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Key Takeaways
- With the chip shortage over, more cars are making it to dealer lots, increasing the inventory, and options for buyers by extension.
- Many automakers continue to push into the electric vehicle space by offering new EV models.
- See list below for the main auto manufacturers to watch.
2023 should be an exciting year for automakers as they find ways to maintain profitability, manage their inventories as supply chain woes disappear, and look toward the future with electric vehicles.
Here’s what consumers and investors can expect from the global auto industry in 2023, along with a few specific car manufacturers that might be worth investing in.
2023 Outlook
Automakers are looking for new revenue streams and targeting the consumer’s wallet as the source. Prices for new cars are increasing in 2023 even as supply chain issues are letting up.
Many automakers are creating subscription plans for features like heated seats and steering wheels, driver assist systems, and using a smartphone app to connect to a vehicle. Buyers can expect more subscription plans and higher costs for desirable features.
Supply chain issues plaguing the automotive industry for the last two years are improving. Backorders are being filled, and regular production is expected to resume in 2023.
The automotive industry is at risk of oversupplying cars to the market. These vehicles may or may not be easily absorbed. Automakers risk depressing the price of their product if this occurs if many cars sit on dealership lots.
Fuel cell electric vehicles (FCEVs) are becoming an alternative to electric cars, with Toyota putting the greatest investment into this technology. The FCEV uses hydrogen to power a car in the same way as the batteries of an electric vehicle, but it uses pure hydrogen for propulsion.
This technology isn’t ready for commercial production, but advances in fuel cell technology are bringing the FCEV closer to commercial reality and further complicating matters for the auto industry, already scrambling to bring better EVs to market.
Push for Electric Vehicles
The push to move into electric vehicles primarily comes from reducing carbon emissions and reliance on oil production.
Outside of the energy costs of manufacturing and charging, EVs cause the least pollution. More vehicles on the road that are all-electric, hybrid, or electric assist (EA) reduces energy prices and pollution apart from an adverse event.
Electric vehicles are also more straightforward to produce because they don’t require the construction of an engine along with the chassis. Automakers can continue to rely on their chassis-building expertise while delivering the next generation of vehicular propulsion.
Meanwhile, buyers can still purchase their favorite make and model but now have the option to buy it with an electric or conventional engine.
Even though manufacturers are pushing hard into the EV space, they’re not giving up on producing internal combustion engines just yet, especially for pickups. EVs can tow, but towing quickly drains the charge on an EV, making it a poor choice for towing.
As a result, you can expect EVs and internal combustion engine vehicles to coexist on dealer lots for 2023 and beyond.
The most prominent issue EVs face comes from a lack of charging infrastructure. Urban areas that would benefit the most from EV adoption have even more limited charging infrastructure. This dissuades many would-be buyers from owning an all-electric vehicle.
Automakers to Watch in 2023
All car manufacturers either release new vehicles yearly or refresh their current lineup. In 2023 however, certain automakers are being closely watched by investors for various reasons.
Here are some of the most talked about auto stocks and what 2023 holds for them.
Tesla
Tesla is looking to stay ahead of the competition in 2023 with the introduction of the Cybertruck by the end of the year, an increase in the production of its Model Y, and the introduction of a new base model that starts at $25,000.
The company also recently introduced the Tesla Semi. It stands to benefit from various federal government tax incentives that help lower the cost of its vehicles and improve sales.
However, the company is starting the year on the wrong foot. On January 3, 2023, Tesla announced that it missed its 2022 deliveries target. This sent the stock down over 10% for the day, on top of the more than 70% decline last year.
Ford
Ford is pushing forward with its plan to build 600,000 EVs by the end of 2023 and increase production to two million by 2026.
It currently offers the following nameplates in EV versions for 2023:
- Maverick
- Escape (hybrid and plug-in hybrid)
- F-150 Lightning
- Mustang Mach-E
- E-Transit
- Explorer Limited
The big news is that more Ford F-150 Lightnings will be delivered to customers waiting who have been patiently to receive their trucks. Investors are also awaiting financial results to see how the company’s cost-cutting moves have impacted the bottom line.
General Motors
CEO Mary Barra announced plans for a conservative 2023 in terms of production and sales. The highly anticipated Hummer EV will be sold through the GMC division and badged as the GMC Hummer in 2023.
Ms. Barra also noted that the company aims to build and sell only electric passenger vehicles by 2035. Plus, it is shifting production at five assembly plants to build EV-only models.
GM’s EV lineup for 2023 includes the following:
- Chevrolet Equinox
- Chevrolet Blazer
- Chevrolet Silverado RST (2024 model arriving in 2023)
- Bolt EV and EUV
Volvo
Volvo is pushing towards its goal of making all of its models as EVs by 2030, and set 2025 as the halfway point for achieving that goal. It currently offers two EVs, the C40 crossover and XC40 Recharge, and two hybrids, the XC90 Recharge and the XC60 Recharge.
The carmaker plans to produce sustainable cars and uses as many recyclable materials to manufacture its vehicles as possible, including exteriors, powertrains, and even interiors.
BMW
BMW is looking for a slight increase in sales growth for 2023 and wants to achieve 10% sales for fully electric vehicles. Included is the redesigned 7 Series, available in gas or electric powertrains.
The company is also looking to put aside the backlash it faced in 2022 over the idea of charging customers for heated seats in their cars.
Bottom Line
Automakers are looking forward to a strong 2023 as new electric vehicles become more prevalent on the roads. This could lead to strong earnings and great investment opportunities for those purchasing auto stocks.
However, if the economy goes south fast or falls into an official recession, the auto industry – among others – will take its share of the pain.
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Source: https://www.forbes.com/sites/qai/2023/01/08/top-5-auto-stocks-for-2023/