WHEN REALITY INTRUDES ON AUTOMAKERS’ EV-FANTASIES: Carmakers Tripped Up by Choppy Present as They Chase an EV Future.
One particular concern among auto investors has grown louder: The strong pricing power that carmakers have enjoyed in the pandemic era is slowly fading. Several auto executives warned that in the second half of the year, they expect the average price paid by customers will edge lower.
“The results of our competitors are not demonstrating that price pressure is going to vanish,” said Carlos Tavares, chief executive of Stellantis, which also makes Ram vehicles.
Car companies for years have made the case that they are ready to become technology companies, with plans to transform cars into battery-powered smartphones on wheels. Those ambitions, coupled with an unprecedented run of profitability fueled by stout pricing, lifted stocks.
Wall Street’s enthusiasm for that vision has faded, as U.S. electric-vehicle demand hasn’t taken off as expected. Now, with signs that pricing is losing steam as the American car buyer grapples with high interest rates, investors are looking for reasons to stick around.
“The overarching feeling for the auto industry is that the good times can’t last,” said Martin French, managing director at auto consulting firm Berylls Strategy Advisors.
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One reason why enthusiasm for electric cars has faded? The election in November: Trump vows to axe Biden’s electric car mandate on ‘day one.’