how this would impact dealerships in the US.

Growth Amid Recession Fears: The second quarter of 2022 showed promising signs for the automotive retail industry amid recession fears. In Q2, dealers around the country sold around 3.5 million new vehicles, more than in the previous three quarters. Despite this improvement, Q2 unit sales this year are almost 20.6% below Q2 2021, when around 4.4 million new units were sold. This suggests that the industry’s difficulties surrounding low production, depleted inventory, and rising vehicle prices may not depart anytime soon.

Popular Segments Struggle to Catch up: In Q2 2022, most light vehicle segments failed to exceed Q2 2021 figures. All but 2 low-volume segments (Large Van and SUV) declined over Q2 2021. Popular ones such as crossovers, pickups, and luxury SUVs endured a double-digit decline in unit sales compared to the same quarter last year. This again underscores the impact of supply chain issues that most manufacturers have been battling since the COVID-19 pandemic.

AUTO INDUSTRY ALERT: AEG’s Preliminary Analysis of the “Inflation Reduction Act”

Anderson Economic Group has reviewed provisions in the “Inflation Reduction Act” bill passed by the Senate on Sunday, August 7, and found it contains at least four provisions that would negatively affect producers, buyers, and sellers of electric vehicles in the United States. These include:

  1. The North American Assembly Requirement for EV Credits,
  2. Price Caps for EVs,
  3. Battery Component Requirement, and
  4. Modified Adjusted Gross Income Thresholds.

Using data on electric vehicles’ MSRP and existing EV assembly locations, AEG estimates that at least three-quarters, and likely more, of recent EV sales in the US would not have qualified for credits under the Inflation Reduction Act. [more…]

AUTOMOTIVE DASHBOARD: ‘One-Stop’ Industry Insights

AEG continues to serve clients and friends in the auto industry with our interactive Automotive Dashboard. The dashboard shows performance over time for key industry-specific and economic indicators. AEG updates this feature regularly to benefit OEMs, franchisees, trade associations, and public institutions.


SOURCES

“U.S. light-vehicle sales by nameplate,” 2nd qtr. 2022, Automotive News Data Center, accessed July 21, 2022.