To The Moon

Tesla and Other EV Makers Have a New Problem: Buyers' Doubts 

Electric vehicle's eventual dominance of the personal transportation market appears to be a fait accompli for everyone but the people who count the most.

Car companies believe it. Investors believe it. But car buyers don't seem as sure.

UBS recently surveyed more than 10,000 consumers and found that 46% of potential car buyers would be willing to purchase an EV. That's high enough to be encouraging for the industry, but the reading from the same survey a year ago was 49%.

The 2023 result was also the first sequential decline since 2016. Interest in EVs is waning, a little.

The decline was "driven by European markets on affordability concerns," wrote co-author and automotive analyst Patrick Hummel. Despite the concerning reading, Hummel still projects that EVs will account for 26% and 51% of global light vehicle sales in 2026 and 2030, respectively.

Those rates match up closely with goals from auto makers. Just below 10% of total light vehicles sold around the world in 2022 were all-electric battery powered models. Penetration of new car sales in the U.S. was about 6%. In Europe, 2022 penetration was roughly 13%. China leads in the adoption of EVs, with a 2022 rate of about 22%.

German and British EV buying intentions are lower. Affordability is definitely an issue: Cars are getting more expensive, a function of higher interest rates and higher car prices. In the U.S., more than 15% of people with car loans were paying more than $1,000 a month at the end of 2022, a record.

While he isn't cutting his long-term projections, Hummel is trimming his 2023 sales estimates as a consequence of the survey results.

There is some good news for $Tesla Motors(TSLA)$  investors in the survey. It remains the top EV brand by a long shot, with 42% of EV buyers looking for a Tesla. Numbers two and three on that list are BMW and Audi, with 30% and 29%, respectively.

$General Motors(GM)$ and $Ford(F)$ didn't crack the top 10 globally, but Chevy finished fourth among EV buyers in the U.S. Ford finished fifth. BMW and Audi finished behind Tesla in positions two and three. Those are the top five EV brands considered by Americans.

BYD (1211. Hong Kong) is the largest EV seller in China. It edged out Tesla with 20% of likely EV buyers choosing BYD. Together, BYD and Tesla accounted for about 40% of EV choices by brand. No other brand cracked 10%.

Overall, Tesla is a relative winner from the survey, according to Hummel. He rates Tesla shares at Buy and has a target of $220 for the price.

Investors still believe in EVs.

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