We all know 2023 was supposed to be The Year for electric vehicles, and in many ways, it was. But 2024 is shaping up to be an even more crucial one. So what does that mean for the wider auto industry, small players trying to transition and bold startups with big ideas who need a lot of capital to pull it off?
You're about to find out. Today on InsideEVs, we're proud to debut a new feature you'll see every morning Monday through Thursday (barring the occasional holiday.) It's a morning roundup of three major headlines covering the transition to zero-emission vehicles and the future of car technology. And it comes with some industry analysis that's meant to be friendly for people who may be new to this world, or still trying to understand exactly what's going on.
These stories may not merit standalone stories on InsideEVs, but we're going to explain why they're crucial to the narrative of what's happening right now during the electric, digital-focused transformation of how we get around. We're working on a way to get this into your inbox every morning, too.
Welcome to Critical Materials. Let's get started.
30%: A 'Reality Check' For 2023
Lately, you've probably read a lot of headlines casting doubt on the near-term future of electric vehicles. I think a lot of that pessimism has been misplaced. After all, the U.S. alone saw one million EV sales for the first time ever, several major automakers are seeing record EV sales and more options are coming to market almost every month.
Instead, the doom and gloom you're seeing has to do with investors concerned that EV growth isn't some straightforward, up-and-to-the-right line; dealers grumbling when that last thing means longer time on the lots; a charging network that still has a lot of headaches; and executives who are struggling to make EVs profitably.
That last part is the biggest challenge—for them, anyway. It's why so many new EVs have been $60,000 SUVs, like the Chevrolet Blazer EV I drove last week (First Drive review coming Wednesday, by the way.) Basically, this transition is proving harder than expected for the car companies, and they don't like it. I also don't think most of them want to do it, but here we are.
We'll have more to say on this subject before the year wraps, but here's Reuters looking ahead at next year's challenges while saying the thing we all know to be true—people want affordable EVs. But automakers are struggling to make those profitable:
Industry executives are lobbying the Biden administration to back away from emissions rules that effectively require EVs to account for two-thirds of U.S. new-vehicle sales by 2032.
Looking ahead, industry executives raise two concerns about the challenge of expanding the EV market beyond adventurous early adopters of technology: Affordability and access to charging.
The slow pace of charging infrastructure development forced major legacy automakers to cut deals this year with Tesla to allow buyers of their EVs to use Tesla's Supercharger network - a competitive coup for Tesla.
"The automakers' capitulation to the (Tesla) standard is a clear signal that they are realizing that demand is held back by fears on charging," said Mark Wakefield, co-leader of consultancy AlixPartners' automotive practice.
"Affordability" is industry code for convincing mainstream, middle-income consumers to pay enough for an EV to cover higher production costs and still yield a profit. For most legacy automakers, that has so far proven impossible.
Indeed, the 2024 election is going to have profound implications for the U.S. emissions mandate that will push America to be a heavily electric market in the coming years. If President Joe Biden loses his job, it's hard to imagine any of his opponents not wanting to reverse his environmental policies.
But if the car companies slow down on battery plant and technology investments—or halt them entirely—they'll never get to the magic mix of "profitable but affordable" that they want. I don't think they can run off those $60,000 (or more) SUVs forever. And the massive sales success of the now-cheaper Tesla Model 3 and Model Y this year, or even the still strong-selling Chevrolet Bolt, say a lot about where this needs to go.
Basically, something's gotta give here.
60%: Mazda Will Be One To Watch In The EV Race. Here's More Of Its Plans
If you've read my work in other places, you may know I tend to keep a close eye on where Mazda is headed next. I do this for a lot of reasons. For starters, the Japanese brand does things that align with my values: great design, premium quality without the luxury price tag, and a long-running emphasis on driving fun and performance.
It's also a latecomer not only to the EV game, but to electrification, period; globally Mazda only even has a handful of hybrids and just one in the U.S. market. How this small, independent automaker—one of the last, really—handles the expensive EV transition will be very telling for the rest of this business. So far, Mazda has played an extremely cautious "wait and see" approach to battery power, which is frustrating for fans like me who would love to own something on par with the current Mazda 3 or CX-5, but electric. (And no, I don't mean the dud that was the MX-30.)
So since we all know Mazda can't keep making gas engines forever, what's the plan, exactly? Today we know more, thanks to an exclusive interview with CEO Masahiro Moro from Automotive News' ace Asia reporter Hans Griemel. It's worth a read in full, but here are some highlights.
First, he calls Mazda an "intentional follower" on EVs, citing concerns over demand and the brand's own weakening sales in China (which is another problem that led to a reduced sales guidance for 2025.) But he said hybrids are driving a ton of growth at Mazda, with half of all CX-90s sold in the U.S. being plug-ins. Mazda will also add a smaller CX-70 plug-in hybrid here next year.
What about fully electric cars? That will take some team-ups:
Last month, Moro set up a new standalone division called e-Mazda to develop, engineer, market and sell its coming line of dedicated EVs. They will be built on a new scalable platform, and the first will debut in the 2025-27 time frame. The new division has about 100 employees, Moro said.
Engineers will likely settle on three motor sizes — small, medium and large — in the range of 70 to 110 kilowatts. Single-motor and dual-motor layouts are also expected, Moro said.
He declined to discuss battery size. But Mazda is working with three battery suppliers. Prime Planet Energy & Solutions is a joint venture between Toyota and Panasonic that already supplies batteries for the CX-90. Mazda has also arranged to source batteries directly from Panasonic Corp. and Envision AESC Japan.
Mazda is working on two EV varieties. One is a new dedicated EV and the other is based on an existing architecture that also accommodates internal combustion and hybrid powertrains.
From around 2026, Mazda's EVs also will adopt, almost wholesale, electronics and automotive software systems jointly developed with Toyota to save funds for EV development.
I've interviewed the folks at Toyota about this and they're very serious on the software front. Letting that company (which owns a 5% stake in Mazda) front the software costs is a smart move. This way, Mazda still aims to have seven or eight EVs on sale by 2030, mostly crossovers and with a focus on bringing costs down over time. Same as everyone on that front, much to the chagrin of people who want cheaper EVs.
But all this talk of collaboration makes me wonder: is there a reality where a bigger company, maybe even Toyota, swallows up Mazda? But Moro said that's the outcome they're trying to avoid:
"There are many things an individual company can't do alone," Moro said. "In the past, we might have said this is a competitive area. But now, it is a collaborative area."
Even though Mazda is working with Toyota on the important digital backbone of its next-generation EVs, the company is prioritizing in-house development of the overall vehicle platform.
"That," Moro said, "is for the sake of Mazda being an independent brand."
Here's hoping. Because again, the next few years will be a test for any smaller, more independent company that can't run on startup cash forever.
90%: Our Next Energy Sees Executive Upheaval, 'Cash Crunch'
And here's a reminder that it's not great for the startups out there either. Not with these interest rates, and not with investors getting skittish about the EV world in general.
Michigan-based Our Next Energy, aka ONE, is one of the more promising battery startups in its field. It's the one working with automakers like BMW to do 600-mile electric batteries. Bloomberg even calls it "the poster child of President Biden’s agenda to wean the US off China by supporting American manufacturing and green jobs in the U.S."
But ONE just axed its Series C funding round (aiming for $100 million), and CEO Mujeeb Ijaz has been demoted to Chief Technology Officer. Board member Paul Humphries is now CEO, something he's apparently been informally doing since Thanksgiving.
Here's more from Bloomberg, including exactly what we've been talking about:
“Our company is viable and healthy, because we have the support of our board and our business plan has been well received,” Ijaz said in an exclusive interview at ONE’s offices in Novi, Michigan.
The leadership changes come at a tumultuous time for ONE, which has been building a $1.6 billion manufacturing plant in Van Buren, Michigan, funded in part by about $200 million in state grants. The company announced late last month it was laying off 128 people, or about 25% of its staff, in response to “market conditions” and to “focus on core priorities.”
ONE’s business plans have been tested as EV demand softens, with automakers like General Motors Co. and Ford dialing back or postponing investments in fully electric cars. Republicans in Congress are also talking about defunding President Biden’s signature climate law.
The startup is now retooling to respond to a lower demand, Ijaz said. It’s delaying the buildout of its 20 gigawatt-hour battery plant in Van Buren until it has a firm commitment from a customer to buy its cells. The company still plans to produce sample cells for customers in the first quarter of next year. In the meantime, ONE will continue buying cells from China’s BYD Co. through 2025 to place in its Aries Grid battery packs, which are designed for both commercial electric vehicles and stationary storage.
See what I mean?
100%: Who Are You Betting On For EV Success In 2024?
Besides the obvious players like Tesla and BYD, of course. Who do you think is going to have a better year on this front, or is the whole business in for a bumpy ride?