Coronavirus May Help Tesla Retain Electric Vehicle Leadership As Traditional Car Makers Cut Electric Investments

The coronavirus pandemic could help Tesla maintain its dominance in the US all-electric vehicle market. USA As traditional automakers reevaluate their spending on emerging technology.

Starting this year, an influx of new electric vehicles was expected to enter the US market to challenge the California automaker, which last year accounted for approximately 3 out of 4 electric vehicles sold in the United States. Despite the fact that all-electric vehicles represent a fraction of sales in the US. In the U.S., automakers are flocking to the segment to meet global fuel economy regulations and position themselves for the expected growth in consumer demand.

While it’s too late for many companies to backtrack a lot on the launch of electric vehicles that went into production over the next year or so, automotive research firm IHS Markit said fully electric vehicles are expected to be one of the segments. more negatively affected due to Covid -19 crisis as automakers reduce their investments.

“Vehicles are not the primary focus of consumers,” said Matteo Fini, who leads IHS global supply chain research and analysis and automotive technology. “There will be other priorities as we are entering a rather unpleasant recession. Some things have to give way, and the deployment of e-mobility could be something.”

Morgan Stanley chief analyst Adam Jonas agrees: “Unfortunately, we anticipate that many auto companies will cut EV efforts or significantly delay EV to address short-term cash needs,” wrote a note to investors this week on possible government funds for EV infrastructure.

The coronavirus pandemic will cause automotive research and development to decrease by 17% this year and by 12% in 2021, according to the IHS, which recently surveyed 140 car manufacturers and suppliers about their plans.

That decline, according to Fini, is expected to include new software development, which many believe Tesla will also lead.

“This is not the time when you want to mess around with the software too much,” he said. “It could be assumed that some will take even longer to catch up with Tesla in software development, which has been at the forefront of the rest of the package.”

Ford Motor confirmed this week that it canceled plans for a Lincoln all-electric vehicle with start-up electric vehicle company Rivian, which is delaying the launch of its first vehicle from later this year until 2021 due to Covid-19.

“Lincoln essentially decided that it would adopt its own approach to electrification, but remains fully committed to electrification for Lincoln customers,” Ford chief financial officer Tim Stone said Tuesday during a first-quarter earnings call. “” And we are equally committed to Rivian as a partner and will continue to look for opportunities to partner with Rivian on non-Lincoln products. “

Ford made a $ 500 million equity investment last year in Rivian, based in Plymouth, Michigan, as part of a strategic partnership that included the vehicle. That deal remains unchanged, according to Ford.

Gerald Johnson, executive vice president of global manufacturing for General Motors, told CNBC that the company is “working very hard to stay true” to its plans around its “EV transformation,” which includes at least 20 new all-electric vehicles by 2023. .

GM is prioritizing its investments. Updates to its Chevrolet Bolt EV have been delayed until the 2022 model year. However, the automaker confirmed on Wednesday that “development work continues on track” for the GMC Hummer EV. The vehicle, which was scheduled to be unveiled next month, was expected at the end of next year.

Lordstown Motors, another startup electric vehicle company that bought GM’s former Lordstown assembly plant in Ohio, is also delaying the 2020 launch of a fully electric work truck called Endurance until January.

Tesla, which reported a $ 16 million profit in the first quarter on Wednesday, is not immune to the coronavirus. The company’s American production, like all automakers, has decreased since last month, including the new Model Y crossover. It is also delaying production and deliveries of its fully electric Semi trucks until 2021, two years after its initial schedule.

Covid-19 is causing an average delay of about 2½ months in the production of new products, according to Jeff Schuster, president of America operations for LMC Automotive and Global Vehicle Forecasting.

“As we get closer to the end of the year, they are receiving delays of two to three months,” he said. “That is pretty consistent.”

Some of this year’s most anticipated vehicles were expected from Ford. They include the electric Ford Bronco, the Ford Bronco Sport, the Mustang Mach-E. Electric vehicles are expected to be delayed by about two months, according to Schuster.

In addition to upgrades for the Bolt EV, GM this year is also delaying revamped versions of the Chevrolet Traverse, Chevrolet Equinox and GMC Terrain crossovers for as much as a year. Johnson told CNBC that new versions of GM’s highly profitable SUVs are still on the way for this year.

Ford canceled the debut of the Bronco models earlier this year and the presentation of a redesigned F-150 was expected to debut soon. It unveiled the Mustang Mach-E, a competitor to the Tesla Model Y, late last year.

Ford spokesman Mike Levine declined to comment directly on the company’s product plans: “We will have more details to share about the timing of our next new vehicle reveal once we have brought our factories and facilities online. safe way”.

The coronavirus has forced American factories to shut down and ceased production of new models such as the Chevrolet Corvette midengine, Volkswagen Atlas, and other models that arrived or were expected in showrooms earlier this year.

Production of new auto plants for Fiat Chrysler in Detroit and Toyota Motor Mazda factory in Alabama was also halted or decreased due to requests to stay home or shelter-in-place due to Covid-19.