Are people giving up on EVs? Elon Musk lost $28 billion as Tesla took a beating last quarter

Tesla, led by Elon Musk, reported disappointing quarterly earnings, prompting investors to reevaluate their expectations for the profitability of the EV sector. Akio Toyoda, the Chairman and former CEO of Toyota, who stepped down from his role as CEO earlier this year, took the opportunity to emphasize, “People are finally seeing reality.” Elon Musk also experienced a significant financial setback, with his net worth decreasing by almost $28 billion. Tesla, a prominent advocate for EVs, reported its lowest quarterly earnings per share in two years, falling 10 per cent below already negative analyst forecasts. Consequently, Tesla’s shares tumbled more than 17 per cent, and the company’s market capitalization dropped by $138 billion in just over two trading days. EV sales slowing down alarmingly While EV sales continue to grow, the pace of growth has slowed. In the first half of 2023, EV sales increased by 49 per cent compared to the previous year, a slower rate than the 63 per cent increase seen in the prior year. President Joe Biden has been a staunch advocate of electric vehicles as part of his ambitious agenda to combat climate change and reduce US carbon emissions. However, the EV market is facing challenges, with high-interest rates dampening customer demand for all vehicles, not just EVs. Experts have pointed out that transitioning to an EV will be expensive for a few years, as they are a “brand new technology” and necessitate a shift in people’s relationship with their vehicles, which has remained largely unchanged for decades. The expectation that this transition would proceed seamlessly is unrealistic. EVs are not the only way ahead Toyoda of Toyota who has long been a skeptic of the electric vehicle (EV) hype, has recently gained validation for his reservations. Toyoda has consistently challenged the prevailing notion that EVs represent the sole path to achieving carbon neutrality in the automotive industry. He has maintained that “There are many ways to climb the mountain” in addressing environmental concerns. Notably, other major automakers are also scaling back their EV initiatives, with Lucid reducing production by 30 per cent and GM delaying the introduction of the Chevy Silverado EV by a year. The search for other alternatives In contrast to the EV-focused strategy of some automakers, Toyoda has consistently recommended hedging bets by continuing to invest in hybrids, hydrogen-powered vehicles, and other eco-friendly alternatives. Ford has also taken a cautious approach, slowing production of its F-150 Lightning pickup, with Bill Ford, the great-grandson of Henry Ford, describing the discourse surrounding EVs as “heavily politicized.” General Motors, despite ambitious commitments to phase out gas and diesel-powered vehicles by 2035, has announced a slowdown in EV production, citing drops in demand and pressures from auto strikes.