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stock plummeted earlier this week after announcing plans to raise more capital and one analyst understands why. It was one of the reasons he downgraded the stock.
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Tag: Alternative Fuel Vehicles
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Rivian shares sink after preliminary sales estimates, plan to offer $1.5 billion in convertible notes
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Shares of Rivian Automotive Inc. slid in the extended session Wednesday after the EV maker issued preliminary quarterly sales estimates that were on par with Wall Street’s forecasts and announced plans to offer $1.5 billion worth of convertible notes.
Rivian
RIVN,
+9.22% ,
in a filing, gave a preliminary third-quarter sales estimate of between $1.29 billion and $1.33 billion. Analysts polled by FactSet expected sales of $1.31 billion. The company estimated it had cash, cash equivalents and short-term investments of $9.1 billion as of Sept. 30.Rivian also said it plans to offer, subject to market and other conditions, $1.5 billion worth of “green” convertible senior notes due in 2030. That would be in a private offering to “qualified institutional buyers,” Rivian said.
The plan would give buyers the option to purchase up to an additional $225 million in notes. The notes will be senior, unsecured obligations of Rivian. Noteholders will have the right to convert their notes in certain circumstances and during specified periods, the company said.
Shares fell 8% after hours.
Rivian stock ended the regular trading day up 9.2%, and so far this year has gained around 28%, which compares with an advance of around 10% for the S&P 500 index
SPX,
+0.81% .[ad_2]
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Tesla, Rivian, Discover, Sphere Entertainment, Nvidia, and More Stock Market Movers
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https://www.barrons.com/articles/stock-market-movers-e5dab615
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Tesla Delivery Numbers Are Coming. Here’s What To Expect.
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https://www.barrons.com/articles/tesla-delivery-numbers-are-coming-221f59d7
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Tesla’s quarterly deliveries, profit seen lower by Citi
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Analysts at Citi on Thursday dialed down their expectations for Tesla Inc.’s third-quarter deliveries and profit, saying they based their new numbers on China sales, global registration data and an implied production pace for the EV maker.
Tesla
TSLA,
+2.44%
and General Motors Co.
GM,
+2.50%
are scheduled to report third-quarter vehicle sales next week, while Ford Motor Co.
F,
+1.37%
and a few others are slated to report September sales.Earlier this week, a Deutsche Bank analyst warned that there was “meaningful downside risk” to current 2024 Tesla projections due to limited volume growth, and cut his price target on Tesla stock.
J.D. Power on Thursday estimated another double-digit gain for U.S. new-car sales in September. GM, Ford and Stellantis NV
STLA,
+2.45%
are facing a strike affecting some of its assembly plants and, in the case of GM and Stellantis, auto-parts distribution centers.The Citi analysts, led by Itay Michaeli, said they trimmed their Tesla quarterly sales estimates to 450,000 vehicles, from a previous expectation of 468,500 vehicles.
See also: Tesla sued for racial discrimination, retaliation by EEOC
They lowered their forecast for adjusted per-share earnings to 75 cents in the quarter, from a prior estimate of an adjusted EPS of 81 cents for the quarter.
The Citi’s expectations compare with FactSet consensus of Tesla deliveries of 462,000 vehicles in the quarter, and consensus around an adjusted EPS of 79 cents for the quarter.
“We will revisit our model post the [third-quarter] delivery report,” the Citi analysts said. They kept the equivalent of a hold rating on the stock.
The update on the sales estimates was based on recent weekly China data “in part reflecting the Model 3 refresh transition,” as the compact sedan in some parts of the world is getting a minor update; the latest available global Tesla registration data; and their observations on production rate and “inventory discounting, with our estimates assuming some [quarter-on-quarter] de-stocking,” the analysts said.
Given Tesla’s production pace and the Model 3 changes, “we see a greater range of delivery outcomes vs. typical quarters,” they said.
Tesla shares have doubled so far this year, compared with gains of around 12% for the S&P 500 index
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Tesla sued for racial discrimination, retaliation by EEOC
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Tesla Inc. was sued Thursday by the U.S. Equal Employment Opportunity Commission, which alleges the EV maker violated federal law by “tolerating widespread and ongoing racial harassment of its Black employees” at its Fremont, Calif., plant, and by retaliating against those opposing the harassment.
Black employees at the Fremont factory, Tesla’s
TSLA,
+2.44%
first assembly plant and for years its only vehicle-manufacturing facility in the U.S., “have routinely endured racial abuse, pervasive stereotyping and hostility” as well as having racial slurs hurled at them, the lawsuit alleges.“Slurs were used casually and openly in high-traffic areas and at worker hubs,” the EEOC said. Black employees “regularly” saw graffiti with slurs, swastikas, threats and nooses throughout the facility, including on desks, in bathroom stalls and elevators, according to the suit.
Tesla, which disbanded its media relations team during the pandemic, did not immediately return a request for comment. In August, SpaceX, another one of Tesla’s Chief Executive Elon Musk’s companies, was sued by the Justice Department over its hiring practices.
Employees who spoke up against the racial hostility suffered retaliations that included being fired or transferred, the EEOC said.
The lawsuit was filed in the U.S. District Court for the Northern District of California after attempts at reaching a settlement before the litigation. It seeks compensatory and punitive damages as well as back pay for the affected workers. It also seeks changes to Tesla’s employment practices to prevent discrimination in the future, the EEOC said.
A Black Tesla employee was awarded $137 million in 2021 by a jury that agreed he was subjected to racial harassment at the Fremont factory, but in April 2022 a judge reduced the award to $15 million.
Shares of Tesla have doubled so far this year, compared with an advance of around 12% for the S&P 500 index
SPX.The first Model S rolled out of the Fremont factory in 2012, and the plant now makes Model S, Model 3, Model X and Model Y vehicles, with capacity to make more than a million vehicles a year as well as energy products and battery cells.
Tesla opened up its second U.S. vehicle-making factory in the Austin, Texas, area in the spring of 2022.
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Tesla Stock Is Falling. China Is the Reason.
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https://www.barrons.com/articles/tesla-stock-china-sales-7dd26568
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VinFast reports half-a-billion-dollar loss for its second quarter
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VinFast Auto Ltd. late Thursday reported a second-quarter loss of half a billion dollars, saying it delivered more than 9,000 electric vehicles globally for sales of about $315 million in the period.
Vietnamese EV maker VinFast VFS went public in August through a SPAC deal, and the stock more than tripled by the end of its first session, sending the company’s market valuation soaring to more than $200 billion.
VinFast’s…
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NIO, Moderna, Block, U.S. Steel, and More Stock Market Movers
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Here’s an easy way to make a more concentrated play on the ‘Magnificent Seven’ stocks
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Investors in index funds have been well rewarded by a high concentration in the largest technology companies over the past decade. But there are also continuing warnings about the risk of such heavy concentrations, even in index funds that track the S&P 500. Solutions are offered to limit this risk, but if you expect Big Tech to continue to drive the broad market returns over the coming years, why not make an even more focused bet?
Comparisons of three index-fund approaches highlight how successful concentration in the “Magnificent Seven” has been.
The Magnificent Seven are Apple Inc.
AAPL,
+0.16% ,
Microsoft Corp.
MSFT,
+0.72% ,
Nvidia Corp.
NVDA,
-2.03% ,
Amazon.com Inc.
AMZN,
+2.17% ,
Alphabet Inc.
GOOGL,
-0.27% GOOG,
-0.32% ,
Tesla Inc.
TSLA,
+9.37%
and Meta Platforms Inc.
META,
+1.67% .
We have listed them in the order of their concentration within the Invesco S&P 500 ETF Trust
SPY,
which tracks the S&P 500
SPX.
The U.S. benchmark index is weighted by market capitalization, as is the Nasdaq Composite Index
COMP
and the Russell indexes.SPY is 27.6% concentrated in the Magnificent Seven. One way to play the same group of 500 stocks but eliminate concentration risk is to take an equal-weighted approach to the index, which has worked well for certain long periods. But here, we’re focusing on how well the concentrated strategy has worked.
Let’s take a look at the group’s concentration in three popular index approaches, then look at long-term performance and consider what happened in 2022 as rising interest rates helped crush the tech sector.
Here are the portfolio weightings for the Magnificent Seven in SPY, along with those of the Invesco QQQ Trust
QQQ,
which tracks the Nasdaq-100 Index
NDX
and the Invesco S&P 500 Top 50 ETF
XLG
:Company Ticker % of SPY % of QQQ % of XLG Apple Inc. AAPL,
+0.16% 7.05% 10.85% 12.46% Microsoft Cor. MSFT,
+0.72% 6.65% 9.53% 11.76% Amazon.com Inc. AMZN,
+2.17% 3.30% 5.50% 5.84% Nvidia Corp. NVDA,
-2.03% 3.02% 4.44% 5.33% Alphabet Inc. Class A GOOGL,
-0.27% 2.17% 3.12% 3.83% Alphabet Inc. Class C GOOG,
-0.32% 1.88% 3.11% 3.32% Tesla Inc. TSLA,
+9.37% 1.79% 3.10% 3.17% Meta Platforms Inc. Class A META,
+1.67% 1.77% 3.60% 3.12% Totals 27.63% 43.25% 48.83% Sources: Invesco Ltd., State Street Corp. The same group of seven companies (eight stocks with two common share classes for Alphabet) is at the top of each exchange-traded fund’s portfolio, although the top seven for QQQ aren’t in the same order as those for SPY and XLG. QQQ’s weighting was changed recently as the underlying Nasdaq-100 underwent a “special rebalancing” last month.
Here’s a five-year chart comparing the performance of the three approaches. All returns in this article include reinvested dividends.
FactSet
QQQ has been the clear winner for five years, but it is also worth noting how well XLG has performed when compared with SPY. This “top 50” approach to the S&P 500 incorporates many stocks that aren’t listed on the Nasdaq and therefore cannot be included in QQQ, which itself is made up of the largest 100 nonfinancial companies in the full Nasdaq Composite Index
COMP,
+0.45% .Examples of stocks held by XLG that aren’t held by QQQ include such non-tech stalwarts as Berkshire Hathaway Inc.
BRK.B,
+0.77% ,
Johnson & Johnson
JNJ,
+0.79% ,
Procter & Gamble Co.
PG,
+0.94% ,
Home Depot Inc.
HD,
-0.12%
and Nike Inc.
NKE,
-0.42% .Now let’s go deeper into long-term performance. First, here are the total returns for various time periods:
ETF 3 Years 5 Years 10 Years 15 Years 20 Years SPDR S&P 500 ETF Trust
SPY40% 69% 223% 370% 531% Invesco QQQ Trust
QQQ41% 113% 430% 882% 1,158% Invesco S&P 500 Top 50 ETF
XLG41% 85% 262% 404% N/A Source: FactSet Click on the tickers for more about each ETF, company or index.
There is no 20-year return for XLG because this ETF was established in 2005.
For five years and longer, QQQ has been the runaway leader, but for 5, 10 and 15 years, XLG has also beaten SPY handily, with broader industry exposure.
Something else to consider is that during 2022, when SPY was down 18.2%, XLG fell 24.3% and QQQ dropped 32.6%.
For disciplined long-term investors, the tech pain of 2022 may not seem to have been a small price to pay for outperformance. And it may have been easier to take the pounding when holding SPY or even XLG that year.
Here’s a look at the average annual returns for the three ETFs:
ETF 3 years 5 years 10 years 15 years 20 years SPDR S&P 500 ETF Trust
SPY11.8% 11.0% 12.4% 10.9% 9.6% Invesco QQQ Trust
QQQ12.0% 16.3% 18.2% 16.4% 13.5% Invesco S&P 500 Top 50 ETF
XLG12.2% 13.1% 13.7% 11.4% N/A Source: FactSet So the question remains — do you believe that the largest technology companies will continue to lead the stock market for the next decade at least? If so, a more concentrated index approach may be for you, provided you can withstand the urge to sell into a declining market, such as the one we experienced last year.
Here is something else to keep in mind. In a note to clients on Monday, Doug Peta, the chief U.S. investment strategist at BCA, made a fascinating point: “The only novel development is that all the heaviest hitters now hail from Tech and Tech-adjacent sectors and are therefore more prone to move together than they were at the end of 2004, when the seven largest stocks came from six different sectors. “
Nothing lasts forever. Peta continued by suggesting that investors who are tired of big tech taking all the glory “need only wait.”
“[I]f history is any guide, their time at the top of the capitalization scale will be short,” he wrote.
Don’t miss: These four Dow stocks take top prizes for dividend growth
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Sorry, Elon, a ‘super app’ is never going to fly in the U.S.
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“Super apps” have never truly existed in the United States, and it is apparent at this point that they never will.
That isn’t stopping some executives and investment analysts from still dreaming of becoming one-stop shops for their users’ needs, something only a small handful of apps in Asia have managed to do. The most prominent is Elon Musk, the Tesla Inc. TSLAchief executive who purchased Twitter last year and has proclaimed that he will turn it into an “everything app” called X that resembles super apps in China.
“I…
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VinFast loses more than $140 billion in market cap in two weeks after week-long nosedive for EV maker
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Electric-vehicle startup VinFast Auto Ltd. has seen its market capitalization fall more than $140 billion in less than two weeks, weighed down by a six-day losing streak for the company’s stock.
Shares of VinFast
VFS,
-2.72%
soared last month after the company went public through a special-purpose acquisition company deal, taking its market cap to an eye-watering $231.3 billion on Aug. 25 — easily surpassing established automakers such as Ford Motor Co.
F,
+0.57%
and General Motors Co.
GM,
+0.09% .VinFast is on pace to extend its losing streak to seven days. Shares of the low-float company fell 26.3% Thursday, taking VinFast’s market cap to $85 billion, according to FactSet data. Ford’s market cap is $47.7 billion and GM’s is $44.5 billion, FactSet data show.
Related: This EV company has a bigger market cap than Ford or GM. But you may not have heard of it.
The EV maker is a majority-owned affiliate of Vietnamese conglomerate Vingroup, one of the largest publicly traded companies in Vietnam. VinFast said that as of June 30, 2023, the company has delivered close to 19,000 EVs.
About 99% of VinFast shares are controlled by Vingroup chair and VinFast founder Pham Nhat Vuon, making only a small portion available to investors.
Related: EV startup VinFast may be worth more than Ford or GM, but there’s a catch
VinFast is importing its vehicles into the U.S. and is also ramping up its North American presence. In July, the company broke ground on an electric-vehicle manufacturing site within the Triangle Innovation Point in Chatham County, N.C. The startup says the plant will eventually have the capacity to make 150,000 vehicles a year.
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XPeng Stock Surges on Plan to Buy DiDi’s Smart Vehicle Unit
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https://www.barrons.com/articles/xpeng-hong-kong-stock-price-didi-evs-ca20a71d
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This EV company has a bigger market cap than Ford or GM. But you may not have heard of it.
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Shares of electric-vehicle startup VinFast Auto Ltd. have surged since the company went public through a special-purpose acquisition company deal last week, taking its market capitalization to levels well beyond established automakers such as Ford Motor Co. and General Motors Co.
Shares of low-float company VinFast
VFS,
+40.35%
rose 16.1% Friday, after ending Thursday’s session up 32.3%, sending the company’s market cap to $231.3 billion. In comparison, Ford’s
F,
+1.36%
market cap is $47 billion and GM’s
GM,
+0.21%
is $45.2 billion, according to FactSet data. Rival EV maker Rivian Automotive Inc.
RIVN,
+2.19%
has a market cap of $18.6 billion. However, all of these are dwarfed by Tesla Inc.’s
TSLA,
+3.72%
$730.2 billion market cap.In roughly a week, the VinFast stream on Stocktwits, a social platform for investors and traders, has racked up about 3,000 watchers, and message volume is “pretty consistent” throughout the day, Tommy Tranfo, Stocktwits’ head of community, and Tom Bruni, a senior writer for the platform, told MarketWatch Thursday.
Related: EV startup VinFast may be worth more than Ford or GM, but there’s a catch
“What everyone is discussing is whether or not the current hype in the stock is warranted given where the business is,” Tranfo and Bruni said in a statement emailed to MarketWatch Thursday, noting the company’s soaring market cap. “That’s despite the underlying business doing less than $1 billion in revenue, having negative cash flow from operations of $1.5 to $2 billion.”
Uncredited
In the short term, the stock is trading on momentum and hype, according to Tranfo and Bruni. “But eventually, its business results have to justify the valuation. And as we’ve seen with other startups in the space, it’s easy to say they’re going to accomplish XYZ, but harder to actually execute and produce results,” they said.
“From the community side: [We] think what we’re paying attention to the most right now is if this hype sticks,” they added.
The EV maker is a majority-owned affiliate of Vietnamese conglomerate Vingroup, one of the largest publicly traded companies in Vietnam. VinFast said that as of June 30, 2023, the company has delivered close to 19,000 EVs.
About 99% of VinFast’s shares are controlled by Vingroup chair and VinFast founder Pham Nhat Vuon, making only a small portion available to investors.
Stocktwits’ Tranfo and Bruni noted that EVs have a good track record of growing strong retail community support. “So there is reason to believe that this momentum could continue, but it may be too early to tell for sure,” they added. “Retail loves the electric-vehicle industry, so the interest is likely to continue regardless of how well the company (and stock) actually perform.”
Related: Tesla’s stock jumps 7% after Baird highlights Cybertruck, other ‘catalysts’ for the year
VinFast is importing its vehicles into the U.S. and is also ramping up its North American presence. In July, the company broke ground on an electric-vehicle manufacturing site within the Triangle Innovation Point in Chatham County, N.C. The EV startup says the plant will eventually have the capacity to make 150,000 EVs a year.
Claudia Assis contributed.
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Tesla cuts Model S and X prices by over 6% in China | CNN Business
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Beijing
Reuters
—
Tesla has cut prices for its existing inventories of its premium Model S and Model X cars in China by as much as 6.9%, it said on Wednesday.
A post from the carmaker on social media platform Weibo showed the price of the Model S cut by 6.7% to 754,900 yuan ($103,477.58) from 808,900 yuan earlier.
The Model X now starts from 836,900 yuan, down 6.9% from 898,900 yuan earlier.
Tesla
(TSLA) on Monday said it cut prices in China for its Model Y’s long-range and performance versions starting on August 14, which triggered concerns around its profit margins.The moves come after sales of Tesla’s China-made vehicles fell 31% in July from June, their first month-on-month decline since December, as the automaker idled some production to prepare for a revamped Model 3 launch.
By contrast, China’s BYD
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Ford is going all in on hybrids. Here’s why.
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Ford Motor Co. is betting that hybrid vehicles will be the bridge toward an all-electric-vehicle future for perhaps longer than most people expect. It’s a cautious strategy that has its admirers on Wall Street.
Ford
F,
-4.48%
is not thinking about “extremes” between hybrids and EVs, company Chief Executive Jim Farley said recently. The automaker decided to keep investing in heavy-duty hybrid vehicles and has been surprised by their popularity, he said.That’s a “subtle shift of strategy” for Ford, but one that makes sense in the current reality, said Garrett Nelson, an analyst with CFRA.
On the call with analysts following Ford’s quarterly results last month, Farley noted that Ford’s hybrid offerings are extremely popular. About 10% of F-150 pickup trucks and 56% of smaller Maverick pickup trucks being sold in the U.S. are hybrids, he said.
“We are adding hybrid options across our [internal-combustion-engine] lineup,” he said. “And we expect to quadruple our hybrid sales in the next five years, and we were already No. 2 in the market last year.”
The pure-battery EV market has become saturated, and Ford is indicating that it is willing to be flexible, CFRA’s Nelson said.
“Bottom line, aside from Tesla
TSLA,
+1.30%
EVs, the vast majority of other EV models have sold very poorly,” Nelson said, adding that although many people are not interested in EVs, hybrids could be an easier sell.Related: Electric vehicles vs. gas-powered cars: Which one is cheaper to buy and own?
“Consumers are becoming much more educated,” he said. “You can in a lot of cases go on pure battery power and not even use any fuel with these hybrids.”
Japanese carmakers such Toyota Motor Corp.
7203,
+1.40% TM,
+0.26%
and Honda Motor Co.
7267,
+5.87% HMC,
-0.09%
have taken that approach from the start, making much bigger bets on hybrids, and “in hindsight that appears to have paid off,” Nelson said.Indeed, “hybrids are a much easier purchase in today’s environment,” said Karl Brauer, an analyst with iSeeCars.com.
“They cost less than electric vehicles, they don’t involve range anxiety, and Ford has managed to make them quite practical in how it pairs the technology with the F-150,” Brauer said.
Hybrids are more expensive to buy than internal-combustion-engine vehicles, but they are cheaper than electric vehicles because their batteries are significantly smaller — even those in plug-in hybrids, which are capable of driving several dozen miles solely on an electric charge. About a third of the cost of an EV is the cost of the battery.
Hybrids have one more critical advantage over EVs, Brauer said — they can be produced and sold for a profit.
Ford’s strategy contrasts with a more aggressive EV push by General Motors Co.
GM,
-5.79% ,
Nelson said.GM late Wednesday unveiled its Cadillac Escalade IQ, a luxury EV that starts at around $130,000 and has 450 miles of range. GM expects to begin making the vehicle in the summer of 2024, with sales beginning in late 2024.
GM’s future lineup includes a number new EV models as well as electric versions of popular vehicles that were previously available only as gas-powered models. That includes an electric Chevy Equinox for next year and a return of the Chevy Bolt, among the cheapest EVs available in the U.S.
See also: GM is bringing back the Bolt. What do we know so far about the updated EV?
GM will cease production of the Bolt later this year but has promised to bring it back using the company’s new shared EV platform. Observers expect the new Bolt to be available around 2025.
GM’s EV strategy is generally viewed as more risky.
Tesla started a price war earlier this year, cutting prices of its EVs several times. Ford also cut prices, most notably on the F-150 Lightning, the electric version of a pickup truck that’s been the best-selling vehicle in the U.S. since the 1980s.
Hybrids also do away with so-called charge anxiety, because their gas-powered engines kick in when needed.
Related: EVs zoomed ahead with a 8.2% slice of auto financing pie in second quarter
According to a Consumer Reports survey in June, about 6 in 10 respondents said that concerns about charging were holding them back from purchasing an EV, and about 5 in 10 cited range as a reason they wouldn’t buy one just yet.
Tesla has made its fast-charging ports the de facto standard in the U.S., and several automakers, including Ford and GM, have inked deals to allow their EV owners to power up at Tesla’s Supercharger network, which has charging stations located near major highways.
An often-cited 2022 study about the reliability of public, open-to-all fast-charging stations in nine counties in the San Francisco Bay Area found a range of issues with the stations, from charging and payment failures to annoyances such as spaces being occupied by gas-powered vehicles or EVs that are not actively charging.
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