Introducing the Jeep Wrangler – a vehicle designed to venture beyond the boundaries of civilization. Its advertisements showcase its ability to conquer rugged terrain and overcome obstacles far away from the familiar highways. While EV chargers may be scarce in remote areas, even the iconic Jeep Wrangler recognizes the need to adapt to modern times. Jeep has exciting news for environmentally conscious off-roaders – they are currently developing the first all-electric Wrangler. The landscape of the automotive industry is changing, with electric pickup trucks from Chevy, GMC, Ram, and Ford already in the works. Even the iconic Corvette, known for its V-8 power, will soon join the electric revolution.
Times are undoubtedly different from just a few years ago when Tesla dominated the EV market. Electric cars are no longer seen as something extraordinary and unique. GM’s Super Bowl ad featuring Lebron James introduced the world to the impressive $100,000 Hummer EV, while Tesla has not released a completely new model in three years. Tesla has faced challenges and setbacks, from production delays with their futuristic pickup truck to concerns surrounding their self-driving mode, which has been linked to accidents, some fatal. Furthermore, Elon Musk’s unpredictable behavior, as revealed in a recent Bloomberg survey, has caused some Tesla Model 3 owners to lose confidence in the brand.
Legacy carmakers would be envious if they weren’t facing bigger problems themselves. The ongoing strike by United Auto Workers against Ford, GM, and Stellantis (the parent company of Chrysler, Dodge, and Jeep) shows no signs of resolution. While only three plants are currently affected, these workers’ concerns are closely tied to the transition to electric vehicles. It has become an existential crisis for automakers that have traditionally relied on gasoline engines. However, until the car-buying public embraces other brands, Tesla will continue to dominate the EV space.
The demands of the autoworkers are not against the potential environmental benefits of EVs. UAW President Shawn Fain expressed support for a greener economy and emphasized the importance of preserving our planet. The strike primarily focuses on fundamental union matters, with workers requesting a 40% raise to match the compensation of their CEOs over the past four years, as well as improved benefits such as increased paid time off. The car companies have countered with a wage increase of approximately 20%.
But beneath the surface, there is concern among autoworkers that the rise of EVs may not bode well for their job security. Building an electric car is a different undertaking, as batteries are complex and challenging to manufacture. As a result, major car manufacturers often collaborate with tech companies to establish battery plants. GM and LG, for instance, work together to operate or construct three battery factories across the country. While electric vehicles still require assembly and paintwork, they eliminate the need for various traditional engine components found in gasoline vehicles. Jeremy Michalek, an engineer at Carnegie Mellon University, explains that although it is difficult to quantify the number of jobs at risk, there will be a shift from manufacturing gasoline engines to electric motors and batteries. Unfortunately, most battery factories are not unionized, and workers in these facilities earn less than their unionized counterparts in the auto industry. This shift in production eerily resembles how the tech industry manufactures gadgets, raising concerns for Detroit and its automakers. It is challenging for these well-established companies to reinvent their longstanding methods, especially at a time when they are struggling to break even with electric cars. Ford’s EV division alone is projected to lose $4.5 billion this year, equating to around $32,000 per EV sold. Nonetheless, the automakers expect to post profits of $11 billion to $12 billion this year from the sales of gas-powered vehicles. These immense losses illustrate the difficulties these companies face in adapting to the EV revolution.
On the other hand, Tesla, a dedicated EV manufacturer, has managed to turn a profit while simultaneously reducing vehicle prices several times this year. In the decade since the launch of the Model S, Tesla has established an advantage that Detroit struggles to match. Tesla has set the standard for EVs, offering cars that revolve around a battery, motors, and a sophisticated touchscreen interface controlled by proprietary software. The company’s roots in Silicon Valley are evident in its design, as well as its nonunionized workforce and its CEO’s controversial reputation. Tesla operates with the tech industry’s efficiency mindset and has even developed innovative “gigacasting” machines that can produce larger aluminum parts, reducing production costs for the Model Y by 40%, according to the company. Importantly, Tesla also pays less in labor costs than the Detroit automakers. According to The Wall Street Journal, Tesla’s average labor cost, including wages and benefits, is $45 per hour, compared to $66 per hour for Detroit automakers.
Despite its challenges, Tesla remains a dominant force in the industry. Earlier this year, the Model Y became the world’s best-selling car, and it rapidly climbed into the top 10 in U.S. sales – a first for an EV. Tesla continues to capture the majority of the EV market in the United States, with its four core vehicles accounting for 60% of total sales. In the first half of this year alone, Tesla sold 336,000 EVs, almost 10 times more than its closest competitors, Hyundai-Kia and GM.
Tesla’s future shines brightly, especially with President Joe Biden’s ambitious climate bill. The recently passed Inflation Reduction Act allows Tesla to once again offer buyers a $7,500 price reduction through tax credits. This is a significant victory for Tesla, considering that EVs are generally more expensive than their gasoline counterparts. Additionally, car companies can only qualify for the IRA tax credit if they conduct a majority of their battery and vehicle manufacturing within North America. This benefits Ford and GM, while excluding major Tesla competitors such as Hyundai and its popular Ioniq series.
Tesla is also leading the way in the charging infrastructure race. Until recently, Tesla’s vast Supercharger network exclusively served its own vehicles, creating a compatibility standoff with other manufacturers that used a different charging standard. However, Elon Musk made a surprising move last November, rebranding Tesla’s charging standard as the open North American Charging Standard, inviting other automakers to adopt it. Many industry leaders, including Ford, Honda, Mercedes-Benz, GM, Rivian, Polestar, Nissan, and Volvo, have chosen to use Tesla’s plug and allow their EVs to charge at Tesla’s Supercharger stations.
Regardless of the outcome of the UAW strike, Tesla will continue to be at the forefront of the electric vehicle industry for years to come. While competition is increasing, legacy automakers are struggling to pivot towards the Silicon Valley business model. Tesla’s lead may not be indefinite, and its unique challenges and controversies could impact the company’s future. Nevertheless, for now, all roads in the electric vehicle arena lead to Tesla.
Denial of responsibility! Vigour Times is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
