EV Quick Hits, Happy Birthday America Edition
EV Buyer’s Remorse, Rivian’s Bailout Source, and EVs Have to Sound Good (of Course)
Study Claims Over 40 Percent of EV Owners in the U.S. Have Buyer’s Remorse
The conclusion reached in a recent consumer survey of EV owners that should have surprised absolutely nobody found that more than four in ten of those owners will likely trade out their EV for a gas-powered vehicle for their next purchase. Yes, you read that correctly: 46 percent of surveyed EV owners are headed back to the fossil-fueled ICE* age according to McKinsey & Co.
“But, but, but…I thought ‘once an EV buyer, always an EV buyer.’”
Yeah, about that. Once consumers were introduced to the whole EV ownership experience after having a less expensive, better performing, and easier to refuel gas-powered vehicle, they decided (as consumers tend to do) that they preferred the convenience and lower total cost of ownership of the vehicle they traded out for the EV.
The biggest objection consumers have is the lack of a reliable charging network across the country, which is not happening fast enough for the next generation of prospective EV customers. Early adopters of EVs tended to be homeowners with dedicated chargers installed in garages, thus having public charging availability was not as urgent for them as it is for EV owners living in multi-family dwellings with no dedicated charging resources.
And exactly what has happened with the $7.5 billion that was allocated two years ago for the building of a nationwide EV charging network? As of today, only eight stations are operational. I’m sure that the ridiculously slow rollout of public charging resources is a factor feeding the growing reluctance of new consumers to consider buying an EV as well as existing owners that are tired of waiting for this much-needed network.
One of the more misleading talking points from EV evangelists is that they require less maintenance due to having fewer moving parts. Well, a 2024 Internal Quality Study from J.D. Power suggests that might not be the case, as EV owners participating in the study reported many more problems.
So, EV owners are reporting that their vehicles have poorer quality, no charging network, higher cost of ownership, and worse performance than the gas-powered vehicle that was replaced. Even EV owners are not self-flagellating forever.
*ICE is an acronym for internal combustion engine. You know, the type preferred by over 90 percent of the U.S. market.
A $5 Billion Lifeline for Rivian, A $5 Billion Gamble for Volkswagen
Volkswagen announced it will be investing $1 billion in EV maker Rivian, with intentions to elevate that investment to $5 billion as part of a software platform development partnership.
Rivian gets what it needs most out of the deal: Cash. Volkswagen get the promise of developing the necessary EV software that has eluded them up to now. A $5 billion promise.
It might work out. It will depend largely on how well the two companies work together in a proposed joint venture (JV) that neither company will fully control.
The JV announcement with VW means that Rivian has finally found a partnership with an established automaker after two failed attempts. Ford abandoned a partnership with Rivian in November 2021, and a deal to build electric vans with Mercedes-Benz failed in December 2022.
The VW-Rivian JV will focus on the electrical architecture of EVs, or “software stack,” that can deliver over-the-air software updates. For a legacy automaker like VW, this is a very different kind of engineering and one that has caused problems in vehicles such as the ID.4 for which the on-board software has been criticized. Having access to software stack know-how could be the key to EV success for VW.
The initial $1 billion investment is expected to be made through an unsecured convertible note that will exchange into Rivian shares on or before December 1. That will dilute the value of existing shareholder equity and could cede some control of Rivian to VW. But Rivian shareholders don’t have much of a choice at this point; the automaker loses around $40,000 on each vehicle it builds and announced a 10% workforce reduction earlier this year. The lower-priced R2 series EVs are not expected to be built until 2026, and Rivian simply cannot wait that long.
The plain fact is that pure-play EV makers like Rivian just cannot go it alone in today’s market environment where early adopter consumers already have their EV and mainstream buyers are much more reluctant to embrace EVs. Fisker recently filed for Chapter 11 bankruptcy, and money-losing Lucid received another $1 billion infusion from sugar daddy Saudi Sovereign Wealth Fund – the type of financial backer that Fisker did not have.
Is the $5 billion investment too risky? Investors have been burned before by VW’s habit of profligate spending. Or is the $5 billion something else entirely?
Once completed and assuming more equity is acquired, the total $5 billion investment could give VW a 30% or higher stake in Rivian (Amazon is Rivian’s largest shareholder today with its 16% stake valued at nearly $2 billion). If VW’s end goal is to acquire Rivian outright, it is doing so at a bargain rate and before any more dedicated manufacturing facilities are built (the company had already paused plans to build a new plant in Georgia).
Do People Want EVs to Sound Like a Waterfall or a Flying Saucer?
Neither. People want their EVs to sound more like gas-powered vehicles. That’s the conclusion of a study by sonic brand agency Listen.
Modern EVs have what are known as acoustic vehicle alerting systems that are small exterior speakers emitting sounds audible to pedestrians who might not otherwise hear an EV approaching. This has led to a whole new type of sound engineering for a moving vehicle, one that must take into consideration what sounds people like and what they find annoying.
The type of sound that survey respondents liked best suggested wind, water and white noise, indicating that people gravitate toward sounds that remind them of the “whooshing” of a gas-powered vehicle passing by. The sounds that the respondents disliked were more tonal - high frequencies that could be hummed and were somewhat associated with science fiction. Kind of like a Tesla.
Since there is no singular sound required for EVs, imagine a crosswalk with a dozen or so EVs approaching – it might sound like a video arcade in the middle of the street.
But that might just be okay. Sound designers consider the vehicle brand and trim level of each EV, designing the sound emitting from each vehicle, and imagine that “If a Mini and a Rolls-Royce were to meet at a traffic light, it would sound as if they were coming together and were part of a bigger (orchestral) score.”
Hoo boy. Well, I suppose EV sound designers need to earn a living too.