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Selling electric cars to the average Joe and Jane is one of the automotive sector’s missions this year.
While clean-energy vehicles are now widely accepted, their prices have made them a segment of the auto industry that currently appeals to consumers with above-average incomes. But in 2022 the situation seems to have changed.
Car makers, most of which aim to offer at least one electric vehicle in the coming months, have effectively launched an operation to conquer the American market, both in terms of price and models.
F-150 EV: Lightning From the Blue Oval
Ford (F) – Get a Free Report focused on the model.
The Dearborn, Mich., automotive stalwart has begun production and delivery of the F-150 Lightning, the electric version of the iconic F-150 pickup truck.
The F-150 has long been America’s favorite truck. It continues to beat every other truck in its class in sales, while attracting more and more buyers, who use it for everything from racing to just driving for fun.
Ford sells more than a million of them a year, a pace that seems even more impressive when you think of it as the company that delivers more than 100 of them every hour.
The F-150 has fan clubs, more repeat buyers than any other truck, and even its own Twitter hashtag.
As this truck is driven in some of the most remote parts of the world, and on some of America’s longest empty stretches, analysts wonder how long its electric sibling’s range will be.
Ford says the truck will have a range of 230 miles to 320 miles, depending on the model. All versions of the Lightning can be connected to the Blue Oval Charge Network, a string of 70,000 chargers across North America, maintained by Ford.
The bet seems to be working, as Ford just added a third shift at the Michigan plant in charge of assembling the F-150 Lightning. The plant now operates three rotating crews of workers in 10-hour shifts seven days a week.
The move is part of Ford’s ambition to produce 150,000 units of the F-150 Lightning a year by mid-2023 to meet strong consumer demand, the company said in January. Initially, Ford planned to produce only 40,000 units a year.
Tesla
The economy went down; So are the Rivals
In the coming months, the F-150 Lightning will face the market arrival of the electric version of the Chevrolet Silverado (GM) – Get a Free Reportanother popular car in middle America, and Tesla’s (TSLA) – Get a Free Report Cybertruck.
These two vehicles should help expand the adoption of electric vehicles beyond the urban, young and affluent public.
Also on the supply side, Fisker (FSR) – Get a Free ReportGeneral Motors and others are announcing electric cars priced below $30,000 after tax credits and various incentives.
This is timely as the current economic downturn is likely to hurt car sales. High prices deter consumers interested in clean energy vehicles, when they also face high interest rates on their auto loans.
The average annual percentage rate for new car purchase financing climbed to 6.3% in October 2022 from 4.2% in October 2021, the highest new car APR since April 2019, according to Edmunds.com.
The average APR for a used car purchase climbed to 9.6% in October 2022 from 7.4% in October 2021, the highest since February 2010, Edmunds said.
But the auto industry received a big gift in the form of extended federal tax credits. President Joe Biden, who has made the adoption of green vehicles one of his priorities, tax credits in the Inflation Reduction Act, signed in August, to encourage consumers to choose electric vehicles when they bought cars.
Ford
Tax Credits under the New Law
Under the new law, the federal tax credit for EVs remains at $7,500. The eligibility period is from January 2023 to December 2032. The existing tax credit limit is when an automobile manufacturer sells the 200,000th unit. Tesla, General Motors and Toyota (TM) – Get a Free Reportwhose vehicles no longer qualify for current tax credits, will be eligible again starting Jan. 1, 2023.
The $7,500 tax credit is split in two: $3,750 applies if at least 40% of the battery minerals that power the vehicle come from the US or a country that has a free trade agreement with the US
Another $3,750 applies if at least 50% of the battery components come from the US or from countries with a free trade agreement with the US
In summary, the electric vehicle you buy may benefit from the full $7,500 tax credit, half or none, depending on the battery and mineral components.
SUVs, pickup trucks and vans worth more than $80,000 are excluded, as are high-income consumers. Some cars should cost less than $55,000.
The White House’s goal is to promote the sale of affordable EVs and encourage American consumers to buy them.
From 2024, consumers will be able to deduct the tax credit directly from the dealer. Until then, this will be done when they file their tax returns in April of each year (as was the case before).
“To really get all the companies and consumers to move forward with EVs, it’s very important,” GM CEO Mary Barra told Bloomberg Television on Dec. “
The Inflation Reduction Act also provides some protection to the large investments made by car manufacturers to develop electric vehicles. This encourages them to plow ahead.
AutoForecast Solutions estimates that by 2025, automakers will produce 18 million to 19 million electric vehicles worldwide, with sales of 15 million, which means supply will outstrip demand.
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