- EV interest declines, layoffs increase
- Lithium, nickel prices plummet
- Automakers adjust EV strategies
As part of a contemporary gold rush, the American public was persuaded that electric vehicles would bring manufacturing companies and a surge in employment opportunities to small communities across the nation.
However, due to declining interest in electric vehicles (EVs), lithium and nickel facilities, which produce the metals used in lithium-ion batteries for EVs, are implementing cost-cutting strategies such as massive redundancies and suspensions of operations.
In April 2022, the demand for electric vehicles increased by 76 percent; however, by the end of 2023, only 50 percent of those vehicles had been sold.
Car buyers remain averse to exchanging their gas-guzzling vehicles for electric vehicles (EVs) due to the exorbitant cost and concerns regarding the ease of charging.
Since January of last year, the price of lithium has decreased by 90% due to the declining demand for electric vehicles.
Ford Motor Company, which was once poised for success, has reduced employment at its lithium factory in Michigan by 1,400. Similarly, General Motors has terminated the entire workforce of nearly 1,000 employees at its facility in Detroit, promising to rehire them all by 2025.
“I believe what you’re observing is a change in the slope of how quickly people are willing to purchase EVs at this time due to their high price and concerns about charging infrastructure,” the CEO of the Centre for Automotive Research, Alan Amici, stated to NBC News.
Adjusting Production to Match EV Demand
“In order to be an efficient automaker, production must be matched with demand. Nobody benefits from stockpiling a yard with EVs that are not being purchased.
The average time it takes automakers to sell an electric vehicle is three weeks longer than that of a standard petrol vehicle; as a result, manufacturers offer discounts and reduced interest rates to attract customers.
Due to this, corporations such as General Motors (GM) and Ford were compelled to impede the growth of electric vehicle (EV) development and battery manufacturing facilities, despite reiterating their commitments to establish additional facilities within the subsequent fortnight.
“It is true that the growth rate of electric vehicles has slowed, causing some uncertainty,” the chairman and CEO of General Motors, Mary Barra, stated in an earnings call last month.
“We will build in accordance with demand, and the fact that numerous third-party projections indicate that U.S. EV deliveries will increase from approximately seven percent of the industry in 2023 to at least ten percent in 2024, indicating another year of record EV sales, is encouraging.”
She asserted that GM has 100,000 reservations for electric vehicle (EV) pickups for the remainder of this year and into the following year but added that the company will consider producing more internal combustion engine (ICE) vehicles if demand for EVs changes.
Paul Jacobson, CFO of General Motors, stated on the earnings call, “We are prepared to flexibly produce ICE vehicles and EVs, bearing in mind that the EV market will not expand in a linear fashion.”
Shifting Gears in EV Strategy
According to Barra’s LinkedIn post from 2021, GM had set forth ambitious plans to exclusively sell completely electric vehicles by 2035 and allocate $27 billion towards EVs. However, this development represents a substantial departure from those objectives.
The CEO of General Motors, James Cain, told that despite a deceleration in the growth rate of electric vehicle (EV) demand, the organisation remains optimistic and continues to make progress in the correct direction.
Ford made a commitment in February 2023 to establish a battery plant in Michigan, worth $3.5 billion, in order to capitalise on the proposed landmark climate legislation of President Joe Biden. This legislation aims to ensure that by 2032, two-thirds of all cars sold in the United States will be wholly electric.
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The New York Times reports that Biden is anticipated to ease the stringent measures to allow automakers more time to transition to electric vehicles, despite the fact that more American consumers chose hybrid vehicles last year than the fully electric alternative.
The percentage of cars sold that were hybrid in 2023 was 8.3 percent, while completely electric vehicles comprised 6.9 percent.
Individuals are being laid off from a once-promising industry due to the deceleration of lithium and nickel production, which is the result of EV sales falling short of automakers’ expectations.
Challenges in Lithium Market Adaptation
This occurs at a time when the costs of lithium and nickel are plummeting, which has a negative impact on major lithium producers in the United States, including Albemarle, which had planned to start construction on a lithium facility in South Carolina this year.
Albemarle intended to manufacture sufficient lithium to power 2.4 million electric vehicles (EVs) annually. However, the company was compelled to suspend investments in the facility and terminate 300 employees, or four percent of its workforce.
“With current prices, those projects are not economically viable,” said Kent Masters, chief executive officer of Albemarle.
Last week, Piedmont Lithium in Belmont, North Carolina, told The Charlotte Observer it would hire nearly 400 people. It is offering an average salary of $82,000. However, the organisation also declared that it would be terminating 27 percent of its current staff.
“In the end, everything stems from demand, but demand is simply not materialising to the extent that all these CEOs anticipated.”
Thus, many of the initial goals established by General Motors or Ford a few years ago may have been overly optimistic and aggressive. Gabe Daoud, a senior analyst at TD Cowen specialising in sustainable energy, told NBC News.
“I believe everyone was anticipating that the entire automobile fleet would switch to electric vehicles overnight. But that is obviously not possible or practical.”
