 |
| Jaguar (among others) will be using the Tesla charging network in 2025 |
2024 is on course to be a lame-duck year for EV sales in North America for any automaker not named Tesla. Nearly every automaker (see list below) has pledged to support the Tesla-initiated charging standard now known as NACS or the North American Charging Standard for their EVs. The announcements from the automakers were largely made in late 2023; however, the charging port changeover doesn't happen until 2025 model-year vehicles. So in 2024, these automakers will offer-for-sale EVs with a charging port in its last year before being phased out.
That charging port that is not long for this world is the CCS port. CSS has a patchwork of charging stations in various states of disrepair. JD Power has consistently ranked the CCS charging stations poorly.
Legacy automakers didn't have to build or support gas stations for their gas cars. They assumed the same would be true with EVs. However, the poor maintenance at CCS stations has hurt the EV ownership experience for their customers. EVs need a dependable charging network. This is a significant factor in owner satisfaction. If you have a car, you want to be able to drive it places. Occasionally, that means you might have to charge up someplace other than at home. This requires a robust "refueling" network. CCS was not that network.
This drove automakers to leave CCS for greener pastures. More on this below in the 'Why CCS Failed' section. Reluctantly, automakers are embracing the solution from the upstart Tesla to gain access to the vast reliable charging network that Tesla has created.
Who is Joining NACS
Companies Joining NACS:• 2023.05.26 : Ford (Lincoln)
• 2023.06.09 : GM (Chevy, Cadillac, GMC)
• 2023.06.20 : Rivian
• 2023.06.22 : FLO (Charging Network)
• 2023.06.28 : Blink (Charging Network)
• 2023.06.29 : Electrify America (Charging Network)
• 2023.07.07 : Daimler (Smart, Mercedes-Benz)
• 2023.08.18 : Honda (Acura)
• 2023.09.22 : JLR (Jaguar, Land Rover, a division of Tata Motors)
• 2023.10.05 : Hyundai (Genesis, Kia)
• 2023.10.17 : BMW, Mini, Rolls-Royce
• 2023.10.20 : Toyota (Lexus)
Why'd CCS Fail?
The largest CCS network in North America is the combination of Electrify America and Electrify Canada. These networks were created as part of the $2B+ Diesel-gate scandal settlement.
For a charging network, reliability is vital! When you pull up to a charging location, you expect to be able to, well, charge up. Sadly, far too often, at Electrify America stations this was not possible. Stations would be down for repair or blocked. This often meant that the few spots that were not blocked and operational had a long line of cars waiting to drink in the lepton juice.
JD Power has repeatedly ranked Electrify America as poor for reliability. It's almost like forcing a business into existence via mandates and fines is not the best way to create a company filled with people passionate about their mission. A headline from The Verge says it well for the state of charging in the US in 2023, "EV charging in the US is still a no good, very bad time — and somehow it’s getting worse." If that was not enough, here's another, "Car Companies Are Beyond Fed Up With Electrify America: Report."
Surprisingly, customers occasionally want to drive their EV more than half a charge away from their home charging station. Drivers of CCS-equipped vehicles are fed up with the unreliable infrastructure and they are letting the automakers hear this loud and clear.
Both Ford CEO Jim Farley and US Secretary of Energy Jennifer Granholm both attempted road trips in 2023 using CCS vehicles and found the infrastructure deficient.
 |
| Vehicle makers that have joined the NACS coalition |
There will be adapters that allow CCS-equipped vehicles to charge up at NACS stations, so the CCS vehicles will not totally be left in the lurch. And there are the MagicDock Supercharger stations. MagicDock Superchargers have a built-in CCS adapter. If you just walk up and grab the handle, it will be the native NACS connector. However, if you login to the Tesla app (or an app that supports the Tesla app APIs), then you can request a CCS connector on a specific stall and the CCS adapter will lock onto the connector. Then when you pull the connector out, it will have CCS for your 2024 or prior year non-Tesla vehicle.
While CCS cars will be able to charge, charging with an adapter or MagicDock is not as convenient as a native NACS experience. With NACS, you just grab the handle and plug it in. When the charge is complete, unplug and drive off. No app, no adapter, to membership card to deal with. Billing is handled automatically via Plug-n-charge.
With CCS, you'll need an adapter. If you are using an adapter, the charging handle may not properly lock to the vehicle or the charging rate may be reduced. If you are using the MagicDock, then you'll have to use an app to tell the station that you want to charge with the CCS adapter. Then after the station is informed, only then will you be able to remove the charging cable with the CCS adapter locked on. Neither of these is as simple as the NACS experience. If you plan on keeping your car for years, that's years of dealing with apps and adapters for every on-the-road charging experience.
Coopetition
When companies compete, there's reason to innovate. A company that can make or do something better, faster, cheaper... has an advantage. There are times, however, when cooperation between companies is better for the customer and the companies. There are times when standardization increases the available market and allows companies to show their strengths in other ways.
One Port To Rule Them All
There are no separate gas stations for Fords or Toyotas. If you drive a gas-powered car, you just go to the gas station (nearly any gas station) and fill up. The only consideration of concern is Diesel or gasoline. This is not that hard and with rare exceptions, people can successfully fill up every day.
Charging an EV is not that simple yet. With an EV, there are different networks. Some are AC, some are DC, some take credit cards, some require membership and have apps or membership cards; some have QR codes to scan. And there's another layer of complexity, the charging ports. You have to know if your car has just AC charging or if it also has DC fast charging and if so, which kind of port(s). In the US, there's J1772, CHAdeMO, CCS, and Tesla (now called NACS). You're out of luck if you pull up to the wrong type when you need to charge. Well, unless you have an adapter that allows you to convert the charging station connector to the type that your car needs. And when you use these adapters, you are often greatly restricted in the top charging rate.
For EV to go mainstream, this needs to be simple. Multiple network memberships, multiple connector types, adapters... this is all far too complicated. Most of the time an EV is just charging in its own garage, and this doesn't matter. However, when you go on a road trip, on-the-road EV charging is anything but simple (unless you have a Tesla, more on that later).
We need one continent-wide, universal connector, with payment simplicity and plug-in simplicity (without adapters). One plug, any place, AC or DC, that just works. For EVs to become ubiquitous, charging has to be easy. You should not have to know multiple standards, voltages, amperages... It has to be simple, plug in, charge up, drive off. When there are multiple competing standards like we have today, there's a layer of complexity that creates an obstacle to mass EV adoption.
There are times when proprietary solutions are the right way to go. This can allow innovation and differentiation. There are other times when standardization benefits the manufacturers with commodity parts with higher volumes and lower prices. Standards make it more convenient for owners too. If there's one charging standard, then you won't have to know if you have a CHAdeMO, CCS, J1772, or NACS port on your car or which connectors are at the charging location that you plan on stopping at on your road trip.
This move by all automakers to adopt NACS removes a layer of complexity. Now, automakers will compete on other features like range, performance, price...
While I think this is the right direction, I wonder if automakers have Osborned themselves by announcing that they will have something cool in 2025, but then expecting people to buy their 2024 vehicles.
2024 Has Other Headwinds Too
Other Headwinds: Interest Rates
Most people buy cars with financing. They take out a car loan and make monthly payments. Other things being equal, the higher the interest rate, the higher the monthly payment. Car loan rates are about 8% for new cars and even higher for used vehicles. They have not been this high since the Great Recession in 2009.
Most people would rather spend their money buying a car that they like rather than paying interest. So some buyers are likely to sit on the sidelines, keep driving the car they currently have, and wait to see if 2025 has better rates.
Let's compare buying a $50,000 vehicle with a $10,000 down-payment (or trade-in) with $2,400 in title registration and other fees rolled into the loan at today's rates versus last year's.
2022:
1.2% Loan Interest Rate
Down-payment: $10,000
Loan Amount: $42,400
60 Month Loan
Monthly Payment: $728
Total Cost: $53,706Today:
8.1% Loan Interest Rate
Down-payment: $10,000
Loan Amount: $42,400
72 Month Loan
Monthly Payment: $745
Total Cost: $63,675
There are a few things to unpack here. The first thing to note is that, if you're taking out a loan, overall you'll pay about $10,000 more in today's environment.
The second thing to note is that the second loan is 72 months rather than 60 months. That's because most people are concerned with the monthly payment more than anything else. To make the payments similar for these two loans, the term of the second one had to be extended.
Other Headwinds: Falling EV Prices
Falling EV prices seems like it would be a sales accelerator. In the long term, it will be; however, if the prices are dropping and they look like they might keep dropping, there's a temptation to wait and see how low they may go.
Multiple battery factories are being built. Batteries are by far the single highest cost of EVs today. As these factories come online in 2024, battery prices will drop and EV prices will follow.
Falling prices of critical minerals will lead to a 40% drop in the cost of batteries for electric vehicles by 2025, with big implications for the pace of global EV adoption, says Goldman Sachs Research. So if you can wait, you'll likely get a better deal in 2025.
Wrapping Up
The current CCS charging network in North America is not good. The only network that is robust and reliable is the Tesla Supercharger (NACS) network. Automakers are giving up on CCS and moving to NACS as fast as possible, which is 2025 model-year vehicles.
This means that 2024 will be the final year of CCS cars. CCS is now officially the Betamax of charging standards and 2024 will be its final year of sales. CCS is a dead-end technology.
Will EV shoppers buy the final model year of a standard that's fading away? Or will they save their pennies for another year and see what 2025 brings? With high interest rates and falling prices in 2024, it is tempting for buyers to sit on the sidelines and hold out for 2025 where they may get a better vehicle at a lower price with better financing and a native NACS port.
You can call 2024 a transition year, a lame duck year, or an Osborne year. If buyers sit on the sidelines, non-Tesla EV sales in North America 2024 is kNACkered.
Counterpoints
There are plenty of EV drivers that disagree with this assessment. They argue that the NACS changeover is not that big of a deal. Comparing CCS to Betamax is hyperbole since there will be adapters (unlike Betamax video tapes) and there's MagicDock meaning that more and more Tesla locations will be able to charge CCS vehicles after just a tap or two in an app. Plus the existing CCS network (as bad as it may be) is not going away and it will be better supported as more EVs hit the road and start using the network in 2024.
Similarly, the point about interest rate impacts is overplayed. Interest rates will hurt all auto sales, not just EVs. So the growth of EVs as a percentage of new auto sales will increase in 2024, even if the volume of sales is down or flat compared to 2023.
disclosure: I'm long TSLA and several other EV stocks
No comments:
Post a Comment