Good morning! It’s Tuesday, July 16, 2024, and this is The Morning Shift, your daily roundup of the top automotive headlines from around the world, in one place. Here are the important stories you need to know.
1st Gear: Rental Firms Can’t Make EVs Profitable
There was much fanfare at the turn of the decade when rental giant Hertz announced it was investing big to electrify its fleet. The firm and a whole host of other renters spent millions adding Tesla and Polestar models to their fleets, only to start selling them off cheap when the problems started mounting.
Now, a report from the New York Times revealed that everything from sky-high repair costs to an increased likelihood of crashes led to the issues rental companies faced electrifying their fleets. All this means that the future of the rental EV may be in doubt, as the Times reports:
Hertz and other rental car companies found that offering customers electric vehicles at a profit was more difficult than they had expected. Most rental car complexes at airports lacked chargers. Many renters were not prepared for how quickly electric cars accelerated, leading to more accidents and higher insurance premiums. And some companies found they couldn’t get spare parts for such cars as quickly as they could for gasoline cars.
“They thought E.V.s would be more simple and straightforward and cheaper to maintain,” said Karl Brauer, an executive analyst at iSeeCars.com, an online car search site. “They’re finding that’s not true.”
In a statement, Hertz said it would “continue to offer our customers the widest possible choice of vehicle makes and models, including electric vehicles.”
The biggest problem that rental giants faced, reports the Times, is the massive depreciation seen among EVs in recent years. Thanks to price cuts on new cars, higher repair bills and other factors, used EVs lose much, much more value than their gas-powered counterparts. This is bad news for rental companies as they often sell off their cars after they’ve used them to recoup some of the costs of running a rental firm. However, selling cars for less than expect means a painful loss for rental firms.
The numbers just don’t shake out, which is why the number of EVs sold to rental companies has fallen dramatically this year. The Times reports that four percent of cars sold to rental firms in 2023 were electric. This year, that figure has dropped to around 1.3 percent.
The revelation is a shame, as widespread adoption of rental EVs would offer more and more people a chance to try out an EV for an extended period of time.
2nd Gear: But EV Sales Are Still Doing Fine
Despite Hertz rushing to offload its fleet of electric cars, stories of sky-high repair costs and a whole heap of fear mongering around the sector, it turns out that electric models are still selling pretty well this year.
While sales at Tesla have grabbed headlines for their drop in recent months, the rest of the sector appears to be thriving according to a new report from Forbes. In fact, sales are up by almost a quarter compared with the first three months of 2024 and EVs are making up more and more of the new cars sold across the U.S. As Forbes explains:
Kelley Blue Book reports that 330,463 EVs were sold in the U.S. during the second quarter of the year, which is an 11.3% boost over the same period in 2023, and is 23% better than during the first quarter. They comprised 8% of all new-vehicle sales on the quarter, which surpasses the previous record of 7.2% set a year earlier.
And this flies in the face of Tesla sales, once the bellwether measure measurement of the segment’s health, slipping by 6.3% in the second quarter, year over year. KBB data shows Tesla now accounting for 49.7% of all EV sales in the U.S., which is down from a full 75% in 2022.
“EV sales exceeded expectations during a record-breaking quarter. Increased competition is leading to continued price pressure, gradually boosting EV adoption,” according to Cox Automotive’s Industry Insights Director Stephanie Valdez Streaty. “Automakers that deliver the right product at the right price and offer an excellent consumer experience will lead the way in EV adoption.”
When it comes to the best selling models out there, the Tesla Model Y still tops that list in spite of slowing sales seen by the brand. The Model Y sold more than double the number of units in Q2 as the second-best selling EV, the Tesla Model 3, and the third-best-seller was the Ford Mustang Mach E.
Forbes predicts that the gains will continue for the EV sector going forward, as tax breaks announced as part of the Inflation Reduction Act draw in new buyers, and more competitive pricing takes hold as an increased number of manufacturers offer EVs.
3rd Gear: Genesis Rushes To Join Hybrid Party
While electric car sales in America might be doing alright, that isn’t enough to stop automakers from looking towards alternative power sources — especially after Toyota posted incredible growth from its hybrid models in the past year. As such, companies like GM and Ford have renewed their interest in hybrid cars in recent months, and now Genesis sounds like it’s following suit.
The Korean automaker is reportedly rushing to offer a lineup of hybrid models as part of its range, while maintaining its focus on EVs and ambitions to one day offer a fully electric lineup of models, reports Top Gear:
“Five years back we anticipated that the EV era would arrive very quickly, and we really wanted to be a leader and a disruptor in the EV space,” said Genesis boss Mike Song at the Goodwood Festival of Speed. “Electrification is still our vision. We will have 100 per cent electrified vehicles, but the market and the customers now want hybrid more than EV, so we really want to bring Genesis hybrid into the market as soon as possible.
“We will apply it to as many models as possible.”
Yep, that’s concrete confirmation of a whole new range of Genesis powertrains incoming. Previously Hyundai’s luxury brand had committed to only launching all-electric cars from 2025, but low appetite for full EVs seems to have put that plan on hold.
As it stands, the Genesis range is currently powered by either a shiny new electric powertrain or an, in Top Gear’s terms, “fairly old internal combustion engine.” The new hybrid powertrains would therefore need to be developed in record time in either a plug-in hybrid form or a full hybrid offering. Thankfully, across the office floor at Hyundai, there are a raft of hybrid powertrains to choose from, which could be altered to meet Genesis’ needs.
4th Gear: CDK Cyberattack Could Cost Industry $1 Billion
Remember last month when a computer outage meant that basically nobody could buy cars in America? Well now a new study has calculated the cost the cyberattack on computer supplier CDK Global could have had on the automotive industry.
A cyberattack on CDK Global left dealerships across America with no access to their computer systems last month, and now the Detroit Free Press reports that the loss in sales from the outage could have cost dealers more than a billion dollars:
A cyberattack on Chicago-based dealership software provider CDK Global that began June 19 forced CDK to shut down most of its systems across the country for its dealership customers until July 5. It left about half of the nation’s car dealerships struggling to operate, forcing some to return to the days of pen-and-paper. According to Bloomberg, the group that orchestrated the attack demanded tens of millions of dollars in ransom to end it.
The result of the attack led J.D. Power and GlobalData to forecast late last month that U.S. retail sales in June across all automakers will be about 5.4% lower than they were in June 2023.
Based on June sales results, Anderson Economic Group on Monday issued a revised estimate to its June 28 estimate, which was a prediction that dealers would experience $944 million in losses. The group now estimates that total direct losses to car dealers in the three calendar weeks of the cyberattack actually reached $1.02 billion.
Some of the sales lost during the period will be made up in the weeks following the attack, when people may have pushed purchases back to while systems got back online. However, the Free Press warns that this may not be the case for every sale lost as a result of the outage. Other customers will instead “postpone indefinitely” their new car purchases, or could go to another dealer that wasn’t hit by the cyberattack. This, the site reports, could be as a result of damage to the reputation of dealerships affected by the cyberattack.