GM and Tesla approaching 200,000 units

[WadeTyhon]

Surprising no one, GM and Tesla are both coming up on 200,000 sales.

Steven has already discussed Tesla hitting 200k in 2018.

https://insideevs.com/tesla-sell-200000th-ev-u-s-tax-credit-sunset/

But GM has also stated they will exceed 200,000 sales this year.

http://gmauthority.com/blog/2018/02...-electric-car-tax-credit-threshold-this-year/

By the end of this fall both automakers should be in the phase out period. Tesla should reach this point in the spring or early summer.

GM and Tesla are both quite confident they will continue being leaders in US EV sales. “Elizabeth Winter, a GM spokesperson, said the tax credits have certainly helped attract buyers to the automaker’s electric cars, but (the) automaker believes it’s rolling out the products with the right prices.”

If you’ve been considering a Model 3, Volt or Bolt, does the loss of the tax credit change your decision on when to buy or what car to buy?

Do you think the vehicles are priced to be competitive with other EVs that still qualify for the credit?

If not, what price post-subsidies would you consider acceptable?

 

[Feed The Trees]

There is really zero way to track this through the phase out period. There is no numbering system or line. All buyers will get their credits until the expiration of the period, that's really the only way the IRS and Treasury will know to stop giving them out.

 

[WadeTyhon]

There is really zero way to track this through the phase out period. There is no numbering system or line. All buyers will get their credits until the expiration of the period, that's really the only way the IRS and Treasury will know to stop giving them out.

Not too concerned about the specific timing or trying to time it right. I was just curious how important the full tax credit is to potential 3, Volt, or Bolt buyers.

For instance we would need to be guaranteed at least the 50% rebate to consider the Model 3 over buying a Volt at the end of the year.

Once the full tax credit is gone for both automakers, assuming a potential buyer was not able to purchase in time, would buyers still consider a SR Tesla or GM EV?

Model X,S and any future Buick or Cadillac EVs shouldn’t be as affected by the loss of the rebate though.

 

[Feed The Trees]

I think the rest of the makers have been slow playing GM.

The most expensive part of R&D is done, the initial phase. They all know how to make a BEV with decent range. This is in part thanks to GM and Tesla who went out in front.

Now if they want someone like Toyota or VW has a ton of credits left to undercut GM on price. And all of them have it.

Unless GM has learned something truly nobody else can from their experiences it's going to be really rocky in 2019 for them if the other makers choose to make their push.

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[WadeTyhon]

I think the rest of the makers have been slow playing GM.

The most expensive part of R&D is done, the initial phase. They all know how to make a BEV with decent range. This is in part thanks to GM and Tesla who went out in front.

Now if they want someone like Toyota or VW has a ton of credits left to undercut GM on price. And all of them have it.

Unless GM has learned something truly nobody else can from their experiences it's going to be really rocky in 2019 for them if the other makers choose to make their push.

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I hope you're right that at least a few of the other automakers are playing the long game on this. Other than BMW, GM and Nissan, I don't currently see the other major automakers having any interest in selling more BEVs or PHEVs in the US than they actually need to.

But hey, if their plan was to hoard tax credits for use later in order to take down the leaders once prices and R&D costs drop, then that makes sense. I wouldn't be able to see any interest from them yet.

 

[Feed The Trees]

They don't want to sell BEV for a lot of reasons, I suspect.

The demand is still in it's infancy compared to the hundred's of millions of gas cars being sold.

The tax credits will be there whether it's yesterday, today, or tomorrow... so why spend them when demand is low? If you long game it and start collecting later, given the above where they cannot really track the number of credits doled out, why not wait until it's on fire and you can sell the dickens out of the credits and get your customers say 400k of them because of the broken redemption process? You sell 400k of credits and Chevy sells 200k of credits you're better off.

Retooling a platform takes 5-10 years for your cycles to work out, so don't rush it. If you're not ready to sell EVs today you're just not ready. And nobody wants the CMAX big battery in the trunk 'solution'.

Tesla is kinda struggling to hit production stride on the 3 and are looking less and less like an existential threat.

 

[Roy_H]

I can't honestly answer because I cannot afford to buy any new car. But if I could, I wouldn't worry too much for several reasons.

I think Tesla will curtail US sales if required to hit the 200k limit at the beginning of Q3, then fill all the orders it can so all early reservationists will qualify for their Model 3 tax break. I think these people as a group were very conscious of the tax break running out, and that spurred them to reserve early. It is too late for anyone who decides to buy one now, but they might qualify for one of the lesser rebates on going. People who want to buy a Bolt or Volt don't have this problem and can wait til end of year to make decision. I am sure that many who are planning to buy a Bolt will, when faced with paying more in January vs December will purchase in December.

However, I caution that especially with Trump in charge, that this tax rebate will be around next year and almost certainly to be gone by 2020. This will leave the automakers late to the party without a piece of cake.

Both GM and Tesla are working hard to reduce costs and I think they will pass on these reduced costs to their customers as soon after the incentives are reduced as possible so the extra the consumer has to pay won't be that much.

 

[Feed The Trees]

In theory GM has 400k credits left And Ford 200k if they move to their sub brands of caddy, buick, and lincoln. They will lobby for the 4.5B of collective breaks even if just to stay competitive with late comers. Now when domestics run out of credits then yeah trump won't care much, but until then he's got swampy lobbyists to deal with, and it turns out drain the swamp meant fill it back up with bigger swamp monsters.

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[WadeTyhon]

In theory GM has 400k credits left And Ford 200k if they move to their sub brands of caddy, buick, and lincoln. They will lobby for the 4.5B of collective breaks even if just to stay competitive with late comers. Now when domestics run out of credits then yeah trump won't care much, but until then he's got swampy lobbyists to deal with, and it turns out drain the swamp meant fill it back up with bigger swamp monsters.

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Unfortunately it doesn't work that way. GM has 200k credits across all of its brands combined. GMC, Chevy, Caddy and Buick. If they use up all (or most) of their credits on Chevy, then there will be none for the "luxury" brands.

But it was better to use the credits primarily on the mass market middle class brand of Chevy. The luxury buyers can stomach the higher cost of a plug-in option even without the credit.

Both GM and Tesla are working hard to reduce costs and I think they will pass on these reduced costs to their customers as soon after the incentives are reduced as possible so the extra the consumer has to pay won't be that much.

I agree that GM and Tesla have benefited from their early adoption in ways that aren't as readily apparent. They'll be ready to pick up the EV slack where other automakers continue to fail.

 

[WadeTyhon]

Just for my own purposes, I've have tried to estimate the potential time frames for GM and Tesla hitting 200k.

The tally following February sales:

GM: 172,790
Tesla: 169,400 (approximate)

Assuming X and S sales for March will be down only slightly YOY, and that Model 3 sales will be at least 3000 units, totals at the end of march:
GM:~176,000
Tesla: ~178,000+

So if all goes according to expectations, March 2018 will become the month that Tesla finally eclipses GM as the #1 seller of Plug-Ins in the US!

Go Tesla! You've earned it.
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Rough Tesla Expectations for Q2:
S + X Q2 Sales: 7,740 (2,000 units less than 2017)

What month (and quarter) Tesla hits it all comes down to Model 3 production.

If Model 3 production averages 1,200 / week on average between April and June, they could hit 200,000 in early Q3.

If Model 3 production averages only 2,000 units between April and June, they will hit 200,000 near the end of May or first week of June.

If Tesla hits in Q2 then the full tax credit for them would expire October 1st. But if the SR Model 3 begins shipping in Oct or Nov, I think buyers would be willing to look past the credit issue.
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Rough GM Expectations for Q2:
Volt + Bolt + CT6 Sales: 9,000 (averaging 3,000 / month)

Rough GM Expecations for Q3:
Volt + Bolt + CT6 Sales: 12,000 (averaging 3,500 / month)

GM's Q4 sales should average 4,500 / month or so. This would have GM hit 200,000 units sometime in the middle of October. So they would have access to the full rebate until the end of Q1 2019. GM would benefit if the SR Model 3 hasn't begun shipping by then and if Tesla runs out of tax credits this same month. Especially of the Cadillac or Buick EV is launched by the end of the year.

Side Note: Mary Barra again re-iterated that she feels the US should expand access to the EV tax credits in a talk today on energy:

https://insideevsforum.com/communit...esla-approaching-200-000-units.769/#post-7358

"Barra also said Congress should expand tax credits for electric vehicles."

Let's hope she can get through to Congress and push some legislation the way GM, Nissan and the Auto Alliance did last fall.

 

[Pushmi-Pullyu]

I was just curious how important the full tax credit is to potential 3, Volt, or Bolt buyers.

Well, we have pretty strong evidence that a tax credit is important to potential EV buyers. Just look at what happened in Georgia when that State ended its tax credit!

According to one report, there was an 80% drop.

However, that's probably an exaggerated comparison. Consider that people knew the State tax rebate was being phased out, so many buyers no doubt rushed to make their purchase before the deadline, which naturally left sales plummeting immediately thereafter. With the more gradual phase-out of the Federal tax rebate, going from 100% to 50% to 25% and then finally to zero, we can expect the dropoff in sales to be more gradual.

The wild card in this is going to be whether or not EV makers drop their prices in reaction to the phase-out of the rebate. Many EV advocates posting to InsideEVs confidently predict this will happen. Personally, I'm quite skeptical.

Will Tesla cut into its profit margin to cater to those who wanted a tax break? That seems very unlikely to me. Tesla can't afford to lower its profit margin, or at least not by much. Will GM slash the price on the Bolt EV, which the available evidence strongly indicates is making at best a very thin profit margin? I can't see GM selling the car at a loss, or at least not for long. GM can and does drop the price on certain models as a sales incentive, but usually that's only for a few weeks or so. I don't think we'll see much if any permanent price reduction in the USA for the Bolt EV, at least not for two or three years, until most or all of the startup costs have been amortized away. However, this isn't my area of expertise, so I'm certainly willing to be told otherwise. (GM did slash the price on the Cadillac ELR, but it seems to me it was greatly overpriced at first, so I'd argue that was a case of "The exception which proves the rule.")

Now what will be interesting to see is what, if anything, GM does about selling the Bolt EV in Europe. Currently it's sold at a ridiculously inflated price as the "Ampera-e" thru Opel, which according to reports doesn't even want to handle the model at all. Will GM switch to another badge and price the car to sell in Europe, where by all reports its body style should appeal much more than it does here in the USA? Or will it continue to let European sales languish?

Frankly, I expect GM to let the current bad situation in Europe continue, because I think GM is still not really interested in volume sales of plug-in EVs. Naturally I always hope GM will prove me wrong on this subject, but so far, sadly, GM is performing pretty much as I (and others) have been predicting for years.

A quote from a few years back:

“Until we see Audi, Mercedes, VW, Toyota, GM, Ford deliver a BEV that similarly dusts their own top-of-line ICE product in performance AND value for money, there will be no effective BEV competition for Tesla. And this isn't going to happen for a LONG time, not for technical reasons, but because ICE carmakers cannot remain viable companies if they start killing off their highest margin products. The ICE carmakers will put batteries into version of their products for the customers who ask for 'the electric one'. They will build low-end, compliance BEVs to earn the ZEV credits they need without cannibalizing their high-end ICEs. They will build hybrids and PHEVs to get their CAFE and CO2 g/km numbers. But they aren't going to deliberately kill off their top profit making products just to compete with Tesla -- at least not until Tesla gets a whole lot bigger than they are now.” -- Randy Carlson​

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[Feed The Trees]

Well, we have pretty strong evidence that a tax credit is important to potential EV buyers. Just look at what happened in Georgia when that State ended its tax credit!

According to one report, there was an 80% drop.

80% drop because there was a similar runup to kick it off. It merely came back to pre credit levels.

Also their credit was pretty big at $5k. That's nearing Fed levels.

“Until we see Audi, Mercedes, VW, Toyota, GM, Ford deliver a BEV that similarly dusts their own top-of-line ICE product in performance AND value for money, there will be no effective BEV competition for Tesla. And this isn't going to happen for a LONG time, not for technical reasons, but because ICE carmakers cannot remain viable companies if they start killing off their highest margin products. The ICE carmakers will put batteries into version of their products for the customers who ask for 'the electric one'. They will build low-end, compliance BEVs to earn the ZEV credits they need without cannibalizing their high-end ICEs. They will build hybrids and PHEVs to get their CAFE and CO2 g/km numbers. But they aren't going to deliberately kill off their top profit making products just to compete with Tesla -- at least not until Tesla gets a whole lot bigger than they are now.” -- Randy Carlson​

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So what? Better they make 100,000 3 series than 10,000 7 series.

 

[Pushmi-Pullyu]

So what? Better they make 100,000 3 series than 10,000 7 series.

That's a good point.

I hadn't thought about it until I read your comment, but I think Randy's little essay would have been more correct to specify top gasmobile models in terms of total profits -- which, generally speaking, would be the best sellers -- not top gasmobile models in terms of per-unit profits, which would tend to be the most expensive models or "halo" models.
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[Robb Stark]

Well, we have pretty strong evidence that a tax credit is important to potential EV buyers. Just look at what happened in Georgia when that State ended its tax credit! According to one report, there was an 80% drop.

I think that shows Nissan LEAF buyers are highly price sensitive. Because most buyers of LEAF in Georgia bought primarily to save money. Not for envirionmental reasons or because LEAF is fun to drive.

It shows Tesla sales not affected all that much. Just pulling a bit of demand forward.

Now what will be interesting to see is what, if anything, GM does about selling the Bolt EV in Europe. Currently it's sold at a ridiculously inflated price as the "Ampera-e" thru Opel, which according to reports doesn't even want to handle the model at all.
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GM sold Opel and Vauxhall to Peugeot in the middle of last year. How many Ampera-e get sold in Europe partially depends on how many GM wants to sell to Peugeot and at what price and how many Peugeot wants to buy and sell at what price. Peugeot raised prices on Ampera-e because it did not want to lose money on each one sold.

GM and Peugeot also have a non-compete clause with current Opel Vauxhall product. GM will not sell almost identical cars in Europe/Middle East under different brand and Peugeot will not bring current GM tech Opel and Vauxhall to North America or China.

GM only sells Cadillac vehicles, Corvette and Camaro in Europe. Mainly to US embassy officials and US military personnel.

Fun Fact: Tesla currently outsells GM in Europe

 

[Pushmi-Pullyu]

GM and Peugeot also have a non-compete clause with current Opel Vauxhall product. GM will not sell almost identical cars in Europe/Middle East under different brand and Peugeot will not bring current GM tech Opel and Vauxhall to North America or China.

Okay, but contracts can be re-negotiated. It happens all the time. Generally speaking, contracts between more-or-less equal partners* have a clause allowing the contract to be ended by either party, altho requiring notice given in advance, and perhaps requiring a penalty payment unless both parties agree to end the contract. I would guess that GM can end its contract with Peugeot if they want to. But I'd also guess that since GM isn't really interested in selling lots of EVs, that this would not give them sufficient motive to end the contract.

*That is, contracts written with the intent that each partner benefits equally. There are also contracts where one party is essentially forcing the agreement on the other, which may not offer the weaker partner the chance to unilaterally end the contract, or at least not without severe penalties. But I don't think that applies here.
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[Robb Stark]

Okay, but contracts can be re-negotiated. It happens all the time. Generally speaking, contracts between more-or-less equal partners* have a clause allowing the contract to be ended by either party, altho requiring notice given in advance, and perhaps requiring a penalty payment unless both parties agree to end the contract. I would guess that GM can end its contract with Peugeot if they want to. But I'd also guess that since GM isn't really interested in selling lots of EVs, that this would not give them sufficient motive to end the contract.

*That is, contracts written with the intent that each partner benefits equally. There are also contracts where one party is essentially forcing the agreement on the other, which may not offer the weaker partner the chance to unilaterally end the contract, or at least not without severe penalties. But I don't think that applies here.
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There is no point in stipulating a non-complete clause if it is non-enforceable.

If there was another clause that made it moot it would have almost certainly been reported in the automotive press. It was not.

Besides, neither wants more competition in their respective strong zones. Which was the original point of the clause.

 

[WadeTyhon]

Okay, but contracts can be re-negotiated. It happens all the time. Generally speaking, contracts between more-or-less equal partners* have a clause allowing the contract to be ended by either party, altho requiring notice given in advance, and perhaps requiring a penalty payment unless both parties agree to end the contract. I would guess that GM can end its contract with Peugeot if they want to. But I'd also guess that since GM isn't really interested in selling lots of EVs, that this would not give them sufficient motive to end the contract.

*That is, contracts written with the intent that each partner benefits equally. There are also contracts where one party is essentially forcing the agreement on the other, which may not offer the weaker partner the chance to unilaterally end the contract, or at least not without severe penalties. But I don't think that applies here.
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GM has discussed that they would be potentially interested in entering Europe again in the future.

"But, Barra sounded more optimistic. “Nothing keeps us from going back,” she said. The statement came with a little asterisk, though.

She added the automaker would need “transformative products” if it considered returning to Europe. The phrase likely alludes to self-driving cars and electric vehicles. Both are under rapid development at GM.

As she mulled over Europe, she also said other markets could face GM’s guillotine, too. “We need to generate an appropriate return. If we don’t see a path to generate appropriate returns we’re going to invest where we see better opportunities,” Barra said.

Read more: http://gmauthority.com/blog/2017/12...er-re-entering-european-market/#ixzz59PcRr1nX

Buick as a brand is on the rise world wide thanks mostly to china. And it has a far better reputation for quality globally than Chevrolet, no matter how great the Bolt's reliability is. Most Buick's are a good mix of affordable luxury. So I would expect Buick to be the most likely *major* feeler brand for re-entering Europe.

If they were to re-enter Europe within the next few years then I could see a good potential lineup being: Buick's new Crossover EV, the Buick Velite, the LaCrosse hybrid (not the e-assist version, the full hybrid) and the next-gen of the Encore and Regal.

But most likely by the time GM decides to re-enter Europe they will be onto their next-gen EV platforms. Who knows what their lineup will be at that point.

 

[WadeTyhon]

I think that shows Nissan LEAF buyers are highly price sensitive. Because most buyers of LEAF in Georgia bought primarily to save money. Not for envirionmental reasons or because LEAF is fun to drive.

It shows Tesla sales not affected all that much. Just pulling a bit of demand forward.

GM sold Opel and Vauxhall to Peugeot in the middle of last year. How many Ampera-e get sold in Europe partially depends on how many GM wants to sell to Peugeot and at what price and how many Peugeot wants to buy and sell at what price. Peugeot raised prices on Ampera-e because it did not want to lose money on each one sold.

GM and Peugeot also have a non-compete clause with current Opel Vauxhall product. GM will not sell almost identical cars in Europe/Middle East under different brand and Peugeot will not bring current GM tech Opel and Vauxhall to North America or China.

GM only sells Cadillac vehicles, Corvette and Camaro in Europe. Mainly to US embassy officials and US military personnel.

Fun Fact: Tesla currently outsells GM in Europe

Hey, at this point my cat outsells GM in Europe.

Yeah, PSA doesn't want to sell the Ampera-e. It is a stop-gap solution. They're replacing it soon with plug-in conversion models that they'll sell in small numbers. I don't see any proof that PSA sees EVs as an important part of their lineup in the future.

When they found out after purchasing Opel that the automaker's entire plan for meeting emissions was moving towards EVs, PSA threw a hissy fit.

https://blog.caranddriver.com/psa-g...l-motors-misled-it-on-opelvauxhall-emissions/

Like many European automakers, PSA is accused of cheating on diesel emissions (whereas Opel was cleared of any emission cheating last year):
https://phys.org/news/2017-03-french-emissions-probe-opel-accused.html

And PSA wants automakers to be allowed to avoid emissions fines if they deem the available infrastructure to be inadequate :
https://cleantechnica.com/2018/03/0...s-goals-ev-charging-networks-arent-developed/

So I'm tempted to believe the death of the Ampera-e rests on PSA's shoulders more so than GM.

 

[Pushmi-Pullyu]

There is no point in stipulating a non-complete clause if it is non-enforceable.

I guess I failed to make my point.

The point I was trying to make is that a contract should benefit both parties, or else they should never have made it in the first place. If GM finds that the contract no longer serves its purpose, then it should move to end the contract, or re-negotiate the terms.

Contracts between more-or-less equal partners generally include the terms for ending the contract, and generally ending it doesn't have to be mutually agreed to. That's not at all the same as "non-enforceable". What that is, is both parties to a contract being sensible and realizing that situations change, and that at some time in the future, the contract may no longer serve their purposes. Generally speaking -- that is, what is typically written into contracts of this type -- is that a party wanting to end a contract would have to notify the other party, and then the contract would end at some period of time (perhaps a few months or a year) after the notification. It wouldn't end instantly, and the party wanting to end the contract may have to pay a penalty to the other party to bring the contract to an end.

Any re-negotiation of the contract would of course have to be mutually agreed upon by both parties to the contract.

Frack! I'm starting to sound like a lawyer or -- worse -- that I want to be one!
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[Cypress]

I think the rest of the makers have been slow playing GM.

The most expensive part of R&D is done, the initial phase. They all know how to make a BEV with decent range. This is in part thanks to GM and Tesla who went out in front.

Now if they want someone like Toyota or VW has a ton of credits left to undercut GM on price. And all of them have it.

Unless GM has learned something truly nobody else can from their experiences it's going to be really rocky in 2019 for them if the other makers choose to make their push.

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IMO, This is why Barra is trying to push for extension of the EV incentives.