There may never be a more fascinating and trying time to be in the automotive business.
Demand for trucks and SUVs is powerful, but manufacturers cannot build them in the quantities people want because computer chips are short. The executives can blame themselves for being much too conservative in their ordering last year, but demand has been a yo-yo because of the defiant and devious nature of the COVID-19 variants. People didn’t buy cars in 2020 because they were afraid to walk out of their homes. This year things have flipped as folks hit the road. Money is still cheap, old F-150s are looking dilapidated, and the Feds have given so many freebies out that trucks and SUVs look too attractive to pass up.
Big demand, not enough product. That’s one interesting problem to navigate.
Then there is your very rich and powerful Uncle Joe (Biden) who observed the Obama Administration resuscitate General Motors in 2009. He feels this is his moment to impact the car builders, forcing electric on them by setting virtually unreachable emissions and gas mileage regulations on their windshields.
It is possible that Biden really believes that he is saving the planet by dictating a massive changeover from gas to electric by 2030. After all, we do have the convenient existential threat of “climate change” to justify everything from the switch to veggie burgers at McDonald’s to giving billions of dollars to the government operated Washington to Boston trains that never run on time.
The auto executives and the world of Tier One, Two, and Three manufacturers, whose businesses revolve around Biden’s decisions, are now living in a world of mirrors. Do they prepare for an environment in which the big car makers struggle to build trucks and SUVs that are rechargeable? Does Exxon plan to abandon oil rigs in the Gulf of Mexico and refining operations near Houston? Do the frackers try to raise money to start drilling again with oil prices around $60 a barrel?
It is an utterly confusing world in which Putin and the Saudis set oil prices by jiggering output and Biden thinks he’s saving the world, or at least his presidency, by setting virtually impossible gas mileage goals to increase electric vehicle sales, which he thinks will be made by union workers who will vote for Democrats in the 2022 and 2024 elections.
Amidst all of the competing interests, you have market research that tells car executives and dealers that real people really do not care much about carbon emissions. They want their Ford F-150s, GM Silverados, and Chrysler Jeeps, and they want them to reliably transport them and their cargo from Boise to Bozeman and Nashville to Memphis. Gas, electric, hydrogen, or pretzels, it really doesn’t matter much to them. The latest data predicts only 15% of the vehicles which will be sold in 2030 will be electric and 3% hybrid.
So we have the 2021 Dancing with the Stars with Joe Biden and the car bosses doing the tango. Dance and dip. The car guys plead their devotion to defeating the dreaded climate change. Billions upon billions of dollars are pledged to be spent, yet Tesla is the only car company that builds an electric car people will buy. When will that change? Nobody knows.
Demand for gas guzzlers far surpasses the ability to produce them, and gas prices approach $5 a gallon in California. It is pretty weird and goofy, but in the real world of brakes and gas pedals and transmissions, people are trying to plan and order stuff. Meanwhile, used cars are flying off the lots.
Question: What’s stopping you from getting an electric car?