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Is the Push for Electric Vehicles Outpacing Market Readiness?

  • Automotive MMI reveals a sideways movement, highlighting concerns about China's economy and its influence on the global steel demand, particularly for hot-dipped galvanized steel.
  • The electric vehicle (EV) sector faces challenges with consumer demand and infrastructure, leading major manufacturers like Ford and GM to adjust their production plans.
  • Rising labor costs from new UAW contracts could significantly impact the competitiveness and pricing strategies of Detroit's major automakers, potentially affecting the overall U.S. automotive market.

Via Metal Miner 

All components of the Automotive MMI moved sideways or down month-on-month. Moreover, January saw prices flatten out across the steel market, causing hot-dipped galvanized steel prices to trend close to support zones. Meanwhile, China’s wavering economy continues to prove a concern for global markets because the country is such a large steel demand driver. Many fear that if HDG demand were to drop too much within China, it could impact global demand overall. Therefore, HDG buyers for vehicle manufacturers should to keep a close eye on China’s economy for the foreseeable future.

Overall, the Automotive MMI (Monthly Metals Index) moved sideways, dropping by 0.87%

EV Push: Too Fast?

A recent Automotive News article touched on President Biden’s approach to advancing electric vehicles and whether or not the plan was pushing the industry forward too quickly. The article addresses numerous concerns involving EVs, such as lower-than-anticipated consumer demand, lack of infrastructure to charge vehicles on the go, and EVs remaining unsold on dealer lots. The Biden Administration implemented its EV plan in April of 2023, establishing consumer tax credits for purchasing electric vehicles. However, the U.S. has yet to see a significant rise in consumer EV sales.

Overall, EV sales projections for 2023 met the actual number of EV vehicles sold. However, while last year’s projections met expectations, individual manufacturers and deals still want to lower EV production due to lower-than-anticipated sales.

Ford and GM Adjusting Electric Vehicle Outputs, Potentially Impacting Steel Market

Several large vehicle producers, both domestically and globally, recently chose to adjust EV output levels. According to a statement from General Motors (GM), the company plans to delay the production of several electric vehicle models, providing several different reasons why. Although the company’s Q3 earnings surpassed forecasts, the EV industry continues to prove more difficult than expected. The statement says that the goal of the delay is to improve the vehicles’ efficiency and lower production costs, which will increase future profits. For now, the high cost of vehicle production and end-user purchases continues to plague the EV industry.

Meanwhile, Ford also modified its plans to produce electric vehicles due to lower-than-expected sales. For instance, Ford recently halved its projected output of electric F-150s because demand hasn’t proved as strong as anticipated. While the scale-back doesn’t necessarily reflect the outlook for EV sales in 2024, it does shed light on issues the industry still faces, namely high expenses. Moreover, such cutbacks could have wider implications for the broader steel market.

Will Higher Labor Costs Impact Detroit’s Big 3?

The three major automakers in Detroit will likely see increased labor expenses resulting from the new UAW contracts. Analysts predict that each company’s annual labor expenses could surpass $1 billion due to these increased costs. Meanwhile, General Motors anticipates an average cost rise of $500 per car in 2024, while Ford forecasts that the new deal will boost labor expenses by $850 to $900 per vehicle.

It seems hard to predict what impact these higher labor costs will have on the overall U.S. automotive market in 2024. One significant worry is that the manufacturers would try to offset these cost increases by charging consumers more for vehicles. However, if the affordability of cars sees an impact from the anticipated price increases, it could restrict the long-term equilibrium level of sales and manufacturing.

The increased labor expenses could also impact the competitiveness of Detroit’s Big 3 in the U.S. market. Furthermore, certain analysts in the sector remain concerned that the corporations’ heightened expenses will potentially harm them in the race for market share, particularly given the intensifying competition from rival manufacturers.


By Jennifer Kary

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Leave a comment
  • Mamdouh Salameh on February 07 2024 said:
    Despite media hype, huge government subsidies, unsubstantiated claims about the success of EVs and a projection by the IEA of peak oil demand by 2030 based on EVs reducing global oil demand very significantly , the number of EVs on the roads are 26 million compared with 1.4 billion ICEs,

    EVs will never prevail over ICESs by 2030 or 2100 or ever. Therefore, the IEA's projection about peak oil demand by 2030 has no leg to stand on it.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert
  • john tucker on February 08 2024 said:
    EV's are a step backwards.
    In 1900, almost all the taxis in NYC were EV's. But a few years later they were all replaced with gasoline powered cars, because they are more efficient and cheaper.

    in 2020, a lot of young dreamers bought EV's. and learned the hard way what had been learned 120 years earlier. The market is now saturated, the prices of new ones are plummeting, the prices of used ones are plummeting, the insurance costs are skyrocketing, the taxes are skyrocketing. Ford Motors recently reported losing $60,000 for each one sold. The news reports about the battery fires are terrifying.

    In another few years they will be gone, again.

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