The cost parity between EVs and gas-powered cars isn't yet net even. It's getting closer, though, and if you consider the lifetime of maintenance, perhaps you can make an argument that it's getting close. But at least the industry average transaction price is tracking closer to that of its ICE-powered counterparts—and now even less than Tesla for the first time in over a year.
Welcome to Critical Materials, your daily roundup for all things EV and automotive tech. Today, we're chatting about the average price of EVs, Tesla's not-so-great quarter, and how a union is dealing with job automation. Let's jump in.
30%: Average EV Price Dips Below Tesla For The First Time Since February 2023
For the first time since early 2023, the average cost of a new EV across all brands dipped below Tesla.
Cox Automotive routinely outlines the Average Transaction Prices (ATP) of new vehicles. For May, Cox puts the ATP of a new EV at $56,648. Historically, this has been higher than gas-powered cars (which still remains the case), but Tesla has had a long-standing price advantage over other automakers that is reflected in Cox's monthly breakdown of industry-wide ATPs. But for the first time since last February, the average cost of a new non-Tesla fell below the electric automaker's average sale price of $57,369.
Now, Tesla's ATP is 3.1% higher than last month, and 1.5% higher year-over-year—and that's despite a staggering 19.5% drop in ATP for 2023. According to industry experts, Tesla's shiny new Cybertruck is to blame.
From Cox:
Tesla prices, which bottomed out in late 2023, are estimated to have increased by 3.1% month over month to $57,369 in May. Prices were higher year over year by 1.5%. Since January, when Tesla ATPs stood at $51,892, the EV maker’s average transaction price has increased by more than 10%, lifted in some part by growing Cybertruck sales – an estimated 3,000 were sold in May. Average transaction price: $108,667.
Another factor in the fall of the industry-wide ATP is the larger pool of vehicles to choose from, according to Automotive News. Not only do consumers have more options, but automakers are able to throw more incentives at EVs to make them more attractive to buyers. In fact, the average discount on an EV was 12.4%, or 6% higher than the industry average.
It's worth noting that the average transaction price for May 2024 is $48,389. This means that the ATP of EVs was 17% more expensive than vehicles equipped with non-EV powertrains. While that may seem like a lot of deviance from cost parity, the EV premium has shrunken from 21% year-over-year.
60%: Tesla's Q2 Wasn't Great. Investors Don't Care.
Tesla released its production and delivery numbers for the second quarter of 2024 today, revealing that the automaker delivered 443,956 vehicles. Surprisingly, the automaker beat some analysts' expectations, albeit not much at only 1.4% over the expected 438,019 units.
Tesla warned that 2024 would be a bad year, and analysts echoed the sentiment. Dan Levy, an analyst at Barclays, anticipated Tesla to have its largest-ever drop in Q2 at 11% and Cox predicted the automaker's sales would falter by a staggering 15.3%. Fortunately, the quarter wasn't nearly as bad as expected.
Investors saw that as a positive. Within the early hours of trading, Tesla's stock rallied nearly 10%—something much needed after it became one of the worst performers on the S&P 500 this year by losing a quarter of its value.
Despite the positive news, this was still a rough quarter for Tesla compared to its surge in growth over the last few years. Overall sales figures signal a second consecutive drop in year-over-year deliveries. Compared to the second quarter of 2023, the number of deliveries decreased by 22,184 units (or 4.8%), even with a refreshed Tesla Model 3 and Model 3 Performance to entice buyers.
Meanwhile, the remainder of the auto industry is beginning to encroach on Tesla's territory. For example, Kia's EV sales alone increased 125% year-over-year, and EVs now represent 8.7% of the brand's total volume in the U.S. And to make matters worse, as noted above, the industry-wide Average Transaction Price is now below Tesla's—formerly the king of affordable EVs. It seems that with more competition, less competitive pricing, and stale models, Tesla has a bit of a fight ahead of it.
So what exactly do investors see in Tesla? It could be the company's approach to autonomy. CEO Elon Musk is no stranger to vocalizing how he believes diversifying into humanoid robots, artificial intelligence, and robotaxis is the company's future, not prioritizing cheap EVs like the rest of the auto trade.
And he's also adamant that Tesla isn't a car company, but a tech company that happens to build cars. Maybe auto sales are just a bump in temporary stock price for Tesla as part of the bigger picture.
90%: Here's How One Global Auto Union Is Handling EV-Related Job Losses
Automakers often tout EVs as having a lower total cost of ownership thanks to being less mechanically complex. Take Tesla, for example. In 2016, it became clear that with only 17 moving parts in its drivetrain, the car was far less of a maintenance item than an internal combustion-powered car with an average of 200 or more moving parts. But what might that mean sacrificing in the supply chain?
The answer is jobs. Congress flagged that possibility in 2019 with an early warning that the lack of complexity in EVs could come at a significant cost to blue-collar workers on the assembly line of vehicles, all the way down to the supply chain that builds small parts for vehicles. Now that EV adoption is beginning to take hold, the reality is beginning to crop up for domestic and global labor unions like the UAW and Korean Metal Workers' Union.
The Korean Metal Workers' Union represents around 70,000 employees at Hyundai and Kia. Like the UAW, the KMWU works to improve working conditions, solve labor disputes, and negotiate new contracts—something the union is currently in a disagreement with Hyundai over and is threatening to strike.
One of the items that KMWU is looking to negotiate is Hyundai's future hiring plans. The union recently visited Hyundai's new heavily automated EV plant in Singapore and had an eye-opening experience: the robots are coming for jobs currently performed by human hands.
Here's what some of the union workers shared with Bloomberg:
The visit to Hyundai’s plant in Singapore made us realize that it will be hard to keep our jobs. So we’re trying to demand that companies create new jobs related to green industries. It’s something we really think about deeply and study what kind of demands will really make a difference. We need to confess, we don’t have a magic bullet.
Dealing with this only at the factory level would be insufficient to address what’s going on in society. If we limit our sights to inside the factory walls, it looks like jobs are being reduced. On the other hand, there are also workers who are going to be building robots.
The union says that workers in the plant are also aging out. Fewer and fewer younger individuals have joined the metal worker's union—Gen Z and millennials account for "a very small portion" of workers and, according to the union, typically advocate for their interests rather than widespread labor disputes.
While this might seem like a bad thing for the number of employees in the union, could the lack of younger workers applying spell a safety net for workers as more jobs are automated and older workers retire?
Hyundai isn't the only automaker that is aiming to reduce the number of fleshy workers in their factories. Elon Musk says that Tesla plans to have 1,000 of its Optimus humanoid robots performing tasks in its factories by the end of next year.
100%: How Do You Feel About Automation?
It's clear why manufacturers want to automate. On the flipside, automating a task could mean losing a human job, which is a blow to the workforce itself.
So this is where I ask you, dear reader: How do you feel about the automation of manufacturing jobs? Is it a good thing? A risky change? Or a natural progression of society? Let me know in the comments.
