There is definitely a gas price that makes electric cars appealing to a larger percentage of the buying public, but our slow march to $4.00 a gallon over the last few weeks hasn’t yet done it yet. At least that’s what the data shows. This makes sense to me. It’ll require a longer period of elevated fuel prices in order to change behavior.
Automakers seem to feel the same way, with General Motors temporarily laying off employees in one of its electric car manufacturing plants as it waits out demand. I think that’s a product issue as much as an overall market issue, though. That isn’t stopping Volvo from helping Polestar produce more of its cars in South Carolina. If there’s anyone poised to benefit it’s BYD, which again has upped the amount of cars it expects to export this year to an impressively large number.
Also, tomorrow’s Morning Dump should come to you live from the New York International Auto Show, so it may be very early or very late.
Electric Vehicle Market Share Stays Low At 5.2% In March
Here’s a chart:
In the summer of 2022 I was out filming in California and I was shocked at the fuel prices, which were so high that my credit card hit its $100 limit before I could fully fill up the big tank on on my rented minivan. Gas prices have risen and fallen since, but mostly they’ve fallen. It’s been one of the areas of the economy that’s felt like it’s avoided inflation since late 2022.
Prices aren’t that bad yet but, according to GasBuddy.com, the national average gas price for the United States hit $4.00 per gallon yesterday. That’s the first time this has happened since the summer of 2022, and is a direct result of the conflict in the Middle East (the most recent one, at least). I’m not a fuel expert, though I did grow up in Houston, which is the next best thing. I don’t think people are quite prepared for how long the impacts could be and how unpredictable the various petroleum derivatives usually are. I hope I’m wrong.
I’ve already mentioned that consideration of “electrified vehicles” has gone up, but that also included hybrids. I don’t think the use case for hybrids has ever been stronger, though after a year of incredible growth in hybrid sales there’s probably only so much upside this year. Electric cars? That’s a harder sell, especially as automakers have cut back on production following the end of the Inflation Reduction Act tax credit and the ensuing pulling-forward of sales at the end of last year.
As you can see above in the chart from S&P Global Mobility, the share of EV car sales is down a lot from its peak above 12% in September, and off the pre-election climb towards 10%. Total sales for the market were down from nearly 1.6 million vehicles in March 2025 to an estimates 1.4 million this month. That is sticking with the expectation that this year’s car sales are going to be middling-to-bad given all the uncertainty. The EV market share barely stayed at 5% in March.
Viewed one way, this 5% market share is a sign that the overall appetite for electric cars is still rather small. Viewed another way, if you average out demand over the last couple of years, it ends up staying at a relatively consistent 7-8%.
The way I see it is that there’s probably more demand at a lower price point, and the vehicles suffering are going to be those priced at the higher end.
GM Temporarily Lays Off Factory Zero Workers, Because Who Really Wants An EV Hummer?
Photo: Griffin Riley
I’ve always liked the design of the Hummer, which appeals to a deeply East Texas part of me. Whenever I see the new Hummer EV I’m torn between appreciating the technology and the aesthetic, and remembering that it weighs 9,000 pounds. This is the maximalist approach to building an electric vehicle, and it hasn’t really worked for GM.
There are four vehicles that GM makes at its Factory Zero in Michigan on this basic platform (Silverado EV, Hummer EV, Sierra EV, Cadillac Escalade IQ), and I don’t think you could argue that any of them are particularly popular. So, the inevitable has happened. Per Reuters:
General Motors is idling its all-electric Factory Zero plant in Detroit until April 13, the company said, once again citing lower than anticipated demand for electric vehicles.
“Factory ZERO will temporarily adjust production to align EV production with market demand,” a GM spokesperson said on March 30. The temporary layoff affects 1,300 workers.
Employees were told March 13 that they would be placed on temporary layoff until April 13, GM confirmed to the Detroit Free Press.
It’s possible that prolonged gas prices will stoke demand for these trucks, though I think it’ll probably be better for vehicles like the Equinox EV and Blazer EV.
Volvo Will Reacquire Some Polestar To Pay For Production In The United States
Photo: Sam Abuelsamid
The Polestar 3 is probably the best argument for Polestar continuing to exist in the United States, and a big reason is that it’s built in the United States. Volvo had been a major shareholder in Polestar, and then it gave its shares back to Geely (the Chinese parent company of both), and now it’s reacquiring shares. Why?
Again, from Reuters:
“Our strong operational collaboration with Volvo Cars continues through manufacturing, our commercial operations and offering our customers access to one of the most extensive service networks in the industry,” Polestar CEO Michael Lohscheller said in the release.
Polestar currently produces its Polestar 3 model in Charleston, South Carolina and in Chengdu, China. Following the deal, it will discontinue production in China, where demand for the automaker’s cars is weak.
China-made vehicles also face high tariffs when exported to the U.S. and Europe. The automaker faces a 28.8 percent EU duty on China-made EVs, prompting it to diversify manufacturing. It will also make its Polestar 7 at Volvo’s factory in Slovakia.
It’s not good enough for China, but maybe it’s good enough for America!
BYD Is Loving This
Photo: BYD
China is the biggest market for electric cars, but it’s also the most competitive. A drawing down of incentives by the Chinese government should start to help rationalize the massive overcapacity issues, eventually, though the best way to deal with a glut of domestic production is to export. BYD had already been at the forefront of this, expanding in Europe, Latin America, and now Canada.
The Iran War was already boosting the company’s share prices, so the company’s leadership sees even more exports, as reported by Nikkei Asia:
Founder and Chairman Wang Chuanfu told analysts at a closed-door briefing on Monday that skyrocketing oil prices are expected to push BYD’s overseas sales to “another level” this year, according to multiple people familiar with the session. Wang singled out markets such as Australia, New Zealand and the Philippines, where he said daily sales volumes are now as high as what the carmaker could previously sell in two weeks.
The automaker has raised its annual overseas sales target to 1.5 million cars, a 15% jump from a previous goal of 1.3 million units, Wang informed analysts last week and repeated at Monday’s event. The company did not immediately respond to Nikkei Asia’s request for comment.
The chairman’s remarks — which reflect a jump in oil from around $60 a barrel at the beginning of the year to over $100 due to the blockage of the Strait of Hormuz in the Iran war — will buoy hopes for a turnaround powered by overseas markets after a disappointing 2025.
Another quirk of energy markets is that producers will happily sell your petroleum product to someone else so fast that they’ll literally turn the boats around to divert to more profitable ports. While consumers in some places, like Europe, will pay the highest price, other consumers will see actual demand destruction. It’s a perfect opening for an EV exporter.
What I’m Listening To While Writing TMD
My favorite thing about A Tribe Called Quest playing “Check the Rhime” on The Late Show With David Letterman is that, contractually, the Late Show band has to also play on the song, so you get the live horns and drums. It’s actually kinda great.
The Big Question
How high does gas have to get, and for how long, to get EV share above 10%?
Top graphic images: DepositPhotos.com; Tesla
