Tesla’s Big Problem: The EV Boom Nobody Saw Coming

So really good news out today if you are an EV buyer. And the reality is, is that in Q4 of this year, the numbers are in and sales of EVs basically grew like crazy. Uh, we saw almost all the automakers except for Tesla show huge growth in EV sales. And, uh, one example is General Motors. Their sales were up 21% quarter over quarter from Q3 to Q4, and the majority of those were due to EV sales. So what the heck's going on? What can we learn from it? And where are the opportunities? That's what this video is about. And what's going on with EVs in Q4 and this like surprise surge in sales is like a huge surprise because for most of 2024, kind of the shine on the whole EV industry had, well, just kind of gone away. Most of the year the sales were in the crapper, growth had slowed, and consumers, well, they were picking other stuff like hybrids and just straight up gas vehicles. If you're new here, I'm Michael. I'm a 20-year-plus CEO. I am a business nerd. I've hired hundreds of people, incubated dozens of companies, and I love to talk about business and explain stuff going on in the world of commerce. So thinking about how we got to this point and why all this is happening, you have to look at, well, the king of the EV market, which is Tesla, Elon Musk's company. They were early to the market. They started to bring out EVs well before anybody else did. And that paid off as the EV market grew. Eventually, that became about 8% of all vehicle sales in the United States being pure EVs. And about half of those, well, they were done by Tesla. But this is America. And while Tesla was early, other automakers rushed in to compete. Folks like Ford, Volvo, GM, all going kind of all in on how they could bring their own EVs to the market. But the early efforts from some of these other folks started to, well, reach some headwinds. Specifically, a lot of the early models that came out from folks like Ford, and one that comes to mind is the Ford F-150 Lightning, which is an all-EV version of a Ford pickup truck. And if you're not familiar with how pickup trucks work in the US, we sell and buy a ton of them. But when these things came out, they were like stupid expensive. Like, you would have to spend $80,000 or $90,000, uh, just to get a base model version of the F-150 Lightning. And, uh, guess what customers said about that? Not interested. So in 2022, 2023, all these different car makers started to build up capacity to produce more vehicles, uh, and you can kind of see where this is going and why prices have come down like crazy for EVs, uh, over the past couple quarters. And the actual leader in all this, and I'll give it to them, was Tesla. They started in April 2024 just basically slashing prices. And what they saw was a couple things happening. One, they saw that people weren't buying EVs. Uh, they saw— they saw the second thing was that China was coming. And if you haven't been following that, the Chinese have been subsidizing their EV market like crazy and pushing prices down. So Tesla, Musk, the whole gang, starting in April, started to just slash prices like crazy. And, uh, you know, before going on this walk this morning, I looked to see what a Tesla Model 3 currently costs. Uh, you could get a base model for $29,900. Just insanely cheap considering— well, like, that's not as much money as it used to be given all the inflation we've experienced. Uh, similarly, I looked at the lease price for a 36-month lease for a Model 3, uh, with Tesla— $216. Just, just insanely cheap. And so if Tesla does all this, uh, what do the other automakers have to do, right? Ford, GM, these guys all have massive capacity to produce vehicles. Well, they've had to respond in the same, uh, I have a buddy who bought a Rivian, which is like an $80,000 car plus or minus, um, and his lease is $499 a month, like just insanely cheap. And you've seen the same thing across all the different EV options from the different manufacturers. So that's kind of factor number one, like competition has pushed the prices down. That's why we're seeing a huge uptick in sales because these things are just so damn cheap. But there's another thing, which is your tax dollars are actually underwriting making these leases so cheap. And here's how it works. Uh, there is a $7,500 federal tax credit that you get when you buy an EV, you know, meeting some certain criteria. Well, if you lease that thing, you don't actually buy that vehicle. It's still owned by the lessor. And guess who gets that tax credit? Not you. And there's another thing here that, that tax credit is causing people to rush to buy EVs, which is Trump has very clearly said that he wants to get rid of it. And by the way, Musk is in favor of this too, which is bizarre considering how many EVs they sell. But if that tax credit's going away, if you're buying a $30,000 car, a $7,500 tax credit, that's a huge impact on the price. So demand is up because prices are down, like stupid cheap. And you have basically an expiring tax credit that people want to take advantage of. And then there's a third thing, which is an election year phenomenon, which is something that studies have shown. When there is a presidential election year, consumers hold back because of the uncertainty of the election. And then the moment the election happens, they, they go shop more and they start to open up their wallets again. And I definitely saw that being out and about shopping as a consumer this fall season as well. The other interesting thing about this particular study that I read showing that people, you know, pause their spending in anticipation of election, it doesn't actually matter who wins. Most people will start increasing their spending the night before the election results are announced. So I think there's two kind of takeaways for this if you own or run a small business. You know, I think number one is this is just a reassuring kind of situation. For me, I think the hope was post-COVID when we put all this money into the system and we did all these kind of weird things to the economy, the hope would be that we could tame inflation and things would kind of go back to normal and the, the world would continue on in a nice healthy growth pattern the way it's been. And all the things we're seeing in this EV market are reflective of, well, just basically the healthy growth that we wanted to see. And that's good if you own a business or you're a CEO of a business. Like, what people want is predictability. And we all know kind of how the normal should be. And it's good to see it, well, coming back to the way it should be. And I think the second thing is a takeaway from all this, and it's a sign of why all these lease deals are so popular, is, man, like, consumers will fall over themselves for ways to have a value of something today and not have to pay for it until later. And that's basically human nature, right? The value of money that you have to pay today is a lot more valuable to you than money, say, a couple of years from now when future you might have to pay it back. And so anyway, hopefully this is a positive video for the new year. One thing I didn't talk about, by the way, is that Tesla sales are actually down. They haven't put out formal numbers, but all the estimates show that their sales were down a single-digit percent quarter over quarter. So it's good to see some competition in the market, but also worrisome that Tesla shipments are slipping compared to where there used to be. So we'll see how 2025 shapes up. A lot of the analysts are predicting very strong momentum into the coming year, uh, and look, as a consumer myself, uh, I've been looking at some of these deals and be like, well, maybe I do need a Tesla. Uh, some of these are just stupid good deals, and if those stupid good deals keep coming, uh, you're going to see a lot more EVs on the road, which, man, pretty cool thing. Oh, and one last thing I think all of this competition around EVs and the slashing of prices and people pushing into the market and having to push their businesses hard to take better care of customers and provide them better value, I think it's freaking awesome. This is the things that makes America great, uh, is high competition to try to get consumer dollars. And, uh, we need more of that. And if you look at where we've gotten into trouble, uh, as a country, it's when we allow competition to be unnaturally reduced. My favorite example is the airlines. Why is air travel so crappy? Well, we let the airlines consolidate and we have too few of them. So what's going on with this EV market, man? If I seem stoked from this video, because I am. This is, this is the way America should work and what makes capitalism so great.