Happy Saturday!

Fun fact: on this day in 1926, the U.S. decided to number its highways 🚗

💭 So, if you're mapping out an epic American road trip, remember this: odd-numbered highways are your compass pointing north and south, while even-numbered ones stretch from east to west.

Speaking of highways and cars, today we'll discuss the bumpy ride for America’s EV industry, and more, in just 4 minutes to read.

— Weronika

QUOTE OF THE DAY

“It has become appallingly obvious that our technology has exceeded our humanity.”

— Albert Einstein

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READER RESPONSE

Last week, we asked readers: If you had $10,000 to spare, would you use it for investing/saving, paying bills, self-development, or spending on something fun like a vacation?

Here are a few responses:

• "I’d love to say something fun, but I’d be investing it!!!” — Jon, Henderson, NV
  

• "I will split it for all these possibilities.” — Łukasz, Wrocław, Poland
  

• "Invest! Gotta work towards that down payment on a house.” — Kayla, Roanoke, TX
  

• "An ETF investment for my child that would make their retirement successful.” — Mark, Calgary, AB
  

• “Self-development.” — Dan, Chicago, IL

Answer this week’s question: Would you rather have to sell your favorite stock today with a guaranteed 100% return, or would you rather hold it but you can’t sell it for ten years?

THE BUMPY RIDE OF EVs

Rapid growth

Electric vehicles (EVs) have surged in popularity worldwide, with many countries endorsing them to combat climate change and save on fuel costs. Governments are rolling out incentives, like tax breaks and grants, to encourage people to choose EVs over traditional cars. 

This support, coupled with advancements in EV technology and increased public awareness of environmental issues, is driving the shift.

In 2022, global spending on electric vehicles soared to over $400 billion. 

The stakes are enormous: Bloomberg NEF forecasts the cumulative value of all forms of EV sales will hit $8.8 trillion by 2030 and $57 trillion by 2050 if the world ditches its gas-guzzling vehicles.

“The automotive sector is a major source of manufacturing jobs, R&D investment, and innovation, but not everyone is going to make this transition smoothly,” said Colin McKerracher, head of transport and automotive analysis at BNEF. “It’s all up for grabs, and nobody wants to be left behind.”

The U.S. had a record surge in its EV market, too, with sales of light electric vehicles reaching about 918,500 units. 

That’s a growth of more than 150% from 2018, a year that saw a significant rise in demand following the launch of Tesla's Model 3. The Model 3 sedan and Y SUV have since become the most popular electric vehicles in the U.S.

Total sales of electric vehicles for the third quarter surged by nearly 50% compared to last year, reaching a new high by representing 7.9% of the overall car industry sales.

Between 2023 and 2027, automakers are poised to inject a staggering $616 billion into the sector. 

But the industry is bracing for potential turbulence ahead as electric vehicle sales have begun to cool. Carmakers are grappling with escalating expenses and growing inventories.

Bracing for impact

Many car dealers have voiced worries that the time it takes customers to purchase an electric vehicle is twice as long as choosing a gas-powered car.

Amidst a period of underperforming sales for electric vehicle makers, Tesla has slashed its prices for the sixth time this year before releasing their quarterly financial results. 

Tesla's Model 3 price dropped to $40,240 in August, making it cheaper than the average new U.S. car price, which is $47,899, with further reductions in the following months, making it one of the cheapest models on the EV market.

Another big EV maker, Lucid, saw deliveries for the second quarter fall short of expectations. At the same time, Ford has ramped up the production of their hybrid pickups in reaction to the slowing pace of growth in EV sales.

Why aren't more customers as sold on EVs as governments, the mainstream media, environmentalists, and tech leaders?

Three red flags

Surveys indicate that potential EV buyers have three main worries: cost, driving distance on a single charge, and charging options.

The data reveals that:

• 42% think EVs are too costly to purchase or lease 

• 39% are anxious about how far they can drive on one charge 

• 33% are uncertain about charging locations

It’s not a surprise that the major concern for the customers is “range anxiety,” where people fear the battery running out of charge before reaching their destination.

In the U.S., millions rely on their cars daily, long drives are common, and cars are the preferred way to travel for comfort and convenience. 

Another challenge for the EV industry: Americans are sticking with their older vehicles for longer, with the average age of passenger cars and light trucks combined on U.S. roads now at 12.5 years.

Although there’s a market for electric cars, the production volume is excessively high in terms of actual demand.

The industry faces other challenges, though. Some experts point out that creating electric vehicle batteries poses various ecological issues.

Producing a standard EV battery (and mining the metals necessary to manufacture them) can generate considerable carbon emissions, reducing their environmental advantages relative to gasoline-powered vehicles.

Dive deeper

To learn more about the EV industry’s road ahead, watch this video.

WHAT ELSE WE’RE INTO

📺 WATCH: WeWork files for bankruptcy: What went wrong?

🎧 LISTEN: Evolving the value investing mold with Adam Seessel

📖 READ: TikTok to shut down its $2 billion Creator Fund

See you next time!

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