Welcome to Automotive News & Views, a quarterly publication from the experts at Anderson Economic Group.
NEWS TO KNOW: Fueling Costs Rise for Both ICE and Electric Vehicles in Q4 2022
Final-quarter results from Anderson Economic Group’s fueling cost study indicate that traditional Internal Combustion Engine (ICE) vehicles and Electric Vehicles (EV) both experienced a shift in the fueling costs between the third and fourth quarters of 2022. The study found that in Q4 2022, typical mid-priced ICE car drivers paid about $11.29 to fuel their vehicles for 100 miles of driving, which turned out to be cheaper compared to comparable EV drivers who relied on home or commercial chargers.
AEG’s research also showed that consumers with luxury EVs enjoyed a cost advantage when refueling over luxury ICE vehicles, but the gap narrowed due to a decline in gas prices.
See the full Q4 2022 update for more information.
Positive End to a Lackluster Year for Sales: In Q4 2022, the automotive retail industry sold 3.6 million new vehicles—nearly 7% more than in Q3 2022. Despite an increase in quarterly sales, the auto retail industry sold fewer vehicles in 2022 compared to 2021. This suggests the auto industry’s difficulties surrounding low production, depleted inventory, and rising vehicle prices coupled with high inflation and interest rates left a notable effect on new vehicle sales across the country.
Popular Segments Sold Better in 2022 than in 2021: In Q4 2022, unit sales of most light vehicle segments grew over the same quarter from the previous year. Segments that showed growth included pickups, crossovers, and large SUVs. Crossovers continued to be the most popular segment, with a little over one-million-unit sales in the quarter, whereas small and midsize SUVs declined significantly compared to Q4 2021.
AUTO INDUSTRY ALERT: The Future of the U.S. BEV Market Remains Uncertain Under IRA
On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 into public law. The new law consisted of several provisions applicable to the U.S. automotive industry. Before the bill’s final passage, Anderson Economic Group highlighted at least four provisions that could negatively affect sales of electric vehicles in the country under the new law. These were: North American Assembly Requirements for EV Credits; Price Caps for EVs; Battery Component Requirements; and Modified Adjusted Gross Income Thresholds.
Around the time the bill passed, the preliminary assessment by AEG auto consultants indicated that at least three-quarters or more of the BEV sales during 2022 would not have qualified for tax credits under IRA, especially in the absence of an intricate understanding of the battery component requirements.
Nearly six months after IRA became law, the uncertainty surrounding the eligibility requirement has grown for auto manufacturers, dealers, and consumers alike, further heightened by the U.S. Treasury after it could not propose guidance on the key provisions by the end of 2022. The debate around the law is set to escalate further after the introduction of new legislation in the U.S senate that aims to bring amendments to Section 12401 on Clean Vehicle Credit under Public Law 117, also known as the Inflation Reduction Act of 2022.
AEG continues to examine and analyze the current law and its impact on the U.S. battery electric vehicle market.
AUTOMOTIVE DASHBOARD: ‘One-Stop’ Industry Insights
AEG continues to serve our auto industry clients and friends with our interactive Automotive Dashboard. The Dashboard shows performance over time for key auto sales and production indicators, along with a section devoted to U.S. Battery Electric Vehicles (BEV) trends. AEG updates this feature regularly to benefit OEMs, franchisees, trade associations, and public institutions.
“U.S. light-vehicle sales by nameplate,” 4th qtr. 2022, Automotive News Data Center, accessed January 13, 2023.
AEG SERVICE SPOTLIGHT: Valuation Expertise
Determining a dealership’s value requires a financial, market, and product expertise, all of which our team offers. Our valuations consider prior performance, expected market trends, brand performance, product appeal, and competitor positions. We have assisted dealer-principals in buy/sell matters, and in determining values for estate, gift tax, succession planning, and other such purposes. Our market and financial analyses provide an unbiased view of the deal.