Inside the Industry
Governments Continue To Push Electrics, Manufacturers Turn Back To Hybrids
Whilst across Europe Governments continue to demand a switch to electrics at a pace that the market (i.e. the customers) seem unwilling to accept, many manufacturers are turning their attention back to Hybrids. Just to show the lack of enthusiasm for electrics across Europe sales in 2022 were 29% up on 2021, 2023 28% up on 2022, 2024 so far only 2% up on 2023. Hybrid sales are up 16%! Mercedes have announced they will be extending the life of their hybrid ranges, at the same time planning to fit slightly bigger batteries to take the pure electric range to over the magic 60 miles, which has tax advantages in Germany. Audi plans to expand and upgrade their hybrid offerings and have pushed back the switch to pure electrics to 2033. Porsche have lowered their target to be 80% electric by 2030 because of lack of customer demand, they haven’t said what the new target is.
Ford says their plan to be all electric by 2030 was “too ambitious” and that they will continue to offer a full range of hybrids for “longer than originally planned”. Renault boss said that unless electric cars can be sold at much lower prices the European target of selling only pure electric cars by 2035 is unachievable. Chinese manufacturer BYD currently only selling pure electric cars will launch three new plug in hybrids next year saying these are “Vital to growth in Europe”. And Toyota, long champions of hybrids, say the UK’s plan to ban ICE engines by 2030 could affect the viability of the whole industry. Jaguar Land Rover have upped their R&D budget by a mere £3 BILLION because slow take up of pure electrics means they believe they have to re-engineer their forthcoming platforms to take a broad range of power plants including ICE and hybrids The Jaguar part of JLR is taking a different view (see below). Fiat are spending a lot of money on their electric only 500 so it can be offered with hybrid engines.
Jaguar Bet The Farm On Expensive Electrics – And won’t Be Selling Any New Cars In 2025!
Whilst all the manufacturers listed above are questioning whether or not the market will accept the swift change to 100% electric Jaguar are totally committed to taking that route. In early 2026 they will launch a new pure electric 4 door GT car at a start price of over £100,000, range of over 400 miles, outstanding performance etc etc. This will be followed in 2027/28 with a large electric SUV aimed at the Bentley Bentyga and a large electric saloon. These will be priced in the £150-£200,000 range. Having originally said they would keep selling the F-Pace model throughout next year Jaguar have now decided to stop all new car sales at the end of this year, So Jaguar dealers will have no new cars to sell in 2025.
What do the dealers think? I’d say most won’t care. Over recent years most have experienced trading losses in the Jaguar parts of their businesses which they accepted because of the very healthy profits they made from the Land Rover and Range Rover sales. In any case 80% of them will cease to be Jaguar sales dealers when the new range arrives as there will only be about as many dealers as Bentley have.
So are Jaguar right to go 100% electric when almost all others are hedging their bets? And to go so far upmarket to compete with Bentley etc not BMW and Audi? Only time will tell, but what is certain is that there’s no going back. This could be a gamble that takes Jaguar to new heights or one that brings its long history to an end.
Manufacturers Struggle To Make UK Electric Targets
As reported many times before all manufacturers selling new cars in the UK are required to achieve a 22% share of electric models in 2023. If they don’t they face a fine of £15000 per car short of target. They can avoid these fines by buying credits from those who exceed the target, like Tesla for example who are 100% electric. But that still costs money, maybe just a bit less. Or they can, as I think they will, “mortgage” the fines, which means they accept they are due but promise to wipe them out by exceeding targets in the future. A dangerous game because next year the target goes up to 28% electric share and then up every year to 100% in 2030. So if you can’t exceed 22% this year how are you so confident you will achieve much higher targets in the future. Manufacturers can also gain credits for other low emission cars i.e. plug in hybrids if this lowers their overall average emissions, but this concession is limited.
Meanwhile there are some fairly desperate things going on to achieve or get close to 22% this year. Heavy discounts are being put behind electric cars both in the retail and fleet markets. Fancy a new Nissan Leaf? The Tekna model with metallic paint has a retail price of £32500. Pre registered delivery miles examples are all over Autotrader at around £17500, not much more than half price. That’s just one example, there are many more. Look out for not big but MASSIVE pre registration of electric cars for the rest of this year. With rental companies unwilling to buy many electrics because of residual value fears manufacturers are turning to their old friend Motability who we discussed last month to take more of them The flip side of the coin is some manufacturers restricting supply of ICE cars for the remainder of the year leaving reduced or zero discounts on those, or maybe no availability at all. Suzuki, who have no electric cars to offer at the moment, have told their dealers they will have no new cars to sell in Quarter 4 to minimise the damage. More about Suzuki below.
Electric Snippets
BMW were early to offer an electric car and now have a pretty full range. In July they sold more electric cars in Europe than Tesla for the first time. BMW electric sales were 35% up on the previous July, Tesla were 16% down. However perhaps the telling point is that total electric car sales were 6% down on last July and the electric share of the market is down from 14.6% to 13.5%. Well behind the UK but still a long way from the 100% Europe is supposed to achieve by 2035.
Tesla have introduced a new finance offer in the UK on their Model Y bringing the monthly payments down from £399 to £299 with a deposit of £4499. Given the cash price is £45000 that IS a deal!
Mitsubishi have joined the partnership formed earlier this year by Honda, and Nissan to develop new electric cars. This underlines the enormous development costs involved. If an industry giant like Nissan can’t afford to go it alone who can?
EU Draft Tariffs On Chinese Electric Cars, Then Canada Announces 100% Duty To Be Imposed
The EU have issued revised draft tariffs to be applied to the import of Chinese built electric cars. These are slightly lower than those previously announced:
BYD 17%
Geely 19.3%
SAIC (MG) 36.3%
Others who co-operated with the EU investigation are charged at 21.3%, others who didn’t at 36.3%. Meanwhile the UK Government has made no announcement on the subject.
Meanwhile the Canadian Government has said it will follow the lead of the US and impose 100% Duty on imported Chinese electric cars from 1st October. This will include Teslas produced at their Shanghai factory. Apart from Tesla Chinese made electric cars are a rare site in Canada although BYD are beginning to establish themselves, so it looks like this action is designed to stop Chinese imports before they start.
Import Tariffs May Bring Proton Back To The UK?
Anyone remember Protons? They were Malaysian built cars based on Mitsubishi designs, Mitsubishi was at that time a major shareholder in Proton. UK imports started in 1989 and ceased in 2014. They were never more than a tiny player very much at the bottom end of the market.
Now Proton are a joint venture between Chinese manufacturer Geely and a massive Malaysial engineering company DRB Hicom Berhad. Therefore the cars they produce are based on Geely designs. Cars produced in Malysia are not of course subject to the tariffs discussed above on Chinese produced vehicles. Proton have said they are eager to return to export markets in the near future, so we may well see them back here fairly soon.
Ford Electric Shock
In an announcement that shocked the US industry (and the New York Stock Exchange) Ford announced recently that they were cancelling plans for a new electric sports utility vehicle for the US market. The manufacturer said they could see no way the new car would be profitable in the face of reducing demand for electric cars and a flood of new models entering the market putting downward pressure on prices. Ford will still make a similar car but as a hybrid. This is not a cheap decision. Ford are writing S400 Million off development costs and will need to provide $1.5 BILLION for the replacement car development. So a total of $1.9 BILLION. Ford are finding it impossible to sell electric cars in the US at anything less than enormous losses. Their electric car division is forecast to lose $5.5 BILLION this year. Ford have cut their annual capita expenditure on electric vehicles from 40% of the total to 30% and resolved not to introduce any new model that they don’t believe will be profitable in the first year.
Ford in the US see the electric sector of the van market as a strong and profitable area of business where large fleets arrange their recharging facilities before they buy. However for their top selling F-150 Pick Up they have delayed the introduction of the electric version until 2027 in the hope that lower costs batteries will be available by then to make it a profitable proposition.
Ford shares have dropped from around $14 to around $10 in the last two months. There are many in the hands of descendants of the founding family, shares passed down through the generations for over 120 years now. These shareholders tend to hold rather than buy and sell, the important thing to them is the dividend. For many it is their main, and very significant, source of income. So they don’t worry too much about short term fluctuations in the share price as long as the company keeps paying the dividends. If things like a £1.9 Billion loss cancelling an electric SUV, or a £5.5 Billion loss this year in the electric car this year mean a reduction in those dividends that is when the trouble will start. The most likely result would be a change being forced at the top. With current Chief Exec Jim Farley being an avowed petrol head who has expanded Ford Motorsport activity notably into the Red Bull F1 engine and the Ranger Dakar programme, with a Le Mans entry now being rumoured, will the next boss be so keen on the sport?
Suzuki Forced To Change Course
I discussed above the problem Suzuki have in the UK with producing no electric cars at all. Suzuki are therefore going to artificially restrict the number of cars they supply this year with virtually none available to dealer in the last quarter of this year. This will still result in large fines for being 22% behind the electric car target. These they will “Mortgage” because they have electric cars arriving in 2025 and 2026, but none util next summer. They then intend to be selling 50% of their cars as electrics by 2026 so will “catch up”.
However this is a problem for Suzuki. Electric cars are bought mainly by fleets principally because of the tax advantage for the drivers. Suzuki mainly supplies retail customers. Fleets are based in big cities. Many Suzuki dealers are in rural areas. So these dealers and the manufacturer are going to have to develop relationships with fleet customers very quickly. They are going to have to turn their whole business around. Not easy!
Toyota Hilux To Go On A Diet
A new Toyota Hilux Pick up was announced earlier this year with UK deliveries due to start very soon. The Hilux is the top selling pick up outside of North America (and they sell a lot there). It’s the standard by which the others are judged. A new model only comes around every 10 years so a big event. Now delivery of all but the base models has had to be delayed because Toyota have made a schoolboy error.
Under UK tax rules a pick up can only be judged as a commercial vehicle if it can carry 1000kgs. If it can they VAT can be reclaimed on the purchase, a business can claim a 100% Capital allowance, and a company car driver who uses the vehicle gets a very low Benefit in Kind Charge. All very important.
Toyota have discovered very late in the day that their top versions of the new model, the Invincible X Hybrid Auto and the GR Sport can only carry 1005kgs. And these are the two top sellers. 1005 is above 1000 but that’s not good enough. 99.9% of buyers will fit extras of some sort. Load Liners, Canopies, Tow Bars and so on. With any never mind all of these fitted these two Hilux become a car for tax purposes. So Toyota have had to delay deliveries until next year while they send the truck to Weight Watchers.
Customers Put Pot Hole Repairs Top Of The List
A recent survey asked motorists what the top priority of the new Government should be regarding transport.
96% said fixing potholes. Other boxes ticked were 92% fairer fuel costs, 91% lower insurance premiums, 85% better public transport, and 81% increased road building to reduce congestion. This last 81% clearly hadn’t noticed major road programmes were cancelled a few weeks ago.
As the man said there are two hopes. And one of them’s dead.
2024/25 Charity Challenge Restarts!
Although recovery from my spinal problems isn’t yet complete (might not ever be), and I’m still awaiting the results from further MRI scans, I continue to make progress so I’ve decided to restart the Challenge from September 1st. But with some changes.
Progressing as I am, currently I’m not at the level of walking the original 2024/25 target of two Mille Miglias, 2000 miles in 12 months. However an integral part of my recuperation has been using an exercise bike, so I’ve decided to combine this and walking into a Biathlon. Obviously progress on the bike is quicker so the Challenge is now THREE Mille Miglias that is 3000 miles in the next 12 months. For each 1000 mile section walking must be at least 45% so 1350 miles for the year, quite enough of a challenge for someone who was told two months ago that he would never walk more than a mile or so in a day again and needed to be looking at wheelchairs and mobility scooters! The balance of another 1650 miles being exercise bike. The three routes I’ll be (virtually) following are the first Mille Miglia 1927, the last 1957, and the 1955 event won so handsomely by Stirling and Jenks.
So started Sunday 1st September, and again once successfully completed (fingers crossed) I’ll be seeking your generous support to raise money for the Eden Valley Hospice.
Paul Gilligan - 07785 293222 - pg@gilliganvc.co.uk