In the world of electric vehicles, 2022 was one of those years that seemed to span a decade. Progress was made, with EVs reaching over 6% of new vehicle sales in the US! But several major challenges to widespread adoption arose. Below, I review the most important developments and what they mean for the road ahead.
1. Can Tesla get its groove back?
To be clear, there’s still a lot right with Tesla:
Model Y sales — the SUV has become one of the best-selling cars in the world, including #1 in California
Gigafactory Austin opening — the opening of a massive new factory in Texas added production capacity of at least 250,000 vehicles per year
Supercharger network — the public charging experience with Tesla’s fast chargers remains the best in the industry by far. No matter what reports say, non-Tesla drivers still aren’t close to gaining access
Oh, and this drone flythrough of their Berlin factory was pretty cool:
What most folks are going to remember about Tesla’s past year, though, is the 69% decline in the company's stock price, representing over $600 billion in lost market valuation. Meanwhile, the company's CEO and (former) world's richest man, Elon Musk, spent much of 2022 fixated on pursuing Twitter, purchasing Twitter, and posting on Twitter.
That’s out of scope for this newsletter, so here I'll just say that the world does not need another petty billionaire narcissist spreading cruelty and misinformation. Musk, who has genuine talents he has applied to great effect in the past, needs to work magic at his car company yet again. Tesla’s near-term catalysts are less exciting than in the past few years while the economic and competitive landscapes have gotten much tougher.
The Tesla lineup is stale. The public mostly sees just two very similar vehicles, the Y and the 3. I'm skeptical that the odd, long-delayed Cybertruck—if it actually reaches mass production in '23—will become a mainstream hit. And the release of true “Full Self Driving” is years behind schedule, with no reason to believe it’s coming soon.
I’m cheered by the debut of the Semi, and what it could mean for electrifying industrial transportation. Even so, Semi production likely ramps very slowly over the next few years. Ditto for the “megawatt” charging infrastructure to support these trucks. Daimler, Volvo, and others loom as competition in this space.
2. Hyundai/Kia has entered the chat
In 2021, among mainstream US EVs by legacy automakers, the Ford Mustang Mach-E was the most compelling offering. In 2022, that title was shared by the Hyundai Ioniq 5 and the Kia EV6. Both combine futuristic design with legit performance and reasonable driving range.
While they were well reviewed, and have sold moderately well (at 3% of the US EV market share each), they trail the Mach-E (5%) and Chevy Bolt/Bolt EUV (4%). Nonetheless, the Hyundai Motor Group—which includes Kia—seems to be methodically executing on its electrification plans. Successfully rolling out the Ioniq 6 sedan and EV9 SUV in 2023 would confirm they’re a force to be reckoned with.
This new year will also test my high hopes for the Ford F-150 Lightning. an electric version of America’s decades-long best-selling vehicle. It has sold ~15,000 units since its mid-2022 debut. Ford reportedly will scale production capacity to 150,000 units/yr. by the end of 2023, which would be a true game-changer.
3. Failure to launch
2022 will also be remembered for the EVs that didn’t arrive as promised. Fisker had startup investors and car design enthusiasts excited about its affordable Ocean SUV, but that still hasn’t launched. The company needs to bring in real revenue this year if they want to continue operations.
But the biggest miss was by Nissan. They heavily promoted their Ariya SUV in early 2022, including in a Super Bowl commercial. Seeing the car featured during fall college football telecasts felt dissonant given their May decision to push back the Ariya’s U.S. launch to 2023.
4. “Earnings calls are wakeup calls”
Public markets endured a beating in 2022, with the EV sector particularly hard hit. Sky-high valuations collapsed as business models were skeptically re-examined. Rivian and Lucid endured brutal valuation slashes—although they, having billions of dollars of cash on hand, are relatively fortunate.
Many smaller companies in the broader EV ecosystem may be on the ropes, whether upstart vehicle manufacturers, charging equipment providers, scooter rideshare providers, or public charging networks. Consider these 2022 opening stock prices versus what they were at year-end:
Arrival — $7.78 to $0.16
Bird — $6.18 to $0.18
Canoo — $8.11 to $1.23
Lordstown — $3.72 to $1.14
Tritium DCFC — $9.96 to $1.68
Volta — $7.46 to $0.36
Workhorse — $4.50 to $1.52
5. IRA provides a boost
The passage of the Inflation Reduction Act in August had multiple touchpoints related to EVs. The most widely reported one was the restoration of a $7,500 tax credit to consumers buying new EVs, although it came with clauses and complications yet to be resolved. (There is also now, for the first time, a $4,500 tax credit for used EV purchases, a credit for commercial EVs, and a credit for charging infrastructure built in low-income areas.)
In a way, the IRA’s involvement here was as much about beefing up the domestic supply chain and setting manufacturing policy as anything else. Per Protocol, “Automakers and battery manufacturers have announced a slew of projects in the wake of the IRA becoming law that could help EVs qualify for tax credits,” including big onshoring investments by Honda, Toyota, and Kia.
6. USPS does the electric slide
Green transportation enthusiasts received the best Christmas present when USPS announced it would purchase at least 66,000 new electric vehicles for its mail delivery fleet. EVs will make up over half of the agency’s new purchases—a very welcome turnaround from its controversial original plan, which I covered back in April, to only buy ~10% electric.
Beyond the environmental benefits, I’m thrilled by the potential of highly visible electric USPS trucks advancing the mainstreamization of EVs in communities across the country. I expect, too, that the Postal Service’s decision will influence other commercial and industrial fleets to take a closer look at going electric, too.
7. Battery supply and high prices limit ‘23 gains
Veering fully into prediction, I suspect 2023 may wind up feeling like a “bridge year” for EV adoption before gains pick up sharply again. The possibility of the U.S. formally entering a recession, combined with lingering supply chain constraints, suggest that high price points and low production volumes will moderate new EV sales.
Automakers and environmentalists alike would love to adjust the American public’s “range psychology,” given that a large share of the public’s actual driving habits don’t necessitate the bigger battery sizes they demand. Accepting shorter ranges would mean lower vehicle prices due to having smaller batteries and/or cheaper chemistries (e.g. lithium-phosphate)… but it may be an impossible task, and definitely isn’t feasible as long as public charging infrastructure remains woefully inadequate.
Accordingly, I’d rather see the usage of e-bikes in urban areas promoted, and incentivized. Denver is offering $400-$1,200 rebates on e-bike purchases, depending on income—many more cities and states should adopt similar policies.
I strongly believe that EVs can’t just be Expensive Vehicles, they need to be for everyone. Even as all cars keep getting pricier, EV adoption is still awaiting a blockbuster affordable car. A big step in the right direction would be the fall 2023 launch of the Chevy Equinox SUV. It’s promised to come in at under $30k after tax credits, with at least 250 miles range, a combination which sounds almost too good to be true right now.
And on a personal note…
I've logged about 10,000 miles on my Tesla Model 3 sedan, still really like the car, and remain bullish on EVs. Specific to Tesla design, I love the interior flooded with natural light, but for EVs generally, it’s about the thrill of instant acceleration, the ease of maintenance (no oil changes, etc.—something Hertz now really appreciates), and the pleasantness and environmental benefits of zero emissions.
In recent months, too, I’ve started parking in a garage where I plug my car into a regular old wall outlet to charge. Overnight I add back more range than I expend on my daily commute, and do so for a fraction of typical fueling costs. It’s the little things that make EVs feel a bit like magic.
Happy 2023, folks!
Appreciate your level-headed assessment. Happy new year to you and all your readers!