Tuesday, July 23, 2024

Challenges and Future Outlook By Quiver Quantitative

© Reuters. U.S. Electric Vehicle Sales Hit a Roadblock: Challenges and Future Outlook

Quiver Quantitative – The U.S. electric vehicle (EV) market, after a period of rapid growth, is experiencing a slowdown in momentum, raising concerns for carmakers who have heavily invested in this technology. Despite a near 50% growth in EV sales earlier in the year, the market has seen a plateau in recent months. This shift is attributed to high prices and limited charging infrastructure, leading to longer sales times for EVs compared to gasoline vehicles. The concentration of EV sales in certain states, particularly in urban areas with better charging infrastructure, highlights the uneven distribution of demand across the U.S.

The cooling interest in EVs has impacted U.S. automakers like General Motors (NYSE:) and Ford (NYSE:), who had anticipated a stronger surge in EV demand. This changing landscape is forcing these companies to reassess their investment strategies in EV production and battery technology. While EVs were selling faster than gasoline cars a year ago, the trend has reversed, with dealers taking about three weeks longer to sell an EV.

Market Overview:
-Regional Fed surveys reveal dampened hiring plans for 2024, anticipating less aggressive job growth.
-Wage pressures expected to ease as labor market finds its equilibrium, alleviating inflation concerns.
-December jobs report likely strong, but future forecasts point to a gradual slowdown in the new year.

Key Points:
-Fed’s interest rate hikes impacting the economy, translating into reduced hiring appetite across various sectors.
-Surveys from Philadelphia, New York, Dallas, and Richmond Feds showcase softening employment expectations.
-While no mass layoffs are anticipated, the pace of job creation is predicted to nearly halve in the first quarter of 2024.
-Wage growth, which soared in 2021 and 2022, projected to decelerate significantly next year.

Looking Ahead:
-December jobs report expected to remain solid, potentially offering a final hurrah for robust hiring.
-The coming year likely to see a slower jobs market, balancing labor supply and demand and moderating wage pressures.
-This shift may provide relief on the inflation front but could also dampen investor sentiment in companies reliant on a booming labor market.

Comparatively, EV sales in China and Europe are outpacing those in the U.S. Nearly 27% of vehicles sold in China in the third quarter were EVs, against about 8% in the U.S. This disparity is partly due to earlier and more aggressive promotion of EVs in these regions through subsidies and stringent emissions regulations.

Looking ahead, the U.S. EV market is expected to rebound in 2025 with the introduction of more affordable models. Analysts and auto executives remain optimistic about the future of EVs in the U.S., anticipating that the market will gradually adapt to the new technology and expand as more budget-friendly options become available. This transition, however, is expected to encounter various challenges and setbacks.

This article was originally published on Quiver Quantitative


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