As the entire U.S. Auto industry tries to gracefully back out of their elaborate plans for electric vehicles, Volkswagen, a car company that went all-in on EVs after the disastrous diesel emissions scandal, is delaying its introduction of the new ID.7, an all-electric sedan.
In a short but sweet statement, the company said:
Volkswagen is committed to making market-driven choices while listening to our customers. As market dynamics continue to change, Volkswagen is delaying the introduction of the ID.7 sedan in the U.S. and Canada.
In Europe, the ID.7 has been on sale since 2023 and has become an industry standard, winning various international awards and comparison tests. After the introduction of the ID.7 Tourer, customer demand for the models is higher than expected, especially in Germany.
In North America, the brand experienced strong sales in Q1, with 27.5% growth, driven by its SUV segment. We remain committed to electric mobility—this year we have enhanced the range and performance on our all-electric 2024 ID.4 SUV, and we are thrilled to welcome the iconic Microbus back into our lineup with the arrival of the 2025 ID. Buzz in Q4.
VW, just a few months ago released new details of the sedan, saying it would be released in the United States closer to the 3rd quarter of this year, which begins less than a month from now, so this new upscale sedan was yanked at what I would call the last minute.
I think this was a good move by the automaker. I am certain that in corporate automotive boardrooms all over the world, meetings are feverishly going on, given the climate for electric cars currently. Electric vehicles currently account for roughly 7% of total sales in America, far below what automakers planned on, and certainly fewer than the current administration’s plans.
The conundrum is what to do now that billions of dollars have been invested into electric vehicle plans. Some car companies are quietly backing away, others are publicly pulling the plug, and some just frankly, don’t know what to do. GM and Stellantis seem to be forging full speed ahead into electrification.
However, most are looking at Toyota that has tiptoed into the world of EVs, but has continued to produce more and more hybrids and plug-in hybrids. Ford went speeding into electrics but is backing off and has publicly said they were making big bucks on hybrids today. Of course, as I reported here and on the air, the Blue Oval company said it lost $100,000 PER ELECTRIC VEHICLE SOLD earlier this year.
Someone woke Mary Barra up, finally. The CEO of General Motors now says the company has a “solid plan” to have plug-in hybrids by 2027. Too little, too late Mary, sorry. You need them much sooner than that if you are going to compete with the others. You rushed electrics to market, why not do the same with hybrids?
As I’ve always said, America will not be forced to drive a vehicle they are not comfortable with or confident in. People vote with their dollars. Oh sure, put enough factory and government incentives out there and anything will sell, but at what cost? Ask Ford, they got a dose of this to the tune of a hundred grand a pop on what are actually some really good electric vehicles. The Lightning pickup and Mach-E are fantastic if an EV is your jam.
The next BIG hit is coming
Car companies tend to live in the present. How can we sell electric cars now and reduce inventories at the dealerships, so they’ll order more vehicles? That is the big question facing them all. Tesla is clearly not immune to this somewhat sudden change in buying habits either.
Some automakers put heavy incentives on leases a year or more ago as a quick way to move the slow selling vehicles, and in many cases it worked well. The problem is these vehicles have high residual values, since electrics were “the next big thing”. Fast forward to today and used EV prices have plummeted. I told you about the one-year-old Lucid I saw sell at auction recently for just about half the original sticker price with 1,000 miles or so on the odometer. This is a fantastic car, one of my all-time favorite reviews, but like all EVs, they are taking a beating on value.
This should not surprise anyone given the movement started by Tesla to take massive price reductions of new electrics. Of course, that will further drive down the value of used ones.
Guess what? All those vehicles that were leased will be coming due soon. They had high residual values, and now they have very low resale values. People coming out of leases will try to sell them, they’ll try to trade them, but they’ll eventually come to the realization that they have no choice but to hand them back in. Nobody in their right mind would ever purchase one themselves like many people who lease gas and hybrid vehicles do.
So then, these leased electric cars will hit the auction in big numbers all at once, which will drive the prices even lower. The captive lease companies and many car companies will write off millions, if not billions, collectively. Mark my words, this will be a bloodbath of epic proportions.
It’s all so clear now: Most automakers are losing big money when it sells an EV, it loses more money putting incentives on them to sell or lease them, THEN will get to write-off a lot more money when the vehicles that were leased get sold at the auction.
A smart man taught me this lesson
It was my dad actually. He was not college educated, hell he didn’t get past the 8th grade when his dad died, and he had a Mother and five sisters to be the man of the house for. He once told me these words:
YOUR FIRST LOSS IS YOUR BEST LOSS
To paraphrase him “Son, if you’ve got an ass-kicking coming, take it and get it over with.” My old man was pretty smart and if the CEOs of major car companies were smart, they’d heed that advice, especially the Detroit 3 that jumped in feet first into electric cars. The Detroit 3 are touting record profits for 2024, but I would suggest putting the majority of that money into reserve accounts to write-off the losses from the unwise speculation about electric vehicles, not doing your due-diligence, and for trying to force a market that simply isn’t there.
Automakers: Listen to my Dad, he nailed it.
