Electric cars begin to "surplus" in the United States

In the middle of the year, some manufacturers accumulate electric cars in their fields, for having produced above demand. This will lead to the need to adjust prices or reduce the rate of production, as requested by the market in the US.

The market seems to be recovering from the chaotic situation that occurred last year, with widespread production restrictions for multiple reasons: lack of semiconductors, the war in Ukraine, various logistics problems, etc. The lack of supply inflated the prices of some used cars above what they cost to release, just to avoid the waiting list.

At least in the United States, the Cox Automotive consultancy offers a somewhat bleak outlook for electric cars, in view of the fact that this type of vehicle accumulates an inventory for about 92 days, or what is the same, more than 92,000 units are in fields waiting for an owner. Keep in mind that in the US it is normal to manufacture to have stock, not to make custom orders to the factory.

In the case of gasoline, the inventory is less abundant, as for 54 days, when a normal and healthy number would be 70 days of inventory. As a curiosity, the inventory of hybrids is even less, for 44 days. Refining the shot more, Toyota has even less stock of hybrids, for 30 days. Of course, the bZ4X, which is fully electric, at the current rate they have cars for 101 days.

Based on the calculation, Tesla's inventory was 99,615 units or 16 days of supply at the end of Q2 2023, up from 86,926 units or 15 days at the end of Q1.

 

These data do not include Tesla, which in the US sells directly to consumers through its Tesla Store, does not have franchisees or third-party companies distribute their cars. According to the company's latest report, in the second quarter, they manufactured 479,700 cars and delivered 466,140, a difference of 13,560 cars globally. Now they have about 16 days, also globally.

According to the data that Troy Teslike regularly offers on Twitter, which are estimates but have an error of less than 3%, Tesla is gradually fattening its inventory from the 3-day low in which it was planted in the first quarter of 2022. This meant that there was practically no waiting list, and the factories ran the risk of having to slow down (which implies spending money) because there was not enough demand.

Going back to Cox Automotive's analysis, the stock problem is getting worse in brands that, since they do not have production in North America, their cars do not qualify for federal credits of up to $7,500. This is the case of Audi, Hyundai, Kia, or Nissan. They are having a hard time finding buyers for their electric cars in the wake of the Inflation Reduction Act (IRA).

From these data we can infer that the tortilla has been turned around, the supply is exceeding the demand, hence the stock is increasing, either because overly optimistic forecasts have been made about future sales, or because consumers expect entrenched in lowering prices and manufacturers competing with more joy.

Ford, for example, has 117 days of inventory for the Mustang Mach-e, the same is true for the GMC Hummer EV, which is delivering cars on a dropper and has 100 days of inventory at the rate it sells them. Over the past year, price increases have been widespread as battery prices have skyrocketed, even above inflation.

Not surprisingly, the US consumer is changing their minds and realizing they could pay less for the same thing, so the ball is in the manufacturers' court. When cars were lacking, prices could go up without apparent end, but now that there are more than enough, the elementary laws of supply and demand say that you have to lower the price to find the equilibrium point. Either that or eat them.

This situation is potentially favorable for the consumer because it encourages manufacturers to compete, which they did not need so much in the midst of high-price bacchanalia. They will have to adjust commercial margins, get off the double-digit profitability target donkey by drying their customers' tits, and start thinking about something that terrifies them: discounts.

In the history of the automobile, we have antecedents. When there are automobile companies that get used to earning a lot of money at the expense of their customers, another arrives that does something similar or better, at a lower price, and ends up eating a large part of the pie. The mental straw of so many executives that all brands can be Premium is a global epidemic. They have to go down to the real world.

Electric cars in the US represent a very modest share, 6.5% of the market, but they are already massively sold. These sales are often concentrated in a few states, especially since Tesla only sells its cars where the franchised dealership model is not required. If they are for massive sale, the rules of massive sale have to be applied, and that implies adjusting prices. They'll get it back elsewhere.