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An EV Reality Check

December 6, 2023

View session recording below.

During the 2023 MichAuto Summit, John McElroy, Host of Autoline, and Joseph McCabe, President and Chief Executive Officer of AutoForecast Solutions LLC, took the stage to discuss Michigan’s electric vehicle (EV) challenges and future—providing Summit attendees with a reality check on the industry. The discussion began with a keynote from speakers and ended with a lightning round of questions.

A Race to Manufacture

McElroy began the conversation with a keynote on his stance on the EV industry, sharing a blurb from his 2018 op-ed on a bleak outlook on the EV industry and a narrative that EVs are best avoided.

“I wrote that five years ago,” McElroy said. “I don’t think I would change one word today.”

As for where the EV industry is today, EVs have become politicized, and automakers are losing billions of dollars on their electric vehicle programs each year. However, McElroy ended his keynote optimistically by noting that Tesla lost money for over a decade and did not turn the corner until mid-2019. He predicts that Legacy vehicles won’t catch up in the EV market until around 2026.

Tackling Industry Disruptors

Then McCabe took the stage to tell the empirical part of the EV industry story. He began with the four hurdles of EV adoption: cost, range, infrastructure, and raw materials.

From there, McCabe dove into the data and discussed the many disruptors to the industry, including the number of manufacturers in North America doubling before 2030, who will pull away from the legacy players and distract consumers.

According to McCabe’s data, North American EV production is currently at the “bottom of the hockey stick,” and production in the upcoming years will remain steady before a significant increase. But he predicts Tesla will not be the winner of the BEV production leaderboard, with Volkswagen and Stellantis overtaking Tesla by the decade’s end.

“I’m not anti-EV. I’m pro-reality,” McCabe said. “We are moving forward. It’s just going to be really long to get there.”

On Today’s U.S. EV Market

Joseph McCabe

“BEVs are a solution, but not the solution…The shareholder value is the ultimate goal for the manufacturers. The only way to get there is a balanced portfolio.”

John McElroy

“Right now, we are in a trough, like Joe said. There was all of this euphoria, and now we have the hangover from that. Everyone is thinking it’s the end of the world when it comes to EVs, but I’m saying give it a few more years, and this thing is really going to pick up again.”

On the Role of Hybrids in EV Market Transition

John McElroy

“Hybrids are the perfect bridge connector to the EV world. There’s no range anxiety … I think hybrids will start to lose their cache once this next generation of EVs hits in the 2026 timeframe.”

Joseph McCabe

“You got to walk them through the strategy. You want to move someone from ICE to hybrid. Now you [have] convinced them that this electric vehicle thing is real. Now, I’m going to move you from a hybrid to an EV. And the long game, I’m going to move you to a fuel cell…Hybrids are definitely a needed transition story to get into the market.”

On Government Mandates and the Impact on the Consumer

Joseph McCabe

“The only way we are going to make this work is if we throw governmental money at it … My concern is [that] when the government is heavily involved, it is highly politicized, and we can all agree to that. There’s an issue here that we may have a change in leadership, and if one of those elected officials decides to pull access to that funding, we may have a very serious problem in the adoption rate of BEVs.”

John McElroy

“So, people buy a lot of Teslas without government mandates. They look at the car and say that’s for me. That’s what the rest of the industry has to be able to do … It hasn’t just been government mandates. They are not just necessarily costly to build. It’s time for the legacies to catch up to Tesla.”

On the Tesla Influence

John McElory

“[Tesla] went back to first principles. And that’s how they approach everything in the company, no matter what the problem is. They go back to the principles. I think that is the most impactful thing that Elon has done for the auto industry.”

Joseph McCabe

“This is what [Tesla] is allowed to do. They can throw anything at the market and say, ‘hey, it’s going to stick.’ … There’s a lot of innovation baked into [the cybertruck]. I don’t care what this thing looks like. Look at what this thing can do.”

On the Rise of Chinese Powerhouse BYD

Joseph McCabe

“Tesla took the strategy that we are going to tackle North America with very high-end, luxury products with really cool technology. [BYD] hit the market at the same time as Tesla, but they did it with affordability. We’re going to build a business model…They are coming, and nothing is going to stop them from coming to North America.”

John McElroy

“BYD has surpassed [Tesla] in China and will surpass it in the rest of the world. Why? They have a boatload of products at different price points, and they are churning them out even faster than Tesla is able to do so.”

On the EV Market in the Next Five Years

John McElroy

“I think this is the most disruptive time in automotive history since 1903. In fact, I look at 1903 for guidance as to where we are going in the future because there were hundreds of car companies and new technology, and consumers did not know where to go … In five years, I hope the legacies get through. The public is going to warm more and more up to electric vehicles as better electric vehicles come out more and more.”

Joseph McCabe

“Every stakeholder needs to have some skin in this game. We have talked about the supply base and local jurisdiction and the federal jurisdiction and the consumer. They are all part of the solution. I would walk in eyes open, knowing [EVs] are here, and it’s too big of a proposition to fail. Manufacturers have trillions of dollars in it. They will not let this fail. We need to be patient and see how this whole thing plays out.”