The Short Cut: Stellantis names Indiana as location for newest EV factory, and more

Hello there! Welcome back. This week we’ve got a line-up that includes Volkswagen eyeing up Tesla’s spot as top EV dog, a sharp contrast to the woes that EV startups are facing, as promised EV sales continue to be delayed. Read on to find out about what’s new in this week’s Short Cut.

All about EVs: Are they being made?

It looks like rocky roads ahead for EV startups such as Nio, Rivian, Lordstown Motors and more. Their stocks are beginning to fall as reality begins to set in, and the realization that making EVs is not that easy hits carmakers. Production costs are surging, The Washington Post reports, and EV startups are facing the biggest question of all: can they actually produce the EV they promised?

As batteries become harder to source, the big production forecasts that these startups boasted aren’t living up to their promises. EVs are still expensive, and despite customer demand, manufacturing problems and material shortages mean that it’s just becoming more difficult to produce the promised product. Investors are getting jumpy, with funds not as readily available. Lordstown Motors recently sold one of its factories to an iPhone contractor, in order to raise funds. Originally, when it first went public two years ago, the startup planned on making 2,000 pickups, and 32,000 EVs the next full year. Now that number has gone down to 500.

It's not necessarily a surprise that EV startups are in flux, with the pandemic and relatively new state of the industry promising something of a roller-coaster ride. So hang on tight – it looks like most carmakers will find themselves on a bit of a bumpy ride as they trundle towards the finish line.

Manufacturing problems and material shortages mean it’s becoming harder to produce the promised product.

Central Europe needs to get on the EV train, and fast

It’s survival of the fittest: Central Europe will be left behind unless they begin to speed up their transition to EVs. Recently, the prime minister of the Czech Republic criticized the EU’s Green Deal as an “existential threat”, due to the importance of the car industry to its economy. However, while this may be the case, it is also because the country has not prepared effectively enough to handle the transition to EVs, Politico reports. With Brussels setting a goal of climate neutrality by 2050, whether or not the Czech Republic will be able to keep up is another question entirely.

Currently, Europe is building its EV industry with major carmakers deciding where the EV only factory hubs will be. Slovakia is a frontrunner in Central Europe at the moment, so if the Czech Republic wants to keep up and remain a major car producer, it will need to step up its game. It does remain a contender to be chosen for a gigafactory – but with millions of jobs on the line, it remains important that the country allocate more funding to the production of EVs, as well as incentives for its population to switch from gas to electric. With other Central European countries eager to secure a place in what is looking like an overhaul of the car industry, it is truly a race to see who will come out on top.

Great expectations? Volkswagen claims it will overtake Tesla

Volkswagen’s chief executive Herbert Diess is making plans. As in, planning to overtake Tesla as the world’s largest seller of EVs by 2025. That’s what he’s claiming will happen, anyway. According to Diess, the automaker will be able to leverage some momentum from the relief of supply chain issues. Tesla, on the other hand, is currently opening new plants and might therefore find it difficult to ramp up more, CNBC reports. Diess claims that despite production issues and material shortages, which have been rampant in the EV industry since the start of the coronavirus pandemic, there are signs that the car giant will be producing better results in the second half of the year.

However, Volkswagen’s Frankfurt listed shares traded 0.9% lower on Tuesday morning, alongside the losses being seen in the auto sector on the pan-European Stoxx 600. What Diess says may be true, but automaker rivalries aside, the EV industry still has a way to go before shortages smooth out, and production becomes easier.

EV prices soar as essential materials get more expensive

EVs are getting expensive. Automakers are raising prices for their electric vehicles, in order to combat changing market conditions and soaring commodity costs, CNBC reports. Even though batteries have been getting cheaper over the years, battery minerals are becoming increasingly scarce, which may soon lead to an increase in price. The surge in EV sales may slow down as a result, hindering the transition from gas to electric that has picked up its pace in recent years.

EV automakers such as Tesla and Rivian have already hiked the prices on their EVs, with most of their vehicles significantly more expensive than they were at the beginning of 2021. Other automakers are seemingly following suit, with GM having recently increased prices on its Cadillac Lyriq crossover EV by $3,000. With oil prices also surging, it remains to be seen if customers are willing to shell out more for a coveted EV, or if it’ll dampen the EV enthusiasm that is currently sweeping across the world.

Tesla and Rivian have already hiked prices on their EVs.

The chosen one: Stellantis to build $2.6 billion EV factory in Indiana

It’s an opportunity every little state dreams of: the chance to become the new site for an EV factory. Stellantis has decided on Kokomo, Indiana as the place for its next EV battery factory, which will create 1,400 jobs and cost an eye watering $2.6 billion to build. The plant is being constructed in partnership with South Korea’s Samsung SDI – a top EV battery maker – The Verge reports. With costs split between the two companies, the plant aims to start production by 2025, and will have an initial annual production capacity of 23 gigawatt hours (GwH), with plans to ramp that up to 33 GwH in the following years.

While Stellantis has been slower than other automaker giants to make the transition to EVs, it is now aiming to sell 5 million EVs by 2030. It has also announced another EV plant, this one costing $4.1 billion, alongside LG Energy Solution, located in Windsor, Ontario. Good luck to you, Kokomo, Indiana, and may your EV battery building be fruitful!