EV Sales Boom As Buyouts and Regulatory Battles Surface

The electric vehicle (EV) space is constantly changing, powered by developments, innovations, and policy shifts worldwide. This news update brought to you by Ideal Power offers a round-up of just some of the most eye-catching headlines around electric vehicles and the market opportunities associated with them.

This month, we’re reviewing impressive developments from Tesla in China, Buick’s plan to accelerate EV investment, Ford’s recent success in the U.S. market, and a lawsuit that threatens to overturn California’s ban on internal combustion engine (ICE) vehicles. 

Tesla takes China by storm; cuts delivery times in half

Tesla is making serious moves in the eastern hemisphere’s largest EV market, nearing monthly production records with the manufacture of 77,000 new vehicles in August, according to estimates by the China Passenger Car Association (CPCA). That represented a year-over-year growth rate of 74%. 

The immense production levels would be second only to June, when the company produced nearly 79,000 units. According to the CPCA, August production consisted of new Model 3 and Model Y units and is primarily attributed to upgrades at the Giga factory located in Shanghai. 

The increased production was accompanied by a significant reduction in estimated delivery times for the Model Y RWD. That particular model is now available for delivery in 1 to 4 weeks, down from 2 to 8 weeks previously. Other models remain delayed with delivery times ranging from 12 to 20 weeks from order.

Buick offers buyouts to EV-resistant dealers

Buick is done waiting for dealers to make the investments needed to support EVs and is offering buyouts to those who don’t want to evolve along with the auto manufacturer. The company, which is the oldest auto manufacturer in the U.S., recently announced its intention to release its first EV model in 2024 and to stop selling ICE vehicles by 2030, leaving some dealers hesitant about the transition.

“Not everyone necessarily wants to make that journey, depending on where they're located or the level of expenditure that the transition will demand,” said Duncan Alfred, global head of Buick. “So, if they want to exit the Buick franchise, then we will give them monetary assistance to do so."

Currently, Buick is partnered with nearly 2,000 dealers in the U.S. Last year, parent company General Motors made a similar move and bought out about 300 Cadillac dealerships that did not want to make the necessary investments (estimated to be around $200,000 per dealership) to prepare for a shift to EV-only sales. 

Ford surges to number two EV manufacturer in U.S.

Ford is riding the wave of a massive sales surge right into second place among EV manufacturers in the U.S. Second only to Tesla, the legacy auto manufacturer experienced a whopping 307% sales increase in August.

“Now we’ve been overwhelmed with the demand for our first-generation EVs, the Mustang Mach-E, the Lightning and the E-Transit,” said James Farley, CEO of Ford. “These products are in the market now, and we have strong multiyear order banks. We’re selling them as fast as we can make them.”

Ford’s late summer success was largely driven by orders of the Ford Mustang Mach-E, which generated significant demand and contributed to 3,120 sales in August. Additionally, deliveries of the Ford F-150 Lightning have now been made in all 50 states since they began in May 2022. August was the truck’s best-selling month, with 2,373 vehicles sold (200 more than in July). 

So far, in 2022, Ford has sold 25,765 Mach-Es, 6,842 F-150 Lightnings, and 3,938 E-Transit vans for a total of 36,545 sales. While that is an impressive number by most standards, the auto manufacturer still trails EV giant Tesla by a significant margin, as the Elon Musk-owned company sold 47,629 units in August. Ford is reportedly aiming to ramp up to an annual capacity of 600,000 units by next year, and 2 million by 2026. 

Lawsuit threatens California’s ICE ban

The State of California has moved to ban ICE vehicles by 2035 --- but it’s unclear if the law will hold up to multiple challenges in court. The lawsuit centers on California’s authority to set its own emissions standards (which in turn enables the ICE vehicle ban). This authority comes from a federal waiver issued by the Environmental Protection Agency (EPA), which the 17 GOP-led states argue is a violation of a principle known as “equal sovereignty”, since the waiver uniquely allows California to set emissions standards beyond those of the federal government’s. 

Because California’s emissions standards are used by many other states in the country, the ICE ban has a broader impact beyond just the Golden State. States that are party to the lawsuit include Ohio (state Attorney General David Yost is leading the charge), along with Alabama, Arkansas, Georgia, Indiana, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, Oklahoma, South Carolina, Texas, Utah and West Virginia.

Whether the suit will be decided in favor of California’s ICE ban or not remains to be seen. However, it is worth noting that many leading auto manufacturers have already made a commitment to stop producing and selling ICE vehicles by 2035, which would render the question of how vehicle emissions are regulated moot regardless of how the lawsuit is decided.

Continued evolution sets the stage for EV maturity

As EV sales boom in China, the U.S., and other countries worldwide, manufacturers are jockeying for favorable positioning in major markets. This includes offering incentives such as buyouts for dealerships who are not ready for the rapidly expanding transition to EVs, as well as regulatory battles over how to regulate emissions, bolster supply chains, and welcome EV startups into the fold. While the landscape may seem a bit chaotic at times, these are all sure signs that the EV market is evolving and maturing.

For investors, the market opportunity in electric vehicles remains immense. With more sales than ever slated for 2022 and a growing market expected to reach $1 trillion in value by 2026 (up from $260 billion in 2020), EVs are here to stay, especially as technological innovation strengthens the industry’s value propositions. While consumer spending increases, manufacturers target lower price points, and the federal government gets serious about expanding the electric vehicle charging grid, we could finally be witnessing electric vehicles preparing to go mainstream.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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