Weekly Brief: EV Sales Suggest ICE May Have ‘Had its Chips’

So much for the myth that real drivers don’t like electric vehicles.

Porsche reported last week that its all-electric Taycan is outperforming its flagship sports car, the gasoline-powered 911 series. In the first three quarters of 2021, Porsche delivered 28,640 Taycans versus 27,972 911s. Porsche’s total deliveries worldwide were up 13%, in large part because the Taycan is performing so well.

For years legacy carmakers like Porsche delayed releasing pure-bred electrics in fear that their customers would rebel against a vehicle with a battery under its hood in place of an internal combustion engine. The more impressive the brand, the more angst there was to make the transition. Real drivers, the prevailing wisdom suggested, wanted ICE-powered rides.

Porsche’s numbers suggest otherwise. Porsche sold 217,198 vehicles worldwide in the past nine months. 28,640 Taycans is by comparison a small number but the growth rates are impressive. Taycan sales are up 200% year over year, whereas Porsche’s top-selling vehicle, the gas-powered Cayenne, is down 2%.

The broader trends across the industry tell a similar story. Electric vehicles account for just 2% of worldwide car sales today. Yet, based on current growth rates, EV sales are projected to soar from 3M a year as of 2020 to 66M a year by 2040. At that point 66% of new car sales will be EVs, according to strategic research provider BloombergNEF.

China and Europe are leading the charge in the EV revolution, thanks to strong government support and large manufacturing capacities. The US lags behind in third place, in large part because the government phased out support for EV production during the Trump years. A study by the International Council on Clean Transportation found that between 2010 and 2020, China produced 44% of the world’s EVs, Europe produced 25%, and the US produced 18%. Between 2017 and 2020, the US took a step back while Europe and China surged forward.

The Biden administration has taken action to change this. In his first 90 days Biden signed an executive order mandating that 40% to 50% of all new car sales in the US must be electric by 2030. The administration is still trying to pass an infrastructure bill that could include up to $7.5Bn in federal support for building a nation-wide network of charging stations.

The administration has also taken an active role in trying to alleviate the microchip crisis, which the shift toward EVs has exacerbated. Transportation Secretary Pete Buttigieg acknowledged last week that there was only so much the administration could do since “this is a capitalist country” and the government won’t be stepping in to own or operate “private-sector systems”. The administration is considering lowering tariffs as one way to get more microchips into the country faster. President Biden announced last week that the Port of Los Angeles will now be open every hour, every day, every week to help expedite the arrival of imports into the country.

Buttigieg said that the crisis could last well into next year. Some carmakers aren’t willing to wait around in hopes that the situation will improve. Hyundai Motors chief operating officer, José Munoz, went on record last week with TechCrunch saying that Hyundai will now look to develop microchips in-house in partnership with its car parts supplier, Hyundai Mobis. Munoz also said that the crisis will force automakers to evolve what kind of chips they’re using, to a more simplified and cost-effective product. “The chip makers don’t want to make the legacy chips that automakers want,” Munoz said.

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