Oasis Charger Corporation: EV Market Update 04/6/2018

Release Date: 04/06/18

While many car buyers may not yet recognize Electric Vehicles (EV) as an option, the next 24 months is likely to significantly change public awareness.  (Reuters: “Automakers, Northeast States Urge Americans to Buy Electric Vehicles,”).  At the recent Geneva and New York auto shows, automakers displayed a wide variety EV’s.  (Reuters: “Automakers put pedal to the metal on electric vehicles,”).  Moving out of the luxury segment, the Tesla 3, the redesigned Nissan Leaf and the Chevy Bolt are squarely targeting a wider market.  The Chevy Bolt EV has already been a success for GM.  It has sold over 20,000 units to date even though it was not available in all states for much of 2017.  GM has announced that it is increasing production of the Bolt.  While suffering production and quality issues, Tesla persuaded 400,000 people to put down a deposit on the mid-market Tesla 3.  Tesla made EV’s desirable, GM, Nissan and soon Mini, VW and Ford, are making them accessible.
 
On Monday, the US Environmental Protection Agency (the EPA) announced that it intends to weaken (but not by how much) the mileage and emission standards for cars and light trucks.  It also announced that it would challenge California’s right to set its own standards.  Under the 2012 rules, automakers are required to double average fuel economy for new cars and trucks to 54.5 mpg by 2025. (The New York Times: “Calling Car Pollution Standards ‘Too High,’ E.P.A. Sets Up Fight With California,”).   While welcomed by automotive industry trade groups, not all automakers were on board with the EPA announcement.  Ford and Honda both responded that they were looking for some flexibility but not a reduction in overall stringency.  (The Verge, “Trump’s EPA Officially Starts the Fight to Lower Vehicle Emissions Standards,”).
 
However, it is unlikely that this announcement will have a substantial impact on the EV market.  The new rules, once announced, are likely to face substantial and protracted litigation both from environmental groups challenging the EPA’s science and from California and at least seven other states defending their right to set more stringent rules.  And different rules across states would be a nightmare for automakers.  The 2012 rules were a compromise designed to ensure common, albeit stricter, emission and efficiency standards across the United States. 
 
Most importantly, however, the main drivers for EV’s are market forces, improved technology and the allure of large international markets, such as Europe and China: “If you are going to be a global player, you have got to play in China and you have got to play by China’s rules, and that means more electric vehicles and more efficient vehicles.”  (Axios, “Storm Clouds for the Electric Vehicle Market: EPA & Tesla,”).   The Administration is missing the real risk.  It is not regulation.  It is global competitiveness in the face of market forces and technological advances.  We run the risk of repeating the mistakes of the last century, with European, Japanese and now Chinese car makers overtaking the US (New York Times; “Tesla’s Manufacturing ‘Hell’ Won’t Slow Down Electric Cars,”).
 
Finally, in case you thought Tesla was the only one who could make interesting EV’s—Genesis, the luxury division of Hyundai, showcased the Essentia EV concept at the New York auto show:

ESSENTIA2.jpg
ESSENTIA1.jpg

Paul Vosper
pvosper@oasischarger.com
+1 (929) 777-0093