Bloomberg Intelligence recently released its 2023 North American Auto Manufacturing Midyear Outlook. On this episode of Inside Automotive, CBT News host Jim Fitzpatrick is joined by Kevin Tynan, senior automotive analyst at Bloomberg Intelligence, to discuss the midyear outlook and what it can tell dealers about the electric vehicle market.
Tynan notes that the report serves as an excellent tool for getting a feel for the rest of the year. “I feel like the markets, in general, are a little bit tentative about the economic outlook in the second half of the year,” he remarks. One of the biggest ongoing developments within the automotive sector is the explosion of the electric vehicle industry, which Tynan explains underwent a transformation over the first two quarters. While investors and analysts used to identify EV companies as tech-focused enterprises, market spectators now consider them to be automotive brands first and foremost due to the immense impact they have on the industry’s business model.
“That’s the role of a disruptor, to push old companies into new technologies,” remarks Tynan. The extent of this disruption can be seen in the ways traditional automotive corporations have changed their habits. Companies like Ford and General Motors have realized that they can use EV products to re-enter foreign markets such as China and Europe, which have historically been ill-suited to American-style vehicles. However, with overseas consumers warming up to battery-powered cars faster than those within the U.S., legacy automakers have a chance to enter these areas and compete once more.
EV prices have remained inflated since their introduction. Tynan notes that while automakers tend to entice customers with budget-friendly starting prices, they are primarily fixated on producing expensive, high-profit margin models. This is because battery-powered cars do not bring in money like other forms of transportation. “That’s where the manufacturers have to live to be profitable in that technology,” he remarks. Since car manufacturers (apart from Tesla) are already operating at a loss on their current electric lineups, demand would need to increase before they can afford to offer discounts. Unfortunately, at current levels, there are simply too few consumers to offer a leveling effect on EV prices.