EV sales remained strong in Q4. They could have been stronger

by with No Comment Tech

gm extends orian assembly plant shutdown of chevy bolt evs until end of january

Image Credits: General Motors

If you’ve only been reading headlines these past few months, you’d think demand for electric vehicles has fallen off a cliff.

There are many reasons why that’s not the case, some of which we’ll get into later, but two more data points landed this week in Tesla’s and GM’s annual sales figures: Tesla delivered 38% more vehicles this year compared with last year, while GM sold 93% more.

That hardly sounds like the sputtering of a dying market.

The reality is that automakers appear to have produced overly rosy forecasts about the future growth of the EV market based on a year and a half of sales data collected during an era of constrained supply, skyrocketing inflation, and pent-up consumer demand. In other words, they saw a black swan swimming in a small pond and confused it for a flock of white ones approaching over the horizon.

GM and Toyota are shaping up to be the biggest losers in the EV transition

That flock is almost certainly still out there. In some countries, like Norway, where 82% of new vehicles are electric, it has already landed. And in places like the U.S., which is a relative laggard, consumer sentiment remains remarkably high given the cost and charging challenges that many EVs still face. Across a range of surveys, about a quarter of Americans say their next vehicle will be fully electric. That jibes with other forecasts that predict EVs will make up around 25% of the market in 2026. The demand will be there, but to make the most of it, automakers have some work to do.

So how should automakers spend their money? It depends on whether that automaker is Tesla or not.

In Tesla’s case, the company appears to be constrained by a few factors. The most obvious is its limited offerings; it basically sells four vehicles, only two of which are arguably affordable to the mass market. (I’m not considering the Cybertruck at this time for two reasons: one, it’s not widely available, and two, it’s still an open question as to whether truck buyers will warm to its styling.)

Now, the Model 3 and Model Y have been incredibly successful in their respective segments. Together, Tesla sold nearly 2 million of them worldwide. For context, BMW sold 2.1 million across all its model lines in 2022. Price cuts, enabled by Tesla’s generous profit margins, have helped some, but there are only so many buyers for luxury midsize sedans and crossovers.

If the company wants to keep the growth engine humming, it’ll need some diversity in its lineup. The $25,000 Tesla that Elon Musk has long teased could help, and speeding that to production would help drive sales in the coming years. (Public opinion of Musk could be a headwind, too, though it’s unclear how much of an impact it will have on sales.)

Legacy automakers like GM, Ford and Toyota don’t have the same problems. While it’s true that none of them have particularly broad EV offerings — GM sells seven across its stable of five brands, Ford sells three, and Toyota sells two, if you count the badge-engineered Lexus RZ 450e — they also have plenty of experience ginning up new models from existing platforms.

Instead, if the legacy automakers want to juice demand for their EVs, they’ll have to get serious about charging and reining in prices.

EV charging can be great; Tesla has shown that it’s possible. Most other automakers, though, were content to leave it to third parties, and the results have been pretty bad. Broken plugs, malfunctioning touchscreens, overheated equipment, slow charging speeds — the list goes on. The incumbents seemed to realize the extent of the problem last year when nearly all of them signed deals with Tesla to adopt the NACS plug and gain access to part of the Supercharger network.

A tesla supercharger station filled with electric cars.
Tesla cars charge at a Supercharger station on Culver Ave. in Irvine, Calif. Image Credits: Paul Bersebach/MediaNews Group/Orange County Register via Getty Images

Many of them also banded together to create their own charging network, but the jury is definitely still out on that one. Still, it shows that they get it. Enough to try to solve the problem themselves? Clearly not. But they finally understand that a poor charging experience is an impediment to EV sales that could cost them market share.

But charging is just one part of the equation. Their market share is further threatened by overly expensive vehicles. EV sales figures from Ford and GM show just how significant pricing can be to drive adoption.

Ford notched an 18% increase in EV sales this year. It was enough to put them at No. 2 in the category, though the growth wasn’t as eye-popping as GM’s. The difference appears to come down to which EVs each company sold and how much they sold for.

Ford sold 40,771 Mustang Mach-Es and 24,165 F-150 Lightnings last year. Lightning sales stand out for a few reasons. Just two years ago, Ford was crowing about racking up more than 200,000 reservations for the truck, and CEO Jim Farley said that the company would double production capacity to 150,000 vehicles annually. But after a series of price hikes that put the vehicle anywhere between $6,000 and $20,000 more than initially promised, most of those reservations didn’t convert to sales. Last month, Ford said it would be halving production in 2024.

Meanwhile, GM’s EV sales rose on the back of strong demand for the Chevy Bolt, which started at $26,500. GM sold 62,045 of them, and it probably could have sold more if it hadn’t stopped production in December to retool the factory for new EV models.

That’s not to say that GM has a clear path in front of it. Its new EV models have had a very rocky rollout, with Chevrolet issuing a stop sale order on its new Blazer EV after early units suffered from blank infotainment screens, failed charging sessions, and brake system errors. What’s more, that model starts near $60,000, more than double that of the Bolt.

Ford and GM have both pursued higher prices in an effort to get their EV lines to profitability as quickly as possible. As a result, sales are suffering today, and the companies are risking losing market share to competitors who succeed in delivering EVs at prices consumers can stomach. At more reasonable prices, demand remains strong. The question is whether legacy automakers want to meet it or cede it to others.

EV sales remained strong in Q4. They could have been stronger

by with No Comment Tech

gm extends orian assembly plant shutdown of chevy bolt evs until end of january

Image Credits: General Motors

If you’ve only been reading headlines these past few months, you’d think demand for electric vehicles has fallen off a cliff.

There are many reasons why that’s not the case, some of which we’ll get into later, but two more data points landed this week in Tesla’s and GM’s annual sales figures: Tesla delivered 38% more vehicles this year compared with last year, while GM sold 93% more.

That hardly sounds like the sputtering of a dying market.

The reality is that automakers appear to have produced overly rosy forecasts about the future growth of the EV market based on a year and a half of sales data collected during an era of constrained supply, skyrocketing inflation, and pent-up consumer demand. In other words, they saw a black swan swimming in a small pond and confused it for a flock of white ones approaching over the horizon.

GM and Toyota are shaping up to be the biggest losers in the EV transition

That flock is almost certainly still out there. In some countries, like Norway, where 82% of new vehicles are electric, it has already landed. And in places like the U.S., which is a relative laggard, consumer sentiment remains remarkably high given the cost and charging challenges that many EVs still face. Across a range of surveys, about a quarter of Americans say their next vehicle will be fully electric. That jibes with other forecasts that predict EVs will make up around 25% of the market in 2026. The demand will be there, but to make the most of it, automakers have some work to do.

So how should automakers spend their money? It depends on whether that automaker is Tesla or not.

In Tesla’s case, the company appears to be constrained by a few factors. The most obvious is its limited offerings; it basically sells four vehicles, only two of which are arguably affordable to the mass market. (I’m not considering the Cybertruck at this time for two reasons: one, it’s not widely available, and two, it’s still an open question as to whether truck buyers will warm to its styling.)

Now, the Model 3 and Model Y have been incredibly successful in their respective segments. Together, Tesla sold nearly 2 million of them worldwide. For context, BMW sold 2.1 million across all its model lines in 2022. Price cuts, enabled by Tesla’s generous profit margins, have helped some, but there are only so many buyers for luxury midsize sedans and crossovers.

If the company wants to keep the growth engine humming, it’ll need some diversity in its lineup. The $25,000 Tesla that Elon Musk has long teased could help, and speeding that to production would help drive sales in the coming years. (Public opinion of Musk could be a headwind, too, though it’s unclear how much of an impact it will have on sales.)

Legacy automakers like GM, Ford and Toyota don’t have the same problems. While it’s true that none of them have particularly broad EV offerings — GM sells seven across its stable of five brands, Ford sells three, and Toyota sells two, if you count the badge-engineered Lexus RZ 450e — they also have plenty of experience ginning up new models from existing platforms.

Instead, if the legacy automakers want to juice demand for their EVs, they’ll have to get serious about charging and reining in prices.

EV charging can be great; Tesla has shown that it’s possible. Most other automakers, though, were content to leave it to third parties, and the results have been pretty bad. Broken plugs, malfunctioning touchscreens, overheated equipment, slow charging speeds — the list goes on. The incumbents seemed to realize the extent of the problem last year when nearly all of them signed deals with Tesla to adopt the NACS plug and gain access to part of the Supercharger network.

A tesla supercharger station filled with electric cars.
Tesla cars charge at a Supercharger station on Culver Ave. in Irvine, Calif. Image Credits: Paul Bersebach/MediaNews Group/Orange County Register via Getty Images

Many of them also banded together to create their own charging network, but the jury is definitely still out on that one. Still, it shows that they get it. Enough to try to solve the problem themselves? Clearly not. But they finally understand that a poor charging experience is an impediment to EV sales that could cost them market share.

But charging is just one part of the equation. Their market share is further threatened by overly expensive vehicles. EV sales figures from Ford and GM show just how significant pricing can be to drive adoption.

Ford notched an 18% increase in EV sales this year. It was enough to put them at No. 2 in the category, though the growth wasn’t as eye-popping as GM’s. The difference appears to come down to which EVs each company sold and how much they sold for.

Ford sold 40,771 Mustang Mach-Es and 24,165 F-150 Lightnings last year. Lightning sales stand out for a few reasons. Just two years ago, Ford was crowing about racking up more than 200,000 reservations for the truck, and CEO Jim Farley said that the company would double production capacity to 150,000 vehicles annually. But after a series of price hikes that put the vehicle anywhere between $6,000 and $20,000 more than initially promised, most of those reservations didn’t convert to sales. Last month, Ford said it would be halving production in 2024.

Meanwhile, GM’s EV sales rose on the back of strong demand for the Chevy Bolt, which started at $26,500. GM sold 62,045 of them, and it probably could have sold more if it hadn’t stopped production in December to retool the factory for new EV models.

That’s not to say that GM has a clear path in front of it. Its new EV models have had a very rocky rollout, with Chevrolet issuing a stop sale order on its new Blazer EV after early units suffered from blank infotainment screens, failed charging sessions, and brake system errors. What’s more, that model starts near $60,000, more than double that of the Bolt.

Ford and GM have both pursued higher prices in an effort to get their EV lines to profitability as quickly as possible. As a result, sales are suffering today, and the companies are risking losing market share to competitors who succeed in delivering EVs at prices consumers can stomach. At more reasonable prices, demand remains strong. The question is whether legacy automakers want to meet it or cede it to others.

Windfall Bio is seeing strong demand for its methane-eating microbe startup

by with No Comment Tech

Windfall Bio, methane, startups, venture capital

Image Credits: Oscar Wong / Getty Images

When Josh Silverman started shopping around the idea for his methane-eating microbe startup, Windfall Bio, eight years ago, the market just wasn’t ready. Nobody cared about methane, he said. Companies were instead focused on lowering their carbon emissions. But a few years later, the market is starting to come around.

Menlo Park–based Windfall Bio raised a $28 million Series A round to expand its commercialization efforts. The round was led by Prelude Ventures with participation from Amazon’s Climate Pledge Fund, Incite Ventures and Positive Ventures, among others, as well as existing investors, including Mayfield.

Windfall works with industries that produce large levels of methane, such as agriculture, oil and gas, and landfills. The startup supplies methane-eating microbes that absorb methane emissions, turning them into fertilizer. Companies can either utilize the fertilizer themselves, if they are in the agriculture sector, or they can sell it as a revenue stream.

“We think there is a big opportunity to leverage this natural ecosystem that gives us a low-cost solution without needing massive investments in capital like we are seeing for these other carbon capture technologies,” Silverman said.

While it took a couple of years to really get investors and companies on board, Silverman said that since the Windfall raised its seed round last year and emerged from stealth in March 2023, demand has been high.

“We have had a massive influx from all continents and all verticals; huge amounts of excitement,” Silverman said. “It’s profitable for everybody regardless of the industry. Everyone wants to reduce their carbon footprint, and they want to do it in a way where they make money and there aren’t many solutions.”

Silverman says that carbon capture was the only focus for so long because once carbon is in the atmosphere, it lasts forever, compared to methane’s 10- to 12-year lifespan. A few decades ago, when people thought about climate change, they were looking for more long-term solutions. But now that the impacts of climate change are both more clear and worsening, people are waking up to the need for both short-term and long-term solutions.

“We have literally missed every single climate target we have put in place,” Silverman said. Not a single G20 country has the policies needed in place for it to reach the Paris Agreement’s emission-reduction targets, for example. “If all you are doing is looking out in the future and not doing the day to day, you miss those targets and miss what is right in front of you. We need to manage the short-term climate factors, or we won’t be around to deal with the long-term.”

The lack of attention to methane is also surprising because methane actually can create a better ROI for companies than their carbon-reduction efforts.

Carbon is waste, which means that when companies capture it, they do so largely just to get rid of it, as opposed to turning it into something else. In comparison, methane is energy, which means it can be captured and repurposed much easier than carbon. Essentially, companies can reduce carbon for potential cost savings down the road, or a super legit carbon credit, while focusing on methane can actually make them money if they work with a company like Windfall.

This deal also stood out to me because Windfall lies within a growing category of startups focused on mitigating the climate issues of today and not just the ones down the road. While it is good for companies to be focused on mitigating the long-term impacts of climate change or trying to prevent future climate-induced events, we need solutions now.

It reminded me of Convective Capital, a venture fund I’ve written about before that’s dedicated to wildfire tech. It’s not dedicated to the tech that helps prevent them but rather tech that helps society adapt to the impact of increased wildfires now. Firm founder Bill Clerico told TechCrunch in 2022 that while it’s great to build long-term solutions, those mean nothing if your home is in danger from wildfires this summer.

Silverman said the market is still in the early innings of coming around to the potential benefits of investing in methane-reduction technology. But progress is good, and though he might be biased, Silverman is happy to see funding heading to a climate company that isn’t another carbon credit startup. I agree with him there.

“It was a long road getting here, lots of years of zero traction,” Silverman said. “Now that the traction is there and there aren’t very many people working in this area, there aren’t that many competitors. We are the best of the very few options. As I’ve said, ‘in my land of the blind, the one-eyed man is king.’”