The future of cars is now.
Electric vehicles on a grand scale are no longer a distant pipe dream, and Tesla (TSLA) is no longer the lone wolf in the hunt for market dominance. But recent calls to action from major world powers, including China, the United Kingdom and France, have highlighted a growing concern among U.S. automobile industry watchers: Will U.S. automakers be able to rapidly expand their electric vehicle offerings over the coming years while simultaneously serving a U.S. market in which demand for SUVs and trucks continues to build?
“Can they do it? Yes, I’d say they probably won’t have a major issue doing it,” Jessica Caldwell, executive director of industry analysis for car research firm Edmunds, said in an interview with TheStreet. “U.S. automakers have their hands in a lot of different arenas. They are invested in a ton of different electrification and autonomous technologies. That said, they may have to address current production issues.”
Tesla is no stranger to electric vehicle production issues, with industry onlookers frequently doubting the ability of the carmaker, which pumped out 83,922 vehicles in all of 2016, to produce 500,000 Model 3s in 2018.
And despite a number of more traditional car companies following in the tech behemoth’s footsteps, including GM (GM) , Nissan (NSANY) and BMW (BMWYY) , electric vehicles still represent just 0.5% of the U.S. car sales market. That means automakers might not know what to do with these vehicles once they do massively expand production.
Global markets could be part of the solution, but industry followers, including Caldwell, have some doubts about the extent to which places like China will play a role.
“What matters most is the price point,” Caldwell explained. “The Chinese market does really well on the high end, expensive show-type vehicles. But the largest part of the market is affordable utility, and it is not matching in the U.S. average transaction price.”
In August, GM announced it reached a record number of vehicle sales in China with 328,425 automobiles. In recent years, car sales research firms have placed the average vehicle transaction price around $20,000 in China.
The average U.S. vehicle transaction price is almost $35,000 per car, and some electric vehicle models are priced roughly in line with that. GM’s newest U.S electric model, the Chevrolet Bolt, has an MSRP of around $37,000.
TheStreet is fresh off a review of the nimble Bolt.
But as GM and other automakers work to bring the price of their electric vehicles closer to what the average Chinese consumer is paying, they may face some new hurdles, including the possible elimination of gas and diesel-fueled vehicles altogether.
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