The EV Bulls Are Suddenly Going Quiet

Key Points

• EV sales are strong in China but slowing in the U.S. and Europe due to high costs and trust issues.
• Challenges like range anxiety and repair costs limit broader adoption.
• Chinese EVs could boost U.S. sales, but tariffs may block them; we’ll revisit after Tesla, GM, and Ford earnings.
• Also: If you want to profit in 2025, start looking at ‘The Next Nvidia’ that could explode

Lee and Doug discuss the growing concerns around the electric vehicle (EV) market, noting that while EV sales in China, particularly for BYD (NYSE: BYD), remain strong due to affordability, sales in the U.S. and Europe are faltering. They explore the reasons behind this slowdown, including high costs, range anxiety, and issues with charging infrastructure. They highlight how some Tesla (NASDAQ: TSLA) owners are now trading in their EVs for gas-powered cars, a significant shift from just a few years ago. The conversation also touches on the potential impact of Chinese EVs entering the U.S. market and the historical lessons from the big three automakers’ response to Japanese cars in the 1970s. They plan to revisit the situation after the release of sales and earnings reports from Tesla, GM (NYSE: GM), and Ford (NYSE: F).

Transcript:

Now, people are worried about EVs.

In China, BYD, people are still buying EVs.

They’re snapping them up.

Part of the reason is that they’re so inexpensive.

They’ve got apparently very good EVs for less than $20,000.

In the United States, sales are slow.

They’re still moving up a little bit year over year, but not really much.

In Europe, there’s actually, EV sales are actually falling year over year.

Yeah, yeah.

From a good growth of like almost 50% a couple of years ago to like 3% or some monumental collapse like that.

What’s the problem?

I don’t know.

We’ve gone through so many of the issues, but it’s everything we’ve discussed.

They’re expensive.

People don’t trust them.

And it’s odd in Europe because…

They don’t have the driving distance required that is in the United States.

And I just think that the European economy is not that great.

I think people just were like, look, I can’t afford this.

It’s not working out like they said it would.

And plus, energy prices in Europe are continuing to go higher.

And that could really weigh on the EV model over there.

I also think that EVs are still sort of an early adopter product.

Again, not in China, but because they’re a small piece of the market share for car sales in the EU, United States, most of the people buying them are still what I would describe as experimenters.

Everybody else is worried about range.

They’re worried about how much they cost, how long they take to charge, all that stuff.

Yesterday, there was a story that came out that said 50% of the people who have a Tesla who trade in for another car are trading in for gas-powered cars.

So that means really…

That’s a gigantic shift.

That’s really a huge shift because remember five years ago, the Tesla owner was the proudest person on your block.

And now they’re going, and if anything goes wrong, if anything goes wrong, it’s going to cost you so much to fix them.

I mean, not that car repair on internal combustion engines isn’t expensive as well, but it’s much higher with EVs.

Well, the other thing is that there are certain things that people don’t know about EVs.

At least they’re not advertised by the EV companies.

Number one, if it gets really cold, the charge in the battery is only about 70% of total.

The other one is that EVs chew through tires at about twice the rate that they do.

They’re so heavy.

Well, not only that, they have instant torque.

Right.

So there’s no torque curve.

You hit the accelerator.

And the only thing to keep you from taking off like a rocket ship is actually the rubber in the tire.

So there are a lot of things that people don’t know about EVs, but the word is starting to get around.

Yeah, and if you were an on-the-fence EV buyer…

Not the new people who are always like, I’ll do that, I’ll do that, I’ll try that.

If you’re the on-the-fence EV buyer because your neighbor has one or something like that, and then you start to see these failures like we saw last winter when we had such a cold winter and the charging stations wouldn’t work and people were having to abandon the vehicles and call AAA to get home.

I think when the on-the-fence buyer sees that, they’re like, no, no, I’m going to wait.

I’m going to wait until this gets ironed out because I believe in the idea and, hey, less emissions and all that, great.

But I think ultimately the car that will change it all will be the hydrogen engine.

That’s probably true.

There’s another problem with the EV business, and that is that as long as there are tariffs – and you can’t bring inexpensive Chinese EVs into the market, it’s going to be very hard to get adoption.

I don’t think that the legacy guys are going to have $20,000 EVs anytime soon.

Musk might get there.

I don’t know.

But if you had a situation where you had six or seven Chinese brands able to come into the U.S. market, sell a really, really good EV, really good EV, which apparently these things are, for $20,000, adoption of EVs would spike.

Yeah, but you know what?

We both grew up outside of Detroit.

We saw what happened in the late 60s and the early 70s.

And the big three has a lot better memory than they had back then.

They totally ignored Japan.

Nobody’s going to buy a Nissan EV.

Or back then, a Datsun.

Nobody’s gonna buy these.

And then the Japanese came in with solid products that would cost less, that looked good, and they got absolutely destroyed.

The 70s were a nightmare for the big three.

And I think that they remember that.

They remember that.

And they’re gonna be all over whoever’s in Washington to say, don’t you ever let them in without a 50% tariff or whatever.

Well, let’s do this.

Tesla releases its sales units usually about two weeks before earnings.

Right.

Then they announce earnings, then GM and Ford come a week or two after that.

So this is what we’ll do.

We’ll wait for Tesla unit sales, Tesla earnings, GM and Ford earnings, and then we will come back to this and find out, are things still as bad then as they are now?

Yeah, yeah.

Okay, let’s do it.

Let’s circle back then and see where we stand.

Good.

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