00:00 Speaker A
Tesla surprising Wall Street, reporting a record number of deliveries in the third quarter, coming in above 497,000 and more than 7% above the mark set during the same period last year. The end of the third quarter also coinciding with the expiration of EV tax credits. Were the Tesla numbers a result of consumers rushing to beat the expiration? And what can we expect from Tesla and other EV makers post tax credits? Let’s bring in Brian Moody, Kelly Blue Book Executive Edi Editor. And Brian, I want to start with those Tesla delivery numbers. Surprising to the upside, yet shares are down just around 2%. So, what’s your reaction to what we heard this morning?
00:54 Brian Moody
Well, one thing investors may be responding to is that this is a temporary bump because of that um federal incentive. Remember, that’s a taxpayer funded incentive for EV purchases. At the same time, we sold plenty of Teslas before there was an incentive and my guess is we’ll sell plenty after. Same with other electric car makers. Only now, the lack of the incentive is going to have to make people want to buy those cars based on their own merit, not because they’re going to get a big discount.
01:22 Speaker A
So let’s talk about the expiration of of the EV tax credits. I mean, are there companies that are uh more exposed to this than than others? I mean, my head goes to Tesla because it’s that pure play EV giant. Uh but are there ways that maybe they can uh rise above that expiration?
01:45 Brian Moody
Yes, um what we’ve seen from Tesla in the past is when they lower prices, orders go up. And I think that is a trend for the overall industry. It’s very telling that we’re talking about the removing of a taxpayer funded incentive for electric cars. And at the same time, what’s happening? We’re seeing record Q3 sales results. August and September, I think it’s going to end up that electric vehicles overall made up about 10 to 12% of the market during that time. What that tells us is that product is priced too high. When you remove price, that’s a barrier, more people want one. So what’s going to have to happen for automakers going forward is they’re going to have to find a way to right size the price for those vehicles, Tesla included to get more people in the seats of those cars.
02:41 Speaker A
And to that point we are seeing certain automakers respond with deeper discounts. So could there be a world that maybe we have a steady decline in these EV car prices and it doesn’t even matter if we have these government subsidies or not?
03:04 Brian Moody
Yes, that will definitely happen over time. One thing that’s going to happen in the meantime though is you’re going to see models go away. Certain auto makers that said they were all in on a fully electric fleet by say 2025 or 2030, some of those models are going to go away. But at the same time, the prices on some of these electric cars, the good ones will rise to the top because without this incentive, now people want it to make sense on value, features, durability, and cost effectiveness. So we’ll see prices come down over time, mainly because that’s what happens with technology, right? As time goes by, technology becomes more affordable. Think of something like consumer electronics, phones and big screen TVs are perfect examples.
