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Almost 40 percent of U.S. EV buyers want to go back to combustion engine cars, McKinsey study says

More than a quarter of EV owners are likely to return to combustion engine vehicles for their next purchase, according to a McKinsey & Co. survey.

Nearly four in 10 owners of electric vehicles in the U.S. are likely buy a combustion engine car for their next purchase.

That’s the takeaway of a global McKinsey & Co. consumer survey that, among other findings, concluded that charging concerns are hindering the transition to EVs.

Twenty-nine percent of EV owners across the globe said they’re likely to reverse course. That hit 38 percent in the U.S. Consumers globally said their top concern was the inadequacy of the public charging infrastructure. They also cited concerns with high costs of ownership and detrimental impact to long-distance trips.

“I didn’t expect that,” Philipp Kampshoff, leader of the consulting firm’s Center for Future Mobility, told Automotive News. “I thought, ‘Once an EV buyer, always an EV buyer.’ ”

The consumer sentiments may go hand in hand with the slow rollout of a U.S.-backed charging network. Only eight stations are operational following the creation of the National Electric Vehicle Infrastructure program two years ago.

Only 23 states have started doling out financing from the $5 billion federal program, according to EVAdoption data through the end of May.

Among existing stations, both public and private stations can be hard to find. Gas station options are displayed on road signage near interstate exits, while EV chargers remain far from public view.

“Part of availability is visibility,” he said. “You can’t keep chargers hidden behind a Walmart.”

The U.S. is not alone. Only 9 percent of global respondents felt the public-charging buildout was sufficient for their needs.

But it’s a problem bound to grow in importance because “the next generation of EV buyers will rely on public charging much more than the current one,” Kampshoff said.

Among other charging-related findings, McKinsey found:

  • Twenty-one percent of global respondents do not want to ever switch to an EV. Among those, 33 percent cited charging concerns.

  • Charging concerns are exacerbated by range-related expectations. Consumers’ minimum range expectations have grown to 291.4 miles today from 270 miles in 2022. The range of in-market products has not grown as quickly, McKinsey said.

As part of its biennial survey, McKinsey asked approximately 200 questions to more than 30,000 consumers in 15 countries, which collectively comprise more than 80 percent of global sales volume. McKinsey issued its findings on June 12.

Overall, consumers are slightly more willing to consider electrified vehicles than they were two years ago. Thirty-eight percent of non-EV owners say they anticipate that a plug-in hybrid or full battery electric will be their next vehicle. That’s up from 37 percent in 2022.

Varied consumer preferences for EVs, plug-ins and combustion powertrains, combined with a variety of changing regulations globally, make planning a complicated process across the auto industry and its supply chain.

“OEMs and suppliers now have to invest in multiple technologies,” said Kevin Laczkowski, global co-lead of McKinsey’s automotive and assembly practice. “This is the ultimate uncertainty right now, like almost never before.”

 

The FTC’s CARS Rule: What dealers need to know

By L. Jean Noonan, Hudson Cook, LLP partner, Washington, D.C.  Contact: (202) 327-9700 | jnoonan@hudco.com.

In my article in the last issue of Spot Delivery, I wrote about the Federal Trade Commission’s new sweeping CARS Rule, the petition for review filed by the National Automobile Dealers Association and the Texas Automobile Dealers Association, and the FTC’s decision to stay the effective date of the final rule pending review by the U.S. Court of Appeals for the Fifth Circuit.

At the end of the article, I warned dealers, who have now entered a state of limbo, against waiting to see what happens with the associations’ challenge to the rule. I suggested that dealers press forward with compliance preparation because, if the rule goes into effect, it will add a slew of new requirements that will affect every covered dealer’s operation in significant ways, and the potential fines for a violation could be ruinous.

But even if the court vacates the rule, the FTC still has plenty of enforcement tools to use against
dealers. In fact, the very day the rule was published, the FTC announced a lawsuit against a car
dealership claiming that the dealer’s practices violated existing law. The FTC claims its rule only
reflects existing law against unfair or deceptive acts or practices. The only difference, in the FTC’s
view, is that the rule allows it to seek a civil penalty of up to $51,744 for each time a dealer fails to
comply with a provision of the rule.

It is true that some provisions of the rule forbid practices that are already illegal, like selling a
worthless product or misrepresenting the benefits of any product, saying a fee is required if it is not,
or charging for a product the consumer did not agree to buy. But the most burdensome parts of
the rule add requirements that are not necessarily UDAPs, such as the extensive new recordkeeping
requirements that exist only to help the FTC prove violations.

Therefore, it may make sense for some dealers to prioritize developing compliance procedures for
requirements that are clearly—or even arguably—required under existing UDAP law. Once they feel
confident that their compliance management systems address these obligations, they can turn their
efforts to the requirements that even the FTC may need to admit are not unfair or deceptive
practices absent the requirements of the CARS Rule. If the court upholds the rule, those dealers
will need to hope that the FTC gives a new effective date that provides enough time to address the
remaining obligations under the rule.

Let’s start with the requirements that the FTC has been suing dealers for even without having a rule
in effect or that are otherwise clearly UDAPs. 

Prohibited Misrepresentations
Section 463.3 lists prohibited practices that would either certainly or likely be declared unfair or
deceptive by a court. These should be top priorities for every dealer. We’ll focus on the ones dealers
may find the most difficult.

§ 463.3(b) – Any costs, limitation, benefit, or any other aspect of an Add-on Product or Service.
This provision requires a dealer’s employees to understand very well each of the products the dealership offers. The first step is a thorough review of each voluntary protection product, which requires
reading not just the brochure provided by the vendor but also the contract and all its fine print. After
a critical review of the contract, with a special focus on limits and exclusions, consider whether the
brochure you offer customers presents a fair and balanced description of the product. Are each of
the brochure’s claims true? Or do some require qualifications? It is not good enough to have important qualifications to claims in the brochure appear only in the contract, where consumers can miss
them.

When reviewing the claimed benefits of a product, consider not only the claims as written but also
any implied claims. For example, the promotional material for a theft deterrent product might talk
about the harm a consumer experiences when a vehicle is stolen. Do these statements imply to a
reasonable consumer that buying the product will reduce the risk of theft substantially? If so, does
the vendor have written proof of this benefit? Don’t accept a vendor’s general claim that the product
is, for example, a “proven antitheft measure.” Ask for the studies, read them carefully, and consider
dropping the product from your menu if you are not satisfied. Remember that it is your duty to
ensure you can substantiate a claim you make or that is made in material you give your customers.

§ 463.3(d) – The availability of any rebates or discounts that are factored into the advertised price
but not available to all consumers.

In the past, the FTC has required rebates or discounts factored into an advertised price to be
“widely” available. The rule takes this a step further, requiring that the benefit be available to all
consumers. Also, be careful about double-counting a subvented finance charge (interest) rate or a
cash rebate when the manufacturer offers the buyer a choice. You can advertise the choice, but you
should not promote the low rate if you have included the rebate in the advertised price.

§ 463.3(k) – Whether consumer reviews or ratings are unbiased, independent, or ordinary consumer
reviews or ratings of the Dealer or the Dealer’s products or services.
Honesty may be the best policy, but honesty alone may not be good enough. Any consumer endorsement or review will be presumed to be honest and independent unless it clearly says otherwise.
A client recently asked me about its long-time policy of giving a free oil change to any customer
who submitted a five-star review. Was that a concern? Yes, I said, unless the review also prominently
disclosed the dealer’s incentive for a five-star review. The same goes for reviews submitted by friends
and family.

When I was once reviewing advertising for a bank product, I asked if the client retained the original,
unsolicited copies of glowing comments attributed to customers “John C.” and “Jessica P.” The client
responded that these “reviews” were written by the advertising department. Yikes! I suppose this is
one way to have good reviews without them coming from your brother or costing you an oil change,
but I don’t recommend it.

Dealer Charges
Section 463.5 prohibits any charges for a product that has no benefit or a charge without “express,
informed consent.”

§ 463.5(a) – Add-ons that provide no benefit.

This provision has received a lot of attention, although I don’t think it is the biggest problem
dealers face. If you research your protection products as recommended and obtain substantiation
for express and implied claims, you are not likely to have this problem. But there is a closely related
concern. What if the product might have some benefit, but perhaps not as much as the consumer
thinks? Such situations require a lot of care to avoid making a misrepresentation. Let’s say a bi-weekly
payment plan will save a consumer some interest by paying off the financing a bit early, but the fees
will exceed any interest savings unless the consumer makes all payments over a six-year term. Any
claim about savings should be carefully qualified.

§ 463.5(c) – Any item without express, informed consent.

The FTC has recently alleged that any dealer failure to get express, informed consent for a
voluntary product is an unfair practice. The cases allege that consumers were charged for items they
did not want or were falsely told that the purchase of the product was required. If true, these would
be UDAPs. But what if the deal jacket contained both clear disclosures that the products’ purchase
was voluntary and signed statements that the consumer wanted to buy them? The FTC is quick to
believe that the dealer tricked the consumer into signing the forms. Perhaps this happens in some
instances, and that would be a dishonest practice. But the FTC’s position that any charge is
unauthorized if it doesn’t meet every requirement of the express, informed consent standard seems
like overkill.

Complying with the express, informed consent requirement will be a major compliance challenge for
dealers. Dealers can probably forget about any current menu-selling procedure meeting this
requirement. To be clear and conspicuous and include all the required information, it will almost
certainly require a new, stand-alone form. The form must be signed and even read to the customer
for in-person transactions.

The charges that must receive express, informed consent are not limited to those for add-ons or
even optional products. All “items,” optional and mandatory, are subject to this heightened consent
requirement. Every charge the dealer assesses except, we assume, for the vehicle itself must be
clearly described and include the cash price and “all fees and costs to be charged to the consumer
over the period of repayment with and without the product or service.” That’s a lot more complicated
than it appears on a first reading.

Disclosure Requirements
Dealers who place a priority on avoiding compliance costs until they know the outcome of the NADA
and TADA petition for review might choose to wait on developing compliance procedures for
sections 463.4, creating new disclosures, and 463.6, requiring recordkeeping. However, we can’t
know how long the FTC will extend the effective date if the rule is upheld, so dealers who wait face
the risk that the time given will be insufficient for the tasks.

Waiting also risks an FTC decision to bring enforcement actions against dealers in the interim for not
making the disclosures in section 463.4 or keeping records as required in section 463.6. The FTC
would not be able to seek civil penalties for such conduct if a trade regulation rule is not in effect,
but even an enforcement action without penalties is an expensive and stressful experience for any
business.

§ 463.4(a) – Offering price.

The offering price is the full cash price that the dealer will charge for a vehicle, except for required
government charges. This term and its rules are intended to address complaints that consumers are
charged more than the advertised price for a car or truck once they are in the dealership. Even
dealers accustomed to strict state laws regulating auto advertising are not prepared for this
requirement.


The dealer’s first challenge is to understand what fees and charges must be included in the advertised
offering price. It must include all mandatory fees except government charges, such as “doc fees” a
dealer routinely charges and any dealer equipment or services the consumer cannot decline. Dealers
who pre-install popular equipment on cars and trucks and will not sell the vehicle without charging
for this equipment must include the cost in the advertised offering price. Of course, pre-installing
optional products will increase the offering price and may make the vehicle appear more expensive
than similar vehicles advertised by competitors without dealer-added items.


The offering price must be included in any advertisement for a specific vehicle and in any ad that
includes a monetary amount or financing term for any vehicle, which can create some interesting
inconsistencies with the Regulation Z credit advertising rules. The offering price also must be
disclosed in any communication with a consumer about a specific vehicle or any monetary amount or
financing term for any vehicle. The dealer must quote the vehicle’s offering pricing in the first
response to the consumer regarding that vehicle. This is a requirement that will necessitate
considerable training and will be a challenge for dealers to monitor. Finally, if the communication
or response is in writing, the offering price must be disclosed in writing. Therefore, if the consumer
emails or texts a dealership about a car, a dealership employee cannot call the consumer to discuss
the consumer’s needs without first providing the offering price in writing.


§ 463.4(d) – Total of payments and consideration for a financed or lease transaction.


§ 463.4(e) – Monthly payments comparison.

Two other disclosure requirements relate to quotes of monthly payments for any vehicle. These are
intended to increase transparency in pricing and respond to consumer complaints that dealers often
focus on the monthly payment without being clear about the total cost and what optional items have
been included in the payment.


If the dealer makes a representation about a car’s monthly payment, the dealer must also disclose the
total amount the consumer will pay to purchase or lease the vehicle at that monthly payment. If the
total amount disclosed assumes the consumer will make a downpayment in cash or by trade-in, the
amount must include the amount of consideration the consumer must provide. If the representation
is in writing, even informal handwritten notes, the disclosure must be in writing.

Section 463.4(e) addresses perceived unfairness and deception risks in comparing monthly payment
options. If a dealer compares payment options and discusses a lower monthly payment, the dealer
must disclose that the lower monthly payment amount will increase the total amount the consumer
will pay to purchase or lease the vehicle, if true. Written representations require written disclosures.

Recordkeeping
Section 463.6 imposes a general two-year recordkeeping requirement. This section, like the
disclosures in section 463.4, creates completely new requirements. It will require drafting and
adopting new policies and procedures, additional staff responsibilities for preserving covered records
and ensuring compliance, and some consequences that we hoped the FTC would agree were not
intended.

§ 463.6(a) – Any Covered Motor Vehicle Dealer subject to this part must create and retain, for a
period of twenty-four months from the date the record is created, all records necessary to
demonstrate compliance with this part.

This section specifies four categories of records that dealers must create and retain. The first
category covers advertisements, sales scripts, training materials, and marketing materials regarding
the price, financing, or lease of a vehicle. The second group includes deal-related records: purchase
orders, consumer-signed copies of all financing and lease documents, and all written
communications relating to sales, financing, or leasing between the dealer and any consumer who
signs a purchase order or financing or lease contract with the dealer.

The next group relates to so-called add-ons. It requires retaining records that demonstrate all
voluntary protection products sold have benefit to the consumer, copies of all service contracts
and GAP agreements, and calculations of LTV ratios in contracts including GAP agreements. The
last group requires retaining all written consumer complaints relating to sales, financing, or leasing,
as well as inquiries related to add-ons and inquiries and responses about vehicles “referenced in §
463.4.” We are not sure which vehicles are included in those referenced in § 463.4 because this
section references disclosures, not vehicles. To the extent it could mean vehicles having an
offering price, vehicles sold with an add-on, or vehicles for which a dealer quotes a monthly payment
or makes a monthly payment comparison, that seems to cover any vehicle the dealer has for sale. If
so, the dealership must retain all written consumer inquiries and responses about all of its vehicles.

Most dealers now create and maintain these records consistent with their business needs. If there is
not (or no longer) a business need to keep them, they usually aren’t kept, unless a state law requires
their retention. Under the rule, creating and maintaining records for two years will be required, and a
dealer will be subject to a fine of over $50,000 a day for noncompliance.

The scope of these requirements, which go well beyond many dealers’ existing practices, and the
steep potential fines for violations make the recordkeeping requirements a significant compliance risk
for dealers. Managing this risk is likely to require a commitment of considerable staff resources on a
daily basis. Advertising from every medium must be collected, reviewed for the need for retention,
and then stored securely. Sales scripts, training materials, and marketing materials must be created
or identified and similarly reviewed and retained. Deal-related documents must be retained. Many
dealers have different systems for “live” deals, with funding approved and assignment, and “dead”
deals, where the sale did not go through.

The rule’s recordkeeping provision for deal contracts creates a purgatory category—deals in which
the consumer signed a contract to buy/finance/lease a vehicle, but final approval was not received.
These may be in the dead file but will need to be combined with the funded files for FTC
recordkeeping.

Regarding the scope, when the FTC initially required retaining virtually all written communications
between a consumer and a dealer, we hoped it had not focused on the extent to which dealership
employees now communicate with consumers by email, text message, social media, and live chats on
dealer websites. More than one commenter raised this concern and the infeasibility of successfully
identifying and saving all electronic communications with customers, especially those that occur on
employees’ personal devices. But the FTC held firm, saying that it was up to dealers to ensure their
employees are communicating with their customers through approved channels that the dealer can
monitor and control. Dealers should not make the mistake of underestimating the considerable
compliance efforts that the recordkeeping provisions will require.

Conclusion

Even with the stay of the CARS Rule’s effective date, dealers will need every day they have to
prepare for the rule if it becomes effective. If the legal challenge succeeds and the rule bites the
dust, the FTC is likely to continue investigating and sometimes suing dealers for practices described
in the rule. We can be sure that the FTC’s commitment to contesting certain dealer practices will not
disappear.

Each dealer must make thoughtful decisions about how to use the time while we wait for the Fifth
Circuit’s decision on the petition for review. We think that most will continue working hard to ensure
their procedures and processes will be ready if the rule goes into effect. And even if the rule doesn’t
become effective, those dealers will have practices much more likely to avoid an FTC enforcement
action for UDAP violations, and, I am guessing, they will be happy they chose preparation.

Copyright © 2024 CounselorLibrary.com LLC. All rights reserved. This article appeared in
Spot Delivery®. Reprinted with express permission from CounselorLibrary.com.

The decline of the midsize sedan: Why there will soon be just five nameplates in U.S.

The once-hypercompetitive midsize car segment has shrunk rapidly, falling victim to innovations in vehicle packaging and changing consumer tastes.

The midsize sedan was once the quintessential family car — and one of the most competitive segments in the U.S.

Not today. When the nation’s No. 3-selling midsize sedan, the Chevrolet Malibu, ends production this year and the Subaru Legacy is discontinued after the 2025 model, there will be just five mainstream midsize sedans available in the U.S. — all Asian imports:

  • Toyota Camry
  • Honda Accord
  • Nissan Altima
  • Kia K5
  • Hyundai Sonata

Toyota, which has stuck with a widely diversified product portfolio while others exited car segments, says its top-selling Camry is not going anywhere. Dave Christ, head of the Toyota brand in North America, recently told Automotive News: “We still believe that it’s worth investing in passenger cars, and we’re going to stay committed to it.”

The Automotive News Research & Data Center has tracked U.S. sales of every midsize sedan nameplate since 2009. As recently as 2012, midsize sedans commanded 16.7 percent of the U.S. market, or 2,424,213 vehicles. In 2023, share fell to 5.7 percent, or 884,949.

While that is just a small slice of the industry’s long history, our data does yield some clues. So what happened? The answer is multifaceted.

  • The Great Recession: Under extreme financial duress, General Motors unwound Saturn, Pontiac and Oldsmobile as part of its 2009 government-supervised bankruptcy reorganization, which meant the end of multiple nameplates. Ford Motor Co., which also felt pressure from the recession, ended Mercury in 2011, opting to focus on Ford and Lincoln.

  • The crossover is today’s “family car”: Taking a cue from the growing popularity of body-on-frame SUVs, automakers modified their unibody car platforms to give consumers more headroom, more cargo space and a higher seating position — often at a relatively low additional cost when compared with their increased profitability. Compact crossovers — not their midsize counterparts — have supplanted family sedans. Today, only about 1 out of 5 U.S. light-vehicle sales is a car — as opposed to a crossover, SUV, van or pickup.

  • Consolidation of product portfolios: Automakers cut slow-selling mainstream car nameplates of all sizes as crossover sales grew. Brands that dropped midsize sedans in the U.S. since 2010 are Chrysler, Dodge, Mazda, Mercury, Mitsubishi, Suzuki and Volkswagen.

  • Product planning resources and capital investments diverted to electrification in crossovers and luxury segments: While cars make up a good chunk of electric vehicle sales — see the compact Tesla Model 3 — luxury brands are electrifying their portfolios and mainstream brands have begun rolling out electric crossovers to match consumer tastes for their combustion counterparts.

See our Future Product Pipeline for all the brands’ plans.

Hybrids vs EVs: What Americans are picking and why

Hybrids offer some of the benefits of electric vehicles — lower fuel costs, less pollution — but don’t trigger Americans’ anxieties about charging.

Americans are starting to turn away from purely gas-powered cars, but most aren’t piling into electric vehicles. They’re straddling the line and buying hybrids.

Hybrids offer some of the benefits of EVs — lower fuel costs, less pollution — without triggering car buyers’ anxieties about finding a charger or running out of juice on a long road trip.

“Hybrids are the gateway for the transition” to electric cars, said Stephanie Valdez Streaty, director of Industry Insights at Cox Automotive. “It’s a good option for consumers who aren’t ready to buy an EV.”

Americans are more hesitant to buy EVs now than they were a year ago, according to a March Gallup poll, which found that just 44 percent of American adults say they’d consider buying an EV in the future, down from 55 percent last year. High prices and charging worries consistently rank as the biggest roadblocks for electric vehicles, but political partisanship is starting to factor in. Republicans are less likely to buy an EV than Democrats.

That attitude shift coincides with a slowdown in electric car and truck sales. Americans bought fewer EVs in the first quarter of 2024 than they did the quarter before — the first drop since the pandemic threw the economy into chaos in 2020.

Meanwhile, hybrids keep getting more popular. Over the past year, hybrids have increased their market share even as EVs have stalled out.

The pros and cons of hybrids vs. EVs

Hybrids offer some advantages over EVs. They’re generally cheaper, and they can fill up on gas to drive long distances without a charge. “You don’t have to change anything about your lifestyle,” Valdez Streaty said.

In fact, hybrids can even be better for the environment than some bulky electric cars. The “greenest” car in America is a Toyota Prius Prime SE, according to a report from the American Council for an Energy Efficient Economy.

But hybrids come with plenty of drawbacks. Having two separate power systems, one electric and one gas-powered, means more maintenance challenges, and running on gas is more expensive than running on electricity.

Plus, continuing to burn gasoline in the long run won’t help avoid the most catastrophic effects of climate change. New federal car pollution rules will allow carmakers to shift from pure gas engines to hybrids in the short term, but eventually the rules will push all automakers toward electric vehicles after 2030.

Today, the decision comes down to car buyers’ individual circumstances, according to Valdez Streaty. For those who mostly commute short distances, have access to charging stations nearby or at home and can afford to spend a little more upfront to save on fuel later, EVs make sense, she said. For those who drive long distances and don’t have charging stations in their area, a hybrid is a good option.

“We’re going to see a mix of hybrids and EVs, and it’s going to be dependent on your situation,” Valdez Streaty said.

Hybrid models hit dealer lots

If you’re considering a hybrid, you should have plenty of options. Automakers are flooding the market with new hybrid models and pulling back on some of their more ambitious plans to ramp up EV production.

This year, Ford delayed its plans for new electric pickup and SUV models and announced it will develop hybrid versions of all its models by 2030. General Motors — which has committed to sell only electric vehicles by 2035 — now plans to start selling hybrids in the United States for the first time since it scrapped the Chevy Volt in 2019.

Meanwhile, Toyota — maker of the quintessential hybrid, the Prius — stuck to its hybrid-first strategy even as other carmakers staked their futures on EVs, and it has been rewarded with record sales and profits.

“Manufacturers are determining, ‘Where is that demand for EVs? And how do I shift to support the greater demand for hybrids?’” Valdez Streaty said.

Associated Press: Average US vehicle age hits record 12.6 years as high prices force people to keep them longer

BY  TOM KRISHER

DETROIT (AP) — Cars, trucks and SUVs in the U.S. keep getting older, hitting a record average age of 12.6 years in 2024 as people hang on to their vehicles largely because new ones cost so much.

S&P Global Mobility, which tracks state vehicle registration data nationwide, said Wednesday that the average vehicle age grew about two months from last year’s record.

But the growth in average age is starting to slow as new vehicle sales start to recover from pandemic-related shortages of parts, including computer chips. The average increased by three months in 2023.

Still, with an average U.S. new-vehicle selling price of just over $45,000 last month, many can’t afford to buy new — even though prices are down more than $2,000 from the peak in December of 2022, according to J.D. Power.

“It’s prohibitively high for a lot of households now,” said Todd Campau, aftermarket leader for S&P Global Mobility. “So I think consumers are being painted into the corner of having to keep the vehicle on the road longer.”

Other factors include people waiting to see if they want to buy an electric vehicle or go with a gas-electric hybrid or a gasoline vehicle. Many, he said, are worried about the charging network being built up so they can travel without worrying about running out of battery power. Also, he said, vehicles are made better these days and simply are lasting a long time.

New vehicle sales in the U.S. are starting to return to pre-pandemic levels, with prices and interest rates the big influencing factors rather than illness and supply-chain problems, Compau said. He said he expects sales to hit around 16 million this year, up from 15.6 million last year and 13.9 million in 2022.

As more new vehicles are sold and replace aging vehicles in the nation’s fleet of 286 million passenger vehicles, the average age should stop growing and stabilize, Compau said. And unlike immediately after the pandemic, more lower-cost vehicles are being sold, which likely will bring down the average price, he said.

People keeping vehicles longer is good news for the local auto repair shop. About 70% of vehicles on the road are 6 or more years old, he said, beyond manufacturer warranties.

Those who are able to keep their rides for multiple years usually get the oil changed regularly and follow manufacturer maintenance schedules, Campau noted.

Cox Automotive 2024 Path to EV Adoption Study suggests consideration will surge in second half of decade

 A second, significant wave of shoppers ready to consider buying an electric vehicle (EV) is poised to begin entering the market in the second half of the decade, according to the latest findings from the 2024 Path to EV Adoption Study by Cox Automotive. The findings indicate that nearly half of all vehicle shoppers in market today are not even considering an EV – a group the study identifies as Skeptics, shoppers who are only considering vehicles powered by traditional internal combustion engines.

But the Skeptics are coming, the study suggests. As technology improves, the U.S. charging network expands and prices moderate further, 54 percent of current Skeptics will become EV Considerers within three to five years. Within the next ten years, 80 percent of today’s Skeptics will be ready to consider an EV as more barriers fall.

Last year, EV sales in the U.S. market surpassed 1 million units for the first time, according to sales estimates by Kelley Blue Book, a Cox Automotive brand. Sales growth continues, albeit slowly, and electric vehicle prices continue to decline, thanks mostly to higher incentives and drastic price cuts by market leader Tesla. Still, EV consideration has waned in the U.S. after peaking in 2022. The latest study from Cox Automotive suggests the recent drop in consideration and slowing of EV sales growth is likely a shift in market dynamics as EV sales enter a new phase of development.

“While we’ve seen EV sales growth slow and consideration dip, we believe this is part of a normal growth curve and not the end of the story,” said Isabelle Helms, vice president of Research and Market Intelligence at Cox Automotive. “We remain bullish on the long-term future of EV sales in America, as many Skeptics today will be carefully considering an EV by the end of the decade. With more infrastructure, education and technological innovation and improvements, we believe electric vehicle sales will continue to grow in the long term.”

Key findings from the 2024 Path to EV Adoption Study by Cox Automotive include:

EV Skeptics – The Next Wave Is Coming
The Cox Automotive 2024 Path to EV Adoption Study suggests a second wave of EV Considerers is preparing to enter the market. The study projects EV consideration will notably increase in three to five years, with 54 percent of current Skeptics expected to become active EV Considerers. Within 10 years, 80 percent of today’s Skeptics will have become EV Considerers. By that time, most vehicle shoppers – looking at both new and used vehicles – will be actively considering an electric vehicle.

As Skeptics slowly become Considerers, overall EV consideration in the U.S. is forecast to increase dramatically. Currently, only 45 percent of consumers in market for a vehicle within the next 12 months say they are considering an EV, down from last year when 51 percent of in-market shoppers were looking at EV options. In the 2026-to-2028 timeframe, research suggests that 79 percent of vehicle shoppers (both new and used) will be considering an electric vehicle. By 2033, 90 percent of all vehicle shoppers will have electric vehicles on their lists.

The expected shift is being driven largely by expectations for significant technological advancements and a notable improvement in the available EV charging infrastructure. Many current-market Skeptics are waiting for better range, longer battery life, improved reliability and overall technological advancements. Current-day Considerers often note “price” as the top barrier holding them back from purchase. On the other hand, Skeptics consider the “lack of charging stations” the top barrier.

Demographics Shift as EVs Become More Mainstream
The new research from Cox Automotive also suggests that the EV market is slowly becoming more mainstream. While current EV ownership is heavily tilted toward luxury and high-earning households, the study shows the EV market is casting a wider net, attracting Gen Z, multicultural and less-affluent shoppers. The market is also seeing a notable uptick in used EV consideration. In 2021, 62 percent of EV Considerers were looking at used EVs. Today, 77 percent are considering used electric vehicles.

While Tesla continues to be far and away the most considered EV maker, many mainstream brands are making inroads. The new report shows that electric vehicles from Toyota, Hyundai and Kia have experienced notable increases in awareness and consideration since 2021. Meanwhile, Ford continues to be the most-considered EV maker not named Tesla. Still, apart from Tesla, a majority of vehicle shoppers are not even aware of EV offerings from other major automakers, the Cox Automotive study reveals, suggesting many shoppers are not researching EV products. For example, only 33 percent of vehicle shoppers – consumers in market for a product – have awareness of EV offerings from Nissan, a brand that helped pioneer EV sales in the U.S. market.

A More Balanced Partnership Between Dealers and Automakers
The new study from Cox Automotive also documents the improving relationship between dealers and automakers when it comes to selling and servicing EVs, a partnership that has become more strategic and balanced since 2019.

Dealerships report that they have enjoyed increased support in marketing, sales and service since 2019 but express a need for additional resources beyond training in selling EVs. More EV incentives are high on their list, as are programs like free maintenance and funds for additional advertising. Dealers also feel the urgency to sell: 65 percent of dealers report feeling pressure from their automakers to hit EV sales targets, up from 39 percent in 2019. Luxury dealers are more likely to feel higher pressure.

Still, the research also demonstrates the level of commitment that dealers have to selling EVs. Among franchised dealers, 86 percent say they are likely or somewhat likely to continue making investments required by the automakers. With this commitment to continue investing in EV infrastructure, dealers are signaling a collaborative effort to accelerate EV adoption.

Background and Methodology
The 2024 Path to EV Adoption Study by Cox Automotive assessed the current landscape and prospects of electric vehicle (EV) adoption in the United States. The research was undertaken in Q1 2024 and included a nationally representative sample of 2,557 American vehicle shoppers and 526 dealers to understand their perceptions, preferences, and attitudes toward electric vehicles. The methodology was structured to capture a broad spectrum of demographic variables, including age, income, geographic location, and current vehicle ownership, to ensure the findings accurately reflect the diverse landscape of the American consumer base.

Why the hybrid boom is funding EVs

Japan’s carmakers have been churning out record profits thanks to the weak yen and strong hybrid sales, creating a war chest for electric-vehicle investments

Electric vehicle or hybrid? While car buyers debate the technologies’ relative merits, manufacturers need to invest in both.

Take Japan’s hybrid leaders, Toyota and Honda. Last week they both reported by far their most profitable fiscal years ever. The weak yen played a part: The U.S. is their largest market, while they have a lot of costs in Japan, making them big beneficiaries of a weaker local currency. 

So too did the resurgence of the hybrid technology pioneered by the Toyota Prius in the late 1990s. In the U.S., hybrid sales rose 62% from a year earlier in February, according to the latest Kelley Blue Book data, while EV sales fell. Only the much smaller market for plug-in hybrids grew faster. The trend is similar in Europe.

Crucially, hybrids are highly profitable, unlike the EVs sold by Ford and General Motors. Honda said Friday that its hybrids in the U.S. commanded the same margins as regular cars but at higher prices.

But Toyota and Honda aren’t taking their recent success as a cue to ease off on their push into EVs, where they lag behind. If anything, the fat profits they are raking in on relatively mature hybrid technology are allowing them to spend even more massively on alternatives. Toyota said it would spend 1.7 trillion yen, equivalent to $10.9 billion, on “growth areas” such as EVs and software in its current fiscal year through March 2025, up from 1.2 trillion last year. Honda has been investing heavily in the EV supply chain, with further details expected at a strategy update this past Thursday.

China is the key problem. Most foreign manufacturers have been losing market share as Chinese consumers adopt EVs and become more comfortable with local brands. This isn’t as existential a threat to Japan’s car industry as it is to Germany’s, but it still hurts. 

China accounted for under 7% of Toyota’s profit before taxes in the 12 months through March, roughly half the level of the previous fiscal year. At a press conference last week, the company admitted that it faced some difficult years ahead before it launches more attractive products, notably software-rich EVs and plug-in hybrids, later this decade.

There is also the question of Chinese competition outside China. The Biden administration raised tariffs on Chinese EV imports on Tuesday, and Europe is considering a similar move. That leaves only emerging markets more exposed. Today, Southeast Asia is a key market for Japanese cars. China’s excess capacity in car production means it soon could become a battleground.

One thing that isn’t in doubt is the financial resources Toyota can mobilize for a fight. After a banner year, it had net cash of roughly $82 billion at the end of March, including cash equivalents and marketable securities while excluding the financial services business. It now expects a less profitable period as it shores up its supply chain, but this could be the company’s traditional conservatism as the hybrid boom continues and the yen remains very weak.

The Toyota ecosystem also includes separately listed SubaruSuzuki and Mazda through a web of partnerships. For those outside the Toyota network, notably Honda, Nissan and Mitsubishi, the investments required to create software-rich EVs that can win back Chinese customers are intimidating. Mitsubishi already pulled production out of China in October. Honda said Friday it would increase research and development spending by 23% this year to the equivalent of $7.6 billion.

Sharing resources is an obvious path forward: Nissan already has a stake in Mitsubishi, while Honda and Nissan in March said they would explore partnerships for future technology. But executives from the two companies sounded noncommittal when they presented results last week. Following the failure of previous collaborations—Nissan with Renault, Honda with GM—they need to make sure there is more to the talks than warm words.

“I don’t think they can survive by themselves as medium-size players in the long term,” says Julie Boote, a Japanese autos analyst at London-based Pelham Smithers Associates.

Mastering every new automotive technology is expensive. For anyone but the very largest players, it might even be unaffordable.

Write to Stephen Wilmot at stephen.wilmot@wsj.com

FTC Amends Safeguards Rule to Require Dealers to Notify the FTC if Certain Data Breaches Occur.

What’s new: The Federal Trade Commission (FTC) has announced a final rule amending the FTC Safeguards Rule that will require non-banking institutions, such as dealers, to report certain data breaches and other security events to the FTC. 

The final rule requires financial institutions (including dealers) to report “notification events,” defined as the unauthorized acquisition of unencrypted customer information involving at least 500 customers, to the FTC. The FTC has stated that the rule and its notice requirement are specifically intended to facilitate enforcement of the FTC’s Safeguards Rule against entities that file reports.

The notice to the commission must be provided electronically through a form located on the FTC’s website and must include:

  • The name and contact information of the reporting financial institution
  • A description of the types of information that were involved in the notification event
  • The date or date range of the notification event (if possible to determine)
  • The number of consumers affected
  • A general description of the notification event[1]

Notices will be available in a public database. The final rule does not impose a consumer notice requirement.

How we got here: When this rule was proposed, NADA submitted extensive comments opposing the notice requirement. While the FTC rejected much of NADA’s comments[2], several of NADA’s key points were included in the final rule, including:

  • Notification is only required if the financial institution discovers that unencrypted customer information has been acquired without authorization[3] (the proposed rule applied to all “customer information”), and
  • The FTC’s acknowledgement that “not every notification event is necessarily the result of a failure to comply with the Safeguards Rule.”

This rule will become effective 180 days after it is published in the federal register, which is expected shortly. Dealers and their qualified individuals should review the final rule to understand its requirements and scope and should consult with their technology providers and counsel regarding the implications of the new rule.

[1] And, if applicable, whether any law enforcement official has provided the financial institution with a written determination that notifying the public of the breach would impede a criminal investigation or cause damage to national security, and a means for the Federal Trade Commission to contact the law enforcement official.

[2] Along with those of other industry commenters.

[3] This important change to the final rule underlines the imperative of dealers complying with the existing Safeguards Rule requirement to encrypt all customer information “at rest and in transit.”

This memorandum is not intended as legal advice. Dealers and their qualified individuals should consult with counsel regarding this rule, other federal laws, and related state or local laws, which are not addressed herein.

Americans are buying cheaper cars

By  and 

The US auto market defied expectations for a slowdown by eking out another quarter of sales growth. But the high cost of financing drove Americans to opt for more affordable models.

Budget sedans and compact SUVs from Toyota Motor Corp. and Honda Motor Co. made eye-popping share gains in the first quarter, according to researcher Edmunds.com. Large pickup trucks – one of the industry’s priciest segments – lost ground in January and February, according to researcher GlobalData. Several brands, including Jeep, Tesla and Ford, reduced prices to win back inflation-weary consumers and spur demand in the sluggish electric vehicle market.

“I’m surprised about how resilient the market has been,” said David Oakley, an analyst with GlobalData. “Affordability is a massive issue for the industry, and it will be going forward. But right now it seems they’re weathering the storm, and people are somehow making it work.”

Global automakers, including Toyota and General Motors Co., will offer more insights when they release first-quarter sales results Tuesday, while Ford Motor Co. reports on Wednesday.

The industry’s yearly sales pace, known as the seasonally adjusted annual rate, rose to about 15.8 million in March, up from 14.9 million a year ago, according to the average estimate of eight analysts surveyed by Bloomberg. The 3.8 million vehicles sold in the first quarter mark a 6 percent increase from a year ago, but a 3.1 percent drop from the final quarter of 2023, Edmunds said.

The pricing bonanza that juiced automaker profits during the pandemic is fading as production normalizes and the highest interest rates in more than two decades damp demand. Now that inventories are rising, car companies are doling out more incentives and prices are starting to slip. 

Consumers seem to be cooling to fully electric vehicles due to a lack of charging infrastructure and high prices. While EV sales rose from a year ago, volume in the first quarter likely declined sequentially for the first time since early in the pandemic, according to researcher Cox Automotive. Meanwhile, sales of hybrid vehicles, which offer good fuel economy and sticker prices that are closer to their gas-powered siblings, are growing.

Steve Gates, a dealer who owns ten stores across Kentucky, Tennessee and Indiana, said sales in the first quarter were better than he expected considering affordability is still weighing on shoppers. That’s especially true for hybrids. In a sign of the financial strain on consumers, he can’t acquire enough used cars to meet demand from shoppers who’ve been priced out of new models.

“The demand is still there,” said Gates, who sells several brands, including Toyota, Lexus and Ford. With just the plug-in version of Toyota’s RAV4, “I could make a living if I could just get those things and nothing else.”

Other dealers warned that high borrowing costs have divided the new-car market into haves and have-nots: Affluent shoppers can swallow average financing costs that have risen to 7 percent while many other potential buyers balk. The average monthly payment on a new car rose to a record $747 in February, up roughly 25 percent from three years ago, according to Edmunds.com.

The financial pain is especially acute for people who bought new vehicles from 2021 to 2022, when supply-chain snarls and vehicle shortages allowed dealers to charge more than manufacturers’ sticker prices. Many of those buyers are now saddled with underwater car loans as vehicle prices normalize. That’s another potential drag on sales of new models, said Jessica Caldwell, executive director of insights at Edmunds.

The growth of electric cars and unwinding of price gains ignited by low inventory during the pandemic created uncertainty in the market because there isn’t a clear historical precedent for what’s happening, Caldwell said. 

“A lot of people just made snap purchase decisions because cars were flying off the lots” during the pandemic, she said. “All of a sudden, you find yourself in an unfavorable financial situation.”

The electric car revolution is losing its charge

In the electric-vehicle race, it’s increasingly clear that not every competitor will make it to the finish line.

Companies like Rivian Automotive, Lucid Group and Fisker are burning through their cash reservers as they spend heavily on expanding factory production and sales – all while losing money on every vehicle they sell.

For consumers, the increased competition translates into steep discounts on some of the flashiest electric-powered vehicles. But for EV automakers, a slowdown in demand starts the clock that might determine how long they can keep the lights on.

Many of these companies first unveiled a lineup of innovative battery-powered cars and SUVs in 2018 and 2019, following Tesla’s pioneering success in the new market. It seemed like an army of upstarts was poised to supplant stodgy giants such as Ford Motor and Toyota as the next household name in the industry.

Electric cars were just starting to break into the mainstream, and sales of Tesla’s popular Model 3 sedan were taking off.

These young companies went public at stratospheric valuations, even though many had no revenue and little experience building a car. Investors, analysts and ordinary shoppers believed EV makers could emulate Tesla’s success in disrupting the traditional car market. Rivian’s market value briefly surged higher than that of Ford or General Motors

Now, these companies are fighting to stay afloat amid stiff competition. Sales of battery-powered cars and trucks have been weaker than expected in the U.S., leading companies from Ford to Tesla to slash prices in an attempt to jump-start demand. Too few buyers have been willing to make the switch to fully electric vehicles, worried about the relatively high sticker prices, still-nascent charging infrastructure and the long-term reliability of EVs. Money-losing startups are pulling back on spending and delaying investments as they seek to conserve their remaining cash.

Some, like electric-pickup maker Lordstown Motors and battery-powered van company Arrival, have already filed for bankruptcy, and others are producing only a trickle of vehicles.

These carmakers that went public in an era of low interest rates and rising buzz around electric vehicles now have to prove they can withstand tougher conditions. They say they are focused on stabilizing their cash-bleeding operations, but not all of them may be able to weather the storm.

Here’s our guide on who could survive the battle of the fittest, using battery icons* to signify financial health. 

Vehicle Lineup: Rivian currently sells the R1T pickup and R1S SUV, which start at $69,900 and $74,900, respectively. The company also builds an electric commercial van for Amazon.com

Sales Pitch: Often compared to the clothing brand Patagonia, Rivian targets affluent, climate-conscious adventure seekers. Company founder RJ Scaringe has said he wanted to build an electric pickup because it is the most popular type of vehicle sold in the U.S.

How It Got Started: Scaringe, an avid outdoors lover, started the company in 2009, mortgaging his home for startup funds. Rivian raised billions privately from investors such as Amazon and Ford before going public in one of the most lucrative IPOs of the past decade. The company purchased a former Mitsubishi Motors factory in Normal, Ill., in 2017 to build its first vehicles. 

Quirks of the Vehicles: Rivian’s vehicles have features meant to be useful off the beaten track, such as “camp mode” that levels the vehicle on an incline for comfortable in-car camping and a portable speaker stowed under the center console.

What Happened: Supply-chain logjams and problems getting parts to the assembly line meant that Rivian struggled to operate its factory at maximum capacity. The manufacturing challenges contributed to the company burning around $1.5 billion a quarter. The company also had to redesign key parts of its vehicles in an attempt to bring production costs down. While Rivian was able to overcome many of the logistics snarls holding up its factory output, the company is now warning of weaker demand for its models.

Where Are They Now? Rivian is still losing money each quarter and faces immediate challenges in meeting its goal of generating gross profit by the end of the year. The carmaker loses tens of thousands on every vehicle it sells, but executives say those losses are expected to decline this year. Rivian said it plans to build roughly the same number of vehicles this year as last.

Ultimately, Rivian aims to become one of the world’s largest carmakers. The first step in that plan is a new, $45,000 SUV called the R2, which it unveiled this month and is to go on sale in 2026. The company says this model is key to transforming into a profitable EV maker. 

Vehicle Lineup: Lucid currently sells one model, the Air sedan, which ranges in price from the $69,900 Air Pure to the $249,000 Air Sapphire. An SUV, called the Gravity, is due to go on sale later this year. 

Sales Pitch: Lucid sold investors on a plan to build high-end battery-powered vehicles, fueled by what it calls “the best electric-vehicle technology.” The company’s battery and electric-motor technology allow it to squeeze out more mileage than its competitors. Even the cheapest version of Lucid’s Air sedan can travel 410 miles on a single charge, around 100 miles farther than most electric vehicles available in the U.S.

How It Got Started: Lucid started life at a battery venture called Atieva. That company’s founders in 2013 hired Peter Rawlinson, a former Tesla executive, who was brought in to help Atieva pivot to car manufacturing. In 2016, Atieva changed its name and Lucid was born. When the company started to run out of cash in 2018, a $1 billion investment from the Saudi Arabia Public Investment Fund saved it. Rawlinson became chief executive in 2019. 

What Happened: At first, Lucid appeared to have a deep well of demand, reporting more than 25,000 reservations for the Air in early 2022. With a factory in Casa Grande, Ariz., Lucid seemed both well-funded and well-prepared. Instead, sales have been relatively flat since the second half of 2022. Lucid began flagging slower demand for the Air last February—sooner than other startups on this list. In response, the company has been spending more on marketing and cutting prices to help boost demand. 

Where Are They Now? Lucid’s newest factory in Saudi Arabia is currently assembling vehicles as part of a deal to sell at least 50,000 to that country’s government. The company is also slated to start production of the Gravity this year. Company executives say the vehicle will appeal to a wider audience, because SUVs outsell sedans three-to-one in the U.S. Lucid also says it is preparing to broaden its lineup further in 2026, when it plans to launch a new, more affordable midsize vehicle. 

Vehicle Lineup: Fisker currently sells the Ocean SUV, which costs between $38,999 and $61,499.

Fisker’s Sales Pitch: Fisker has taken a different approach than other startups, employing what it calls an asset-light business model. Rather than building the cars itself, it contracts that work out to an outside company. That way it doesn’t have to own a factory itself or employ a manufacturing workforce. 

How It Got Started: This is the second electric-car startup started by former BMW and Aston Martin car designer Henrik Fisker, who is also CEO. His first company, Fisker Automotive, sold a $100,000 plug-in hybrid called the Fisker Karma, but it went bankrupt in 2013 after 300 vehicles were destroyed in a hurricane and its battery supplier went out of business.

Four Unique Features: “Each Fisker has to have at least four unique features that have to be either best-in-class or something nobody else has,” says the Fisker CEO. The features include the Fisker Ocean’s “California mode,” which opens every glass panel, except the windshield, and a small foldout shelf dubbed the taco tray. The company’s forthcoming Alaska pickup truck has a “cowboy hat holder” and “the world’s largest cup holder.”

What Happened: Fisker only started delivering vehicles to customers halfway through 2023 after missing self-imposed deadlines. The company says it ran into delays securing parts and regulatory approval. As a result, it slashed its production outlook twice last year, but ultimately fell short of even its reduced goals.

Where Are They Now? Fisker warned at the end of February that it risked running out of cash this year. As of mid-March, the company had nearly 5,000 unsold vehicles and its cash reserves had dwindled to $89 million. Fisker says it is raising $150 million in fresh funds from an investor and is negotiating with a large carmaker for another investment. Fisker has hired restructuring advisers to help prepare for a potential bankruptcy filing, according to people familiar with the matter.

Note: Gross profit per vehicle, net loss and cash burn are as of end of September, 2023, because the company has yet to release full-year results.

Vehicle Lineup: The carmaker sells three models: the $49,200 Polestar 2 sedan, $73,400 Polestar 3 SUV and approximately $60,000 Polestar 4 SUV.

Sales Pitch: Like Fisker, Polestar doesn’t own manufacturing facilities, and instead contracts to have its vehicles built at other companies’ factories in China, South Korea and the U.S. Unlike most electric-car makers, Polestar says it doesn’t want to make a mass-market EV. Instead, the company pitches itself as a sportier alternative to Volvo.

How It Got Started: Volvo Car and its Chinese parent, Geely, created Polestar as an EV-only brand in 2017. The company started by selling a hybrid, the Polestar 1, before launching the fully electric Polestar 2 in 2020.

Quirk: Polestar vehicles bear more than a passing resemblance to electric vehicles made by Volvo. That may not be surprising given that the CEO, finance chief, operations head and lead designer are all former Volvo executives.

What happened: Polestar appeared to have the smoothest launch of any of the current crop of EV startups. It has built over 100,000 vehicles since starting production and has even turned a profit in some quarters. But Polestar has faced slowing demand for its Polestar 2 sedan and the launch of its Polestar 3 SUV was delayed after Volvo ran into software development issues. The company has slashed its production outlook and Volvo said last month that it will sell the majority of its 48% stake in Polestar.

Where Are They Now? Polestar’s finances are now stable after raising nearly $1 billion in debt last month. Production of the Polestar 3 has started in China, and a U.S. plant is due to start producing the vehicle later this year. Polestar’s chief financial officer says the company is targeting a double-digit gross margin by the end of 2024. The company says the U.S. launch of the Polestar 3 SUV this year will help boost sales.

Vehicle Lineup: In the U.S., VinFast currently sells the $46,000 VF8 SUV. A larger SUV called VF9 is expected to go on sale this year, starting at $79,800. VinFast also sells battery-powered scooters in Vietnam.

How It Got Started: VinFast was created in 2017 by Pham Nhat Vuong, the billionaire owner of Vietnamese conglomerate Vingroup, which operates a diverse array of businesses from hospitals to theme parks. VinFast built a massive $1.5 billion factory east of Hanoi, which the company has said will be capable of producing nearly a million vehicles a year by 2026.

VinFast’s Sales Pitch: VinFast aims to compete with Chinese EV startups like BYD and NIO, and says that building cars in Vietnam means its labor costs are even lower than those of Chinese competitors. The company is expanding across Southeast Asia and in India, while also aiming to increase its sales in the U.S.

Quirk: Early buyers in the U.S. were offered free stays in one of Vingroup’s resorts in Vietnam. People who buy a home in Vietnam from the company’s property arm may also get a free car as part of the deal. 

What Happened? VinFast tried an innovative pricing strategy in which it sold cars to customers but rented the lithium-ion batteries that power the vehicles separately. The company said the plan allowed customers to pay less upfront for VinFast vehicles, but ended up ditching the plan in the U.S. for now, because customers found it confusing. Ultimately, VinFast only delivered a little over 3,000 vehicles to U.S. customers last year, according to Motor Intelligence. 

The company also had a rocky debut on Wall Street. Initially, its share price skyrocketed, briefly making VinFast more valuable than Ford or GM, in part because only a small percentage of the company’s shares were available for trade, boosting demand for them. Since then, the stock price has tanked as the company faced challenges getting its first batch of cars to U.S. consumers. Reviewers panned the VF8 for quality issues.

Where Are They Now? VinFast is building a $2 billion factory in North Carolina, which will allow its vehicles to potentially qualify for a federal tax credit. Over 70% of VinFast’s passenger vehicles and nearly half of its scooter sales last year were to a taxi company owned by Vuong, the head of Vingroup. VinFast has said it plans to deliver 100,000 electric cars and SUVs this year, but hasn’t said how many will be to customers outside of the Vingroup network.

NOTE: A fully charged battery would signify a profitable, cash-generating business. Two bars of charge denotes a company draining its cash reserves but has more cash on hand than it spent last year. A company whose cash burn last year was greater than the sum of its current cash and cash equivalents is assigned one bar of charge.