Now that the $7,500 EV tax credit has expired, many are wondering what this might mean in the world of electronic vehicles and EV stocks. There are specific concerns surrounding Tesla, whose market share has fallen dramatically, and consecutive bad quarters haven’t helped. In ar recent podcast, Doug McIntyre and Lee Jackson point out that as EV demand drops — from 8% of total car sales earlier in the year to a projected 4% — these companies will face even greater financial losses. The two also discuss Tesla, comparing its dominance on the EV market to that which General Motors once had in the 1960s. As was the case with GM, more competitors got into the market over time and continuously chipped away at what once seemed like an insurmountable lead. With EV prices still high and the demand for such vehicles dropping thanks in part to high electricity costs, it appears the only way for some companies to survive is to be acquired by larger automakers.
Doug McIntyre: So Lee, what’s happened now is, is that the, the EV $7,500 tax credit disappeared a few days ago—
Lee Jackson: Uh-oh.
Doug McIntyre: And this is what the year looked like for EV manufacturers. Crummy first quarter, crummy second quarter, probably huge crummy July or something. Then all of a sudden a hockey stick. So the year was about a million EVs totally sold in the United States, but about 440,000 of those were in the third quarter. So this is, here’s, here’s where you end up. Tesla 46% and that used to be 80% for people who don’t remember. GM 13% Ford, little over 6% Hyundai. 6%. Now that tells me several things. The first one is, is that how badly Tesla’s been bloodied. They may still be the only guys making money in EVs, but when you’ve seen your market share over what is really only a few years, we’re not talking decades.
Lee Jackson: No. You could use a decade as as maybe the benchmark. Yeah.
Doug McIntyre: That still reminds me in the sixties, General Motors had a 50% market share in the United States. All cars sold. It’s now 17%. Over time competitors got into the market, they chipped away, chipped away, chipped away. And now you know, GM has less than a quarter of the market share. So, this is a Tesla story, but it’s also a story about the fact that some of these legacy car companies have started to buy their way into this car, this EV business. Now this is buying your way in. Ford’s lost. Say they invested $30 billion in EVs, lose another 5 billion this year, starting a new assembly line to build EVs. It’s gonna cost them $2 billion. So what did they get for this? They got a market share of about six and a half percent and still lose money on every EV they sell. Gee whiz. I spent 30, $40 billion and I got, now here’s the other great thing. You now have six and a half percent of an EV market that’s almost gonna drop in half. Now, because the estimate from IC cars is, is that 8% of the new cars bought in the United States and the first half of this year were EVs. Their forecast is is in the fourth quarter into next year, it’ll be 4%. You’re talking, you’re talking about EV sales basically dropping by half, so, if the ratio and proportion of the ownership of this market stays the same, uh, GM’s gonna have 13% of a market that’s half the size it was in the third quarter, and Ford’s gonna have 6.5%. You know what that means? It just means that they’re going back to losing so much money that there isn’t this much money in the world, you know?
Lee Jackson: You where you wouldn’t think so. You wouldn’t think so. And it’s interesting because your favorite CEO Jim Farley said over the weekend that Americans don’t want $75,000 EVs. That’s quite, that’s quite obvious if, if you wanna state the obvious. But he’s right. You know? And the only buzz that you hear really coming from anybody like Tesla is that Oh, yeah, I mean the, the 25,000 car is on the way. It’s on the way. It’s like, okay, you’ve said that for three or four years, but you’ll still keep looking. But I thought what, what Farley said was good. ’cause that basically that says lucid, you’re dead. You know, anybody with the expensive cars is toast is absolutely toast. There’s nobody gonna pay it.
Doug McIntyre: I don’t want to give Mr. Farley too hard a time, but you buy an F-150 Lightning, their, their full-size pickup EV. That thing starts out around 60 K, but you throw anything on it, you put in the less of leather seats. So, so anyway, now they do say that they will have themselves a sub 30,000 EV, but not until 2027.
Lee Jackson: Right. And you know what the, the most bizarre dichotomy that’s that’s coming to face drivers and people in the future is that gasoline prices are going down because production, especially at OPEC Plus, is going up. But electricity processes are going up because, you know, AI and data center use and all that is driving things crazy. You’re gonna end up with the electricity being more expensive than owning, which was the whole pitch. Well, this is gonna be, I know, gas car, you know, and you’re saving the world.
Doug McIntyre: Those lines may not cross, but December of last year, the United States produced more crude oil than any country in any month in history ever. So isn’t just OPEC plus the world is a wash in oil, and this idea that we’re looking at peak oil in like four or five years, forget it. Peak oil is no way, no way. 20, 30 years out.
Lee Jackson: The production increases, but it’s still is, oil is everywhere.
Doug McIntyre: Well. There, there are two parts to this, but the, to me, the most important thing of all is if you’re an investor in any car company that’s selling EVs in the United States, you’ve gotta ask yourself the question and that, and that is “What happens when the EV market share goes in half when it comes to the purchase of new car?” And I would say the answer to that is if you’re in that business, nothing good. And let’s just tag this on for people so that they have it. Rivian and Lucid are toast.
Lee Jackson: They’re, they’re absolutely toast. They won’t make, if you can short ’em, I don’t even think they’ll make it two more years.
Doug McIntyre: If you’ve got some guts, short ’em.
Lee Jackson: Well, that would take guts, but I think unless, unless somebody, unless somebody like a Mercedes-Benz or a Volkswagen or somebody like that would want to buy them and incorporate them into their universe, maybe they survive. But other than that…
Doug McIntyre: Their valuations are too high. They’re still in the billions of dollars.
Lee Jackson: I know, I know, I know. Well, so I guess we’re gonna have to see what happens and we’ll return to this after the fourth quarter numbers come out and just see how they are in comparison to the blockbuster third quarter for everybody.
Doug McIntyre: Yes, indeed.
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