EV Market Share

[renim]

'Existing models will continue to be sold until they no longer meet increasingly strict emissions regulations, when they will be withdrawn. European emissions regulations, which see brands fined if they fail to meet targets, have reportedly been the final straw for the Japanese company.

Mitsubishi currently offers a number of models in the UK. The line-up mostly comprises SUVs, including the ASX, Eclipse Cross and Outlander (which is offered as a plug-in hybrid), as well as the Mirage supermini. The announcement means that neither the new-generation Outlander PHEV nor the Eclipse Cross PHEV will come to the UK.'

Mitsubishi ends new models for the UK/

Even this year, the aging outlander phev sells pretty good in EU, a top 5 plugin vehicle

 

[jhm]

'Existing models will continue to be sold until they no longer meet increasingly strict emissions regulations, when they will be withdrawn. European emissions regulations, which see brands fined if they fail to meet targets, have reportedly been the final straw for the Japanese company.

Mitsubishi currently offers a number of models in the UK. The line-up mostly comprises SUVs, including the ASX, Eclipse Cross and Outlander (which is offered as a plug-in hybrid), as well as the Mirage supermini. The announcement means that neither the new-generation Outlander PHEV nor the Eclipse Cross PHEV will come to the UK.'

Mitsubishi ends new models for the UK/

View attachment 573271

Even this year, the aging outlander phev sells pretty good in EU, a top 5 plugin vehicle

Wow, that's pretty shocking that some PHEVs are not up to these emissions standards.

 

[RobStark]

I think part of the problem Toyota has is that Japan is much more hooked on the idea of hydrogen solutions. Japan knows it must import most of its renewable energy. So it is investing in developing hydrogen resources in places like Australia for import. So while I expect the Japanese govt to prop up Toyota, that just may lock them into hydrogen all the more.

India is an interesting opportunity. I hope Tesla can build there soon.

Elon maths says different.

Elon was in Japan a few years ago in a news conference.

He said Japan could go 100% BEVs and generate all electricity Japan needed from solar. He did not even include wind generation.

 

[RobStark]

'Mitsubishi's three-year plan announced on Monday also included a freeze on the introduction of new models in Europe. Sales of the current lineup will continue, '
Mitsubishi to end Pajero production, halt new model launches in Europe

At the European level, the fine was set at €95 for every gram that exceeds the target (95 g/km), to be multiplied by the number of vehicles sold in the EU from January 1st to December 31th each year. In practice, all car makers have specific targets depending on the characteristics of their own fleets. Individual goals are calculated using the average CO2 emissions of their fleets over the period of reference but also some fine-tunings, such as the average mass of their fleets (the heavier the fleet, the higher the CO2 target) and a comparison to the average mass of all carmakers.

What i think we are seeing is the first automaker to capitulate under the EU emissions regulations instead of buying credits. Which is ironic, its Mitsubishi, since for parts of europe, Mitusbishi first electric car iMiEV came to market around (even before) the Tesla Roadster.

Mitsubishi pools with Renault and Nissan in the EU for fleet CO2 emissions regulations.

Nissan has a controlling ownership in Mitsubishi and is part of the Renault-Nissan-Mitsubishi Alliance.

 

[renim]

Wow, that's pretty shocking that some PHEVs are not up to these emissions standards.

The phevs are up to the emission standards, for instance the new old phev is 44gm/km. (Ie less than half the target)


Mitsubishi Outlander PHEV Review - GreenCarGuide.co.uk

The problem will be homologation costs, which currently are shared with ICE brethren, remove the ICE brothers and Mitsubishi PHEV and BEV are not profitable enough to cover those sunk costs.

In extreme, homogolation to bring the imiev to america was $50million. They never made it back, and so they could not afford to bring their PHEV to america in a timely manner, i think it was perhaps 5 years later in USA than EU.

 

[EinSV]

An interesting question whether the investments Tesla is making into new models, battery supply and factory expansion represents a third or more of the entire BEV industry. I'm saying this can be quantified by dollar, because Tesla is moving toward very efficient capital use, but in terms of actual productive capacity. So if Tesla is investing more than a third of the industry, Tesla should be able to grab a third of the BEV market for a while. My impression is that its is expanding faster than the industry as a whole, but maybe other folks have some data to correct my faulty impressions.

For the next 18 months we have decent visibility into Tesla's plans for production coming online -- Model Y at GF Shanghai and Fremont, Model Y then 3 at GF Berlin, Model Y then Cybertruck (and possibly Model 3) at GF Austin. Semi at GF Austin. Roadster. After that we only have hints about new products and Gigafactories, and a very wide 50-100% target annual growth range, which is not much to go on.

You might be able to get a rough estimate of legacy's plans by backing out estimates from the battery pipeline or piecing together estimates from different manufacturers but ultimately the test will be how many cars can they sell. Whatever plans Chevy had for the Bolt were out the window when it had to compete with the Model 3 ("no battle plan survives contact with the enemy").

Tesla is already way ahead and Elon has made it abundantly clear that he intends to continue to drive down pricing while growing extremely fast. Tesla can build new factories in 12-18 months, and obviously has plans to bring massive battery capacity online as fast as possible.

While VW and a few others will certainly ramp up EV production in the next few years, I don't think the lumbering legacy oems can pivot fast enough to keep up with Tesla, especially since they are all still trying to protect their precious legacy ICE businesses. Perhaps if they spin off their EV businesses (as Mary Barra recently hinted at) and let their ICE businesses die on the vine they'll have a shot but by the time they pivot Tesla will be so far ahead it will be extremely difficult to catch up.

China is another story. I expect they will take manufacturing lessons from Tesla to heart and start rapidly updating "the machine that builds the machine." I don't see why they can't build factories as fast as Tesla did in Shanghai, and improve the quality of their products along the way.

 

[EinSV]

Thus my conclusion is similar to yours - competition gets with the program or Tesla gets to 50% market share (significantly more ridiculous than the ridiculous 28% market share).

I'm not sure where Tesla will end up -- too many variables -- but even maintaining 20% market share by unit over the long run would be a remarkable achievement, especially if it's primarily toward the top end of the market. That would roughly align the statement Elon has made a couple times (most recently in the third part of the Automotive News Interview) that his goal is for Tesla to ultimately make 20,000,000 vehicles per year. DAILY DRIVE PODCAST: August 4, 2020 | One-on-one with Elon Musk (Part 3): Autopilot criticism is 'idiotic' (discussion re 20,000,000 target starts at about 11:20).

 

[jhm]

Elon maths says different.

Elon was in Japan a few years ago in a news conference.

He said Japan could go 100% BEVs and generate all electricity Japan needed from solar. He did not even include wind generation.

Enough to power BEVs, sure. But the question is how much this limits their industrial base. Replacing industrial heat with electricity 24/7 is a huge undertaking. So if Japan ultimately finds itself importing hydrogen to keep industry running, it's not a huge step to see some of that supply go into ground transport.

On a global basis in deep decarbonization, I envision at least a third of electricity generated will be consumed by hydrogen generation. This will create a relative surplus in some areas where renewables are cheapest. It only makes sense that the supplus will be traded leading to imports where renewables are more expensive. So it become economically more efficient that some countries may be net importers of hydrogen.

So in the end it is not a question of whether Japan has enough surface area for solar, but whether it will be more economical for Japan to be a net importer or net exporter of hydrogen.

Of course, all this begs the question of where heavy industry should be located. Why should Australia export hydrogen to run factories in Japan when many of those factories could be located in Australia? But that's another question for another day.

 

[Doggydogworld]

Mitsubishi pools with Renault and Nissan in the EU for fleet CO2 emissions regulations.

Nissan has a controlling ownership in Mitsubishi and is part of the Renault-Nissan-Mitsubishi Alliance.

I don't think they pool. They're listed separately on ICCT and other web sites that track progress. It would be kind of dumb for Mitsubishi to pool as they would lose their lenient sub-300k niche producer treatment.

I don't think this decision has anything to do with the CO2 regs.

You might be able to get a rough estimate of legacy's plans by backing out estimates from the battery pipeline or piecing together estimates from different manufacturers but ultimately the test will be how many cars can they sell.

It's easier to just estimate how many they need to sell to meet the EU and Chinese mandates. They have a strong incentive to sell that many and a negative incentive to sell any more.

The European mandate makes it much more difficult for Tesla to compete.

 

[jhm]

For the next 18 months we have decent visibility into Tesla's plans for production coming online -- Model Y at GF Shanghai and Fremont, Model Y then 3 at GF Berlin, Model Y then Cybertruck (and possibly Model 3) at GF Austin. Semi at GF Austin. Roadster. After that we only have hints about new products and Gigafactories, and a very wide 50-100% target annual growth range, which is not much to go on.

You might be able to get a rough estimate of legacy's plans by backing out estimates from the battery pipeline or piecing together estimates from different manufacturers but ultimately the test will be how many cars can they sell. Whatever plans Chevy had for the Bolt were out the window when it had to compete with the Model 3 ("no battle plan survives contact with the enemy").

Tesla is already way ahead and Elon has made it abundantly clear that he intends to continue to drive down pricing while growing extremely fast. Tesla can build new factories in 12-18 months, and obviously has plans to bring massive battery capacity online as fast as possible.

While VW and a few others will certainly ramp up EV production in the next few years, I don't think the lumbering legacy oems can pivot fast enough to keep up with Tesla, especially since they are all still trying to protect their precious legacy ICE businesses. Perhaps if they spin off their EV businesses (as Mary Barra recently hinted at) and let their ICE businesses die on the vine they'll have a shot but by the time they pivot Tesla will be so far ahead it will be extremely difficult to catch up.

China is another story. I expect they will take manufacturing lessons from Tesla to heart and start rapidly updating "the machine that builds the machine." I don't see why they can't build factories as fast as Tesla did in Shanghai, and improve the quality of their products along the way.

Thanks. This helps. You raise an interesting point about the risk of ramping up when you are unsure how well a new model will compete for consumer dollars. Tesla has enormous confidence in this area, and so it is able ramp aggressively on three continents. GM? Not so much.

I guess this illustrates another we in which BEV market share is meaningful. Any OEM that is gaining BEV market share is also gaining in confidence about ramping up successful models. BEV market share derisks expansion investments. This can have cost of capital implications. For example, if Tesla and GM were each to seek $5B in capital to fund expansion of BEVs, arguably Tesla could acquire that capital at lower cost than GM. This depends on alot of factors besides just BEV market share, but Tesla has demonstrated that is is more capable at expanding BEV market share than GM. So this does weigh in favor of a lower cost of capital for Tesla.

In many respects the explosion of Tesla's market cap is recognition that investors see a much lower cost of captial for Tesla, both debt and equity.

 

[jhm]

I'm not sure where Tesla will end up -- too many variables -- but even maintaining 20% market share by unit over the long run would be a remarkable achievement, especially if it's primarily toward the top end of the market. That would roughly align the statement Elon has made a couple times (most recently in the third part of the Automotive News Interview) that his goal is for Tesla to ultimately make 20,000,000 vehicles per year. DAILY DRIVE PODCAST: August 4, 2020 | One-on-one with Elon Musk (Part 3): Autopilot criticism is 'idiotic' (discussion re 20,000,000 target starts at about 11:20).

We should ask, if Tesla produces 20M vehicles in 2030, what share of the auto market is this?

It's easy for many of us to think that the size of the market could be about 100M in 2030, i.e. Tesla has 20% share. This is an extrapolation from current size with some modest growth.

But how about 80M, wherein Tesla has 25% share. This implies a plateauing or slight decline in the auto market. How is this possible? Maybe a massive ICE Osborne effect inhibits auto sales until EVs hit 100%.

To get to 30% share, we would envision a market of 60M. This is a substantial fall off in demand for ICE vehicles, bigger than an Osborne effect. You could get to this scenario if robotaxis on million mile BEVs are able to kill demand for 3 or 4 ICE vehicles with 1 robotaxi.

So there are three scenarios, BAU modest auto growth, EV Osbornes ICE holds back auto growth. Robotaxi Kills the Family Car.

To be honest, I see Tesla building effectively more than 20M vehicles in 2030, largely because the rest of the auto industry will be too slow to ramp up enough BEVs to satify the market. If BEV Osborning of ICE is slowing total auto sales, investors will be throwing massive capital at Tesla (and any other BEV maker) to try to keep up with demand. The Robotaxi Killer scenario is quite different. There much of the value comes in operating the robotaxi fleet. So total revenue generated per vehicle goes way up for Tesla, as the market size in revenue (inclusive of operating autonomous vehicles) grows substantially bigger even as unit sales decline. So in that case, you do better to measure market share by revenue than by unit sales.

 

[jhm]

The European mandate makes it much more difficult for Tesla to compete.

Please explain your though process here. Tesla can pool with any of these. And if it were such an advantage to have ICE vehicles to sell in Europe, Tesla could buy out an ICE maker to get the "full value" of the incentive scheme. Moreover, we are starting to see models of vehicles to be withdrawn from the EU market, which suggest potential for total auto supply to be in deficit of demand, a huge opportunity for a BEV maker not burdened by the regulatory scheme. So it is not obvious to me how the European mandate makes it hard for Tesla to compete. Perhaps I am overlooking something.

 

[EinSV]

To be honest, I see Tesla building effectively more than 20M vehicles in 2030, largely because the rest of the auto industry will be too slow to ramp up enough BEVs to satify the market. If BEV Osborning of ICE is slowing total auto sales, investors will be throwing massive capital at Tesla (and any other BEV maker) to try to keep up with demand.

I agree with you. I think there is a decent chance the 20,000,000 number is a baseline -- like Tesla's original production estimate of 20,000 Model S's, just with a few extra zeros.

I also think there is a decent chance that with rapidly falling EV costs, the accelerated depreciation that implies for ICE and mounting problems from climate change that encourage faster sunsetting of ICE vehicles, there will be a period where demand for EVs spikes and exceeds long-term "stable" demand, whatever that turns out to be. I believe Elon mentioned something along these lines at a high level at the shareholder meeting or one of the calls last year. This would be a boon for EV makers and also serve Tesla's mission.

The Robotaxi Killer scenario is quite different. There much of the value comes in operating the robotaxi fleet. So total revenue generated per vehicle goes way up for Tesla, as the market size in revenue (inclusive of operating autonomous vehicles) grows substantially bigger even as unit sales decline. So in that case, you do better to measure market share by revenue than by unit sales.

If/when Tesla gets FSD to work and the Tesla Network up and running with Robotaxis it might make sense for them to go into copy/paste mode and just crank out as many production lines as possible for a couple years, even if it means they are not innovating production as fast or being as efficient as they otherwise would want. The margins on self-driving cars and first mover advantage/network effects should be so substantial that some inefficiencies in producing cars probably wouldn't matter. At that point, presumably the limiting factor will be battery supply, and even for that it might be worth Tesla's while to outbid other oems for supply to the extent it's not already locked up. Automated vehicles will likely log the most miles, generate the most revenue and therefore be the highest and best use for vehicle batteries.

 

[Doggydogworld]

Please explain your though process here. Tesla can pool with any of these. And if it were such an advantage to have ICE vehicles to sell in Europe, Tesla could buy out an ICE maker to get the "full value" of the incentive scheme. Moreover, we are starting to see models of vehicles to be withdrawn from the EU market, which suggest potential for total auto supply to be in deficit of demand, a huge opportunity for a BEV maker not burdened by the regulatory scheme. So it is not obvious to me how the European mandate makes it hard for Tesla to compete. Perhaps I am overlooking something.

Without mandates a carmaker can't offset EV losses by raising ICE prices. They'd lose ICE share and make losses even worse.
With mandates everyone raises ICE prices, so nobody loses share.

Of course the mandate must be "big" enough that carmakers can't just permanently ignore it and buy indulgences. Or rip the ICE out of a few econoboxes and throw some batteries in the trunk. The mandate must justify a full production program, as Europe's does.

The race in Europe is to develop EVs that lose the least amount of money. That way you won't have to raise your ICE prices as much, and you can actually gain ICE share. VW has fully embraced this approach. FCA got caught napping and is now paying Tesla money that should be going toward EV development. They will lose money, and lose ICE market share. That's why they had to merge with PSA.

Of course VW's enthusiasm (and lobbying) is fueled by that fact that as the biggest carmaker in Europe, a high volume EV development program is a relatively smaller fraction of their annual sales.

Anyway, in Europe Tesla will now face much better EV designs that OEMs can afford to sell cheaply. That's a complete sea change, and the opposite of the US.

BTW, Tesla's deal with FCA is for multiple years. They aren't free to just go pool with others.

 

[jhm]

Without mandates a carmaker can't offset EV losses by raising ICE prices. They'd lose ICE share and make losses even worse.
With mandates everyone raises ICE prices, so nobody loses share.

Of course the mandate must be "big" enough that carmakers can't just permanently ignore it and buy indulgences. Or rip the ICE out of a few econoboxes and throw some batteries in the trunk. The mandate must justify a full production program, as Europe's does.

The race in Europe is to develop EVs that lose the least amount of money. That way you won't have to raise your ICE prices as much, and you can actually gain ICE share. VW has fully embraced this approach. FCA got caught napping and is now paying Tesla money that should be going toward EV development. They will lose money, and lose ICE market share. That's why they had to merge with PSA.

Of course VW's enthusiasm (and lobbying) is fueled by that fact that as the biggest carmaker in Europe, a high volume EV development program is a relatively smaller fraction of their annual sales.

Anyway, in Europe Tesla will now face much better EV designs that OEMs can afford to sell cheaply. That's a complete sea change, and the opposite of the US.

BTW, Tesla's deal with FCA is for multiple years. They aren't free to just go pool with others.

Hmm, the cost of compliance raises the cost of the average car in the EU. There is a cross-subsidization from ICE profits to EVs, but this only lowers the net cost of an EV (netting out the cross-subsidy) to the extent that it raises the cost in ICE. But when you average this out, competitor cars are more expensive and less profitable because of the mandate. Tesla does not incur this cost to its average vehicle. So it is in a relatively better position than competitors. This is also why TeIsla can't just acquire FSA or another OEM and come out with a stronger overall position.

So the crux of whether you see this as a net good thing for Tesla or net bad seems to come down to what specific cars you think Tesla is competing with. If you view the competition as other BEVs, then you point to the cross-subsidization and say that Tesla not getting that side of the cross-subsidy. But if you think that Tesla is primarily competing with ICE vehicles, then you point to the cross-subsidization and say that Tesla is not on the paying side of that cross-subsidization. So whether Tesla has an advantage or not depends on how broadly you think Tesla is competing, the whole auto market or just some limited segment of EV buyers.

My own perspective is that Tesla is mostly trying to seduce consumers away from ICE vehicles. Indeed the segment of consumers that already have some kind of EV is too small to support Tesla's growth ambitions. They must conquest ICE sales to grow. Their competitors are in the opposite situation. They must minimize the number and value of consumers that they migrate from ICE to EV. They must sacrifice ICE sales to meet their compliance numbers. This has always been the problem with the compliance game. So legacy OEMs are trying to make EV sales to the lowest value segments that already drive compliance cars, while Tesla is going after much more profitable segments which typically drive higher end ICE vehicles. So from my perspective, I'm really not so worried about any cross-subsidization from profitable ICE to less profitable EV putting Tesla at a disadvantage.

Thanks for sharing your perspective. I think it is helpful to see more clearly where the issues are.

 

[RobStark]

Enough to power BEVs, sure.

Elon didn't limit solar generation to powering EVs.

He said solar could power all electricity needs in Japan.

 

[RobStark]

I don't think they pool. They're listed separately on ICCT and other web sites that track progress. It would be kind of dumb for Mitsubishi to pool as they would lose their lenient sub-300k niche producer treatment.

I don't think this decision has anything to do with the CO2 regs.

It's easier to just estimate how many they need to sell to meet the EU and Chinese mandates. They have a strong incentive to sell that many and a negative incentive to sell any more.

The European mandate makes it much more difficult for Tesla to compete.

At the beginning of year I saw this is several papers. Only now see in Autocar.

Maybe they have agreed to pool but have not done so already.

Renault, Nissan and Mitsubishi agree new Alliance deal | Autocar

 

[renim]

..... VW has fully embraced this approach. FCA got caught napping and is now paying Tesla money that should be going toward EV development. They will lose money, and lose ICE market share. That's why they had to merge with PSA.

Of course VW's enthusiasm (and lobbying) is fueled by that fact that as the biggest carmaker in Europe......

VW is probably
A)too big to fail.
B)more profitable than all its non German neighbours combined.

For all the pain diesel-gate caused VW the market share / profit share gain in Europe would've made all worthwhile....

(GM is gone from Europe, PSA had to recapitalize with Chinese, Renault is haemorrhaging and Fiat is paying for Tesla's next EV factory instead of building their own.)

 

[Doggydogworld]

Hmm, the cost of compliance raises the cost of the average car in the EU. There is a cross-subsidization from ICE profits to EVs, but this only lowers the net cost of an EV (netting out the cross-subsidy) to the extent that it raises the cost in ICE. But when you average this out, competitor cars are more expensive and less profitable because of the mandate. Tesla does not incur this cost to its average vehicle. So it is in a relatively better position than competitors. This is also why TeIsla can't just acquire FSA or another OEM and come out with a stronger overall position.

So the crux of whether you see this as a net good thing for Tesla or net bad seems to come down to what specific cars you think Tesla is competing with. If you view the competition as other BEVs, then you point to the cross-subsidization and say that Tesla not getting that side of the cross-subsidy. But if you think that Tesla is primarily competing with ICE vehicles, then you point to the cross-subsidization and say that Tesla is not on the paying side of that cross-subsidization. So whether Tesla has an advantage or not depends on how broadly you think Tesla is competing, the whole auto market or just some limited segment of EV buyers.

My own perspective is that Tesla is mostly trying to seduce consumers away from ICE vehicles. Indeed the segment of consumers that already have some kind of EV is too small to support Tesla's growth ambitions. They must conquest ICE sales to grow. Their competitors are in the opposite situation. They must minimize the number and value of consumers that they migrate from ICE to EV. They must sacrifice ICE sales to meet their compliance numbers. This has always been the problem with the compliance game. So legacy OEMs are trying to make EV sales to the lowest value segments that already drive compliance cars, while Tesla is going after much more profitable segments which typically drive higher end ICE vehicles. So from my perspective, I'm really not so worried about any cross-subsidization from profitable ICE to less profitable EV putting Tesla at a disadvantage.

Thanks for sharing your perspective. I think it is helpful to see more clearly where the issues are.

Here's some example numbers. Say a nice 250 mile BEV nominally costs $40k and a similar ICE that's a bit slower but better on trips is $35k. If mandates force 10% BEV, but 10% of legacy customers won't pay $5k extra they can price both at 35.5k and make the same profit.

Will the $40k Tesla be marginally more competitive against the 35.5k ICE than the old 35k ones? Yes. But now it has to compete against a flood of 35.5k BEVs that didn't exist before. The same logic applies at other price points.

Helping Tesla are subsidy programs in the larger European markets. Subsidies help Tesla equally and they reduce or even eliminate the need for competitors to discount. They also push volume toward cheap leasing deals (e.g. €99/month) on low end EVs which help meet quotas while not directly competing against Tesla.

 

[petit_bateau]

If the capital the non-TSLA makers invest in BEV capacity is not as well utilised at TSLA-capital is, then TSLA could still invest less than 30% of the capital but take more than 30% of the BEV market share. Non-TSLA utilisation % could be adversely affected by either 'capital-side' issues (e.g. poor project management, poor designs, etc), or by 'operational-side' reasons (e.g. poor manufacturing efficiencies, low sales, etc).

By the way, well done to all you folks at TMC. For some reason I do not seem able to 'rec/like/love' anybody's posts, but there are some good quality thinkers here.