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“I was a little bit bearish on Tesla for this quarter — and I should’ve been darker.”
The electric vehicle market is anyone’s game.
That’s the takeaway from this year’s first tranche of EV sales data, which saw the two global market leaders — Tesla and BYD — turn in dismal sales for the first three months of the year. Those were in contrast to other automakers including Rivian, Hyundai, and Toyota, all of which reported healthier numbers.
Tesla’s deliveries, which Wall Street uses as a decent proxy for sales, came up well short of analysts’ expectations at 386,810 vehicles for the quarter — down about 9% from the first quarter of 2023. Analysts have consistently cut their estimates for this quarter’s deliveries over the past few weeks, but even so, the real numbers came in well below even the lowest expectations.
“I was a little bit bearish on Tesla for this quarter — and I should’ve been darker,” Corey Cantor, an EV analyst for BloombergNEF, a new-energy research firm, told me.
But despite those meager results, Tesla edged out BYD on sales for the quarter. The Chinese EV giant — whose new $9,000 Seagull hatchback has stunned Western automakers and triggered protectionist impulses around the world — reported far less stunning sales data. BYD sold 300,114 vehicles in the first three months of 2024, down 42% compared to a year before.
That means Tesla is once again the world’s No. 1 seller of electric vehicles, after ceding that title to BYD last year. But little else is going right for Elon Musk’s car company.
Tesla has an aging vehicle line-up, and its newest North American offering, the Cybertruck, has not impressed reviewers. By its own admission, the company is struggling to scale up the Cybertruck’s production as well.
Perhaps most worrying for Musk is that Tesla produced almost 47,000 more vehicles during the first quarter than it sold, suggesting that it is beginning to hit real limits on customer demand for its cars.
“There must be some kind of supply-demand imbalance here,” Cantor said. Tesla has slashed its vehicle prices by thousands of dollars over the past year in order to stimulate demand. Tesla doesn’t break out its sales data by region, which is a shame because that could help clarify what is going on. If Tesla’s sales are flagging in China and Europe, that could be because consumers are flocking to a new set of EV options. A sales decline in the U.S. would indicate that one of the company’s cash cows, the Model Y crossover, is beginning to falter.
“If you look at this, you can see where there are yellow flags here,” Cantor said. “Tesla can explain it however you want but the numbers speak for themselves. Anytime you’re down 9% year on year is a challenge.”
It’s harder to know how to read BYD’s fillip. Other Chinese automakers reported surging March sales. Xiaomi, a Chinese phone maker, has reported almost 90,000 preorders for its first-ever electric car, the SU7. Cantor speculated that the hiccup may be due to Lunar New Year, which tends to depress sales in January and February.
Elsewhere in the car market, other EV makers did better — although few reported surging sales. One exception was Hyundai, which reported EV sales up more than 60% from the first quarter of 2023.
General Motors’ electric vehicle sales fell 20.5% compared to the first quarter of 2023, even as the company’s overall sales of personal-use vehicles rose slightly. It reported higher sales for the Lyriq, its EV SUV, Cantor said.
Toyota says that it sold 206,850 “electrified” cars across North America in the first quarter, a gain of 74% over the year before. “Electrified,” however, is a Toyota term of art — it includes conventional hybrids, plug-in hybrids, and hydrogen fuel cell vehicles. About a third of Toyota’s North American sales now fall in this category.
The electric truck maker Rivian modestly surpassed expectations, beating both analysts’ and its own estimates with 13,588 deliveries in the first few months of 2024. While its total production of 13,980 vehicles for the quarter came in marginally below predictions, Rivian reaffirmed its earlier estimates for full-year production.
Even so, by late afternoon, Rivian’s stock was down 5% for the day. That might be partially explained by the planned weeks-long shutdown of its factory in Normal, Illinois, scheduled to begin at the end of this week. While the pause will allow for renovations designed to reduce costs and increase efficiency, it will also mean that next quarter is guaranteed to be a “wash” for Rivian, Cantor said.
As of last quarter, Rivian was losing about $43,000 on every vehicle it produced. Whether it can stem those losses and get on the “bridge to profitability” executives say is within sight remains, apparently, an open question for shareholders. Rivian is now focused on surviving long enough to sell the R2 SUV. “Every single thing we do within the business is focused on driving costs on this,” RJ Scaringe, Rivian’s CEO, told CNBC last month.
Tesla's and BYD’s flagging sales may also be signaling to investors that a general EV slowdown is coming. And then, of course, there's the general malaise that descended over the EV industry in 2023 as the big legacy American automakers reported sluggish sales for their splashy new electric models and planned to scale back production in the coming year. Though the data don’t present as clear a picture as the doomers might suggest, it is undeniable that, as Princeton energy systems professor and Shift Key podcast co-host Jesse Jenkins wrote for Heatmap, “the vibes are bad.”
“The narrative now will be harsh on Tesla and BYD,” Cantor said. “But if you’re another automaker, you should see this as an opportunity. We’re in the early stages here. None of this is written.”
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Jesse teaches Rob all about where solar and wind energy come from.
The two fastest-growing sources of electricity generation in the world represent a radical break with the energy technologies that came before them. That’s not just because their fuels are the wind and the sun.
This is our third episode of Shift Key Summer School, a series of “lecture conversations” about the basics of energy, electricity, and the power grid. This week, we dive into the history and mechanics of wind turbines and solar panels, the two lynchpin technologies of the energy transition. What do solar panels have in common with semiconductors? Why did it take so long for them to achieve scale? And what’s an inverter and why is it so important for the grid of the future?
Shift Key is hosted by Jesse Jenkins, a professor of energy systems engineering at Princeton University, and Robinson Meyer, Heatmap’s executive editor.
Subscribe to “Shift Key” and find this episode on Apple Podcasts, Spotify, Amazon, YouTube, or wherever you get your podcasts.
You can also add the show’s RSS feed to your podcast app to follow us directly.
Here is an excerpt from our conversation:
Jesse Jenkins: And so then the other thing, of course, that helps is putting it at a place that’s sunnier, right? In addition to pointing it at the sun, you need to have the sun in the first place. If you go from a cloudy northern latitude to a sunny southern latitude, you’re going to get more production. That variation isn’t as large as you might think, though, from the best site in, say, Arizona and New Mexico to the worst 10th percentile sites in northern Maine or Portland, Oregon, where I grew up, where it’s very cloudy. That difference in solar resource potential is only about a factor of two. So I get about twice as much solar output from an ideally placed panel in Arizona as I do in Portland, Oregon, or Portland, Maine. That’s a lot, but we can find much better resources much closer to Portland, Maine, and Portland, Oregon, right?
And so this is why it doesn’t really make sense to build a giant solar farm in Arizona and then send all that power everywhere else in the country — because the transmission lines are so expensive and the efficiency gain is not that huge, it doesn’t make sense to send power that far away. It might make sense to put my solar panel on the east side of the Cascade Mountains and send them to Portland, Oregon, but not to go all the way to Arizona. Because the variation in solar potential is much more gradual across different locations and doesn’t span quite as much of a range as wind power, which we can talk about.
Robinson Meyer: I was going to say, this idea that solar only varies by, it sounds like, about 100% in its efficiency.
Jenkins: Or capacity factor.
Meyer: Yeah. I suspect, in fact, from previous conversations that this is going to be an important tool that comes back later — this idea that solar only really varies by 100% in its resource potential, that Arizona solar is only twice as good as Maine solar, is going to be really important after we talk about wind.
Mentioned:
How Solar Energy Became Cheap, by Gregory F. Nemet
More on what wind energy has to do with Star Trek
This episode of Shift Key is sponsored by …
Accelerate your clean energy career with Yale’s online certificate programs. Gain real-world skills, build strong networks, and keep working while you learn. Explore the year-long Financing and Deploying Clean Energy program or the 5-month Clean and Equitable Energy Development program. Learn more here.
Music for Shift Key is by Adam Kromelow.
It took a lot of scrutiny and a lot of patience, but the city council is finally making progress against natural gas infrastructure.
Susan Albright, a city councilor in Newton, Massachusetts, was reviewing the latest batch of requests from the local gas utility in early July when one submission caught her off guard. The company, National Grid, regularly asks the city for permission to tear up stretches of road in order to replace aging gas mains and service lines. But this time, the utility wanted to install a new 46-foot pipeline leading to Newton Crossing, a mixed-use housing development that’s currently under construction.
“I thought, Oh my god,” Albright told me. “Here we are trying to get rid of pipe, and here’s some new pipe that they’re asking for.”
Such “grant of location” requests used to be a rubber stamp exercise for the Public Facilities Committee, of which Albright is the chair. But more recently, they’ve become contentious. Activists have started showing up to public meetings to question the necessity of pipeline work. Could the pipes be repaired instead of replaced? Or even better, retired? Could the houses served by them be electrified?
To get ahead of public outcry about a brand new pipe, Albright sprung into action. She pulled up plans the housing developer had filed with the city and learned that the apartments were intended to be all-electric. The developer had requested a gas connection solely to serve commercial businesses on the ground level. Albright found a contact for the project and picked up the phone.
“Is there any possibility that you could go electric for your commercial?” she recalled asking, explaining the connection between natural gas and climate change, and the city’s goal of weaning off gas. “At first he was very reluctant,” she told me. “But then he called me back and said that he’s willing to try it.” His ability to do so will depend on whether the electric utility can supply enough power. Nonetheless, Albright had successfully pushed a vote on the request to a later date. “We will review that grant of location at our meeting on July 28, and hopefully he will withdraw it, but we don’t know,” she said.
The city committed to transitioning away from natural gas by 2050 as part of its Climate Action Plan, enacted in 2019. Although residents have started to electrify their homes, the city hasn’t been able to slow down investment into the gas system. The story of Newton Crossing illustrates a strategy that has finally begun to move the needle. Councilors and activists have begun doggedly scrutinizing each of National Grid’s requests in hopes of finding alternatives that avoid investing more ratepayer money into a gas system that is — or should be — on a path toward obsolescence.
Progress has not been linear, and almost all of these attempts have so far failed. But the city does seem to have gotten the company’s attention. Earlier, in June, National Grid came to Newton with a different kind of request — an invitation to embark on a collaboration together with the local electric utility, Eversource, to proactively plan the city’s transition away from gas, and in doing so, begin to create a model for the company, the state, and possibly the country.
“I’m so excited to be here today because this is the first of its kind,” Bill Foley, National Grid’s director of strategy and transformation told the Public Facilities Committee while presenting the proposal. “We’ve never sat down with Eversource, National Grid, and another community to talk about how we’re going to broadly electrify a community.”
The subterranean network of natural gas pipes that runs under Massachusetts is old and leaky, with some sections dating back to the late 19th century. Utilities in the Commonwealth have always been required to address dangerous leaks, but in 2014, the state passed a law incentivizing more proactive measures to replace or repair leak-prone pipes. It was a matter of public safety as well as environmental protection — the methane that seeps out can kill tree roots in addition to being a powerful greenhouse gas.
The law created the Gas System Enhancement Program, or GSEP. Each fall, companies would file annual plans to the Department of Public Utilities outlining all the pipeline repair and replacement projects they aimed to complete in the coming year. In return, they’d get quicker approvals from regulators and be able to recover the costs more quickly from ratepayers.
In the years since, utilities have spent billions of dollars replacing thousands of miles of pipelines. Simultaneously, the state has fleshed out its plans to tackle climate change, making it clear that electrifying buildings would be a key component. As a result, the tide of public opinion about the pipeline program shifted. Replacing aging pipes may actually be worse for the climate, many activists now believe, since it means putting major investments in new fossil fuel infrastructure, thereby increasing inertia in the energy system and possibly delaying the transition to carbon-free solutions.
Former mechanical engineer Peter Barrer is one of those activists. Barrer lives in Newton, and has become an expert on the local gas network and the state’s pipeline policies. Using public data filed with state regulators, he calculated that out of the $18 million National Grid spent to address aging pipes under the GSEP program in Newton in 2023, only about $200,000 went to repairs, with the rest going to replacements. (National Grid later disputed the number, reporting that it spent $3 million on repairs that year.)
Barrer is concerned that the GSEP gives the company cover to spend excessively on pipeline replacements, which earn them larger profits than repairs. Other analysts have reached similar conclusions. Last year, the energy research consultancy the Brattle Group submitted testimony to state regulators on behalf of the Massachusetts attorney general’s office arguing that utilities are increasingly using GSEP to make everyday capital improvements. The level of spending “goes far beyond remediating immediate risks to safety caused by gas leaks,” the consultants wrote.
Barrer’s research on GSEP led him to a potential point of leverage with National Grid. When the utility wants to dig up a street, it has to submit a Grant of Location request to Newton’s Public Facilities Committee, which is then subject to a public hearing.
Newton is a progressive city that has long been at the forefront of climate action in the state. It’s one of 10 communities granted permission by the state to ban gas hookups in new buildings. (The Newton Crossing development got its permits before the policy went into effect.) The city council has also passed an ordinance requiring the largest existing buildings to reduce their emissions to net-zero by 2050.
While the Public Facilities Committee doesn’t have the power to deny National Grid’s Grant of Location requests, Albright, the city councilor, told me, the meetings do present an opportunity to engage with the utility. Members and the public can ask questions and delay approvals. Barrer and other activists began using the requests as an opportunity to highlight the paradox of the city approving new gas infrastructure.
One particularly contentious fight began last October over a replacement on Garland Road, a street known for hosting a “Sustainable Street Tour,” during which residents spoke about their experiences greening their homes with solar, insulation, EVs, and heat pumps. “Bells kind of rang in my mind,” Barrer told me. “Here’s a great place to fight National Grid.”
The gas company argued that the Garland Road pipeline, 600 feet of cast iron from the 1920s, was simply too high-risk. “National Grid cannot agree to delay replacement long enough to determine if the Garland Rd customers that still use their gas service for one or more uses are willing to have their gas service disconnected,” Amy Smith, the director of the company’s New England Gas Business Unit, wrote in an email to Albright in January. “In addition, even if all customers on Garland Rd agree to have their gas service cut off, we do not currently have a mechanism to fund the costs of full electrification of each home.” The Committee signed off on the project.
But activists continued to challenge it. A resident of Garland Road, Jon Slote, surveyed his neighbors and found that all were either neutral or supportive of electrification. He also put together a cost comparison and found that the capital cost of electrifying the homes was 18% to 41% lower than that of replacing the pipeline.
National Grid didn’t budge. One of the reasons the block couldn’t be electrified, Smith explained to Barrer in emails that I reviewed, was that this segment of pipe “plays a critical role in providing pressure support for approximately 120 homes in the area. Maintaining minimum pressure is vital for both safety and reliability.”
Barrer told me he’s skeptical that replacing the pipe is the only solution, but acknowledged that the issue is real.
Perhaps Barrer’s biggest grievance, though, is that National Grid frequently makes requests that are not in its regulator-approved plans. Nearly 60% of the money the company spent in 2023 and was able to recover through the expedited GSEP process went to such projects, he found. A related issue: GSEP plans often don’t disclose the full extent of each project. “This is important for municipal planning,” Barrer told me. If the public can’t see in advance which areas the company is planning to work on, he said, “there’s no opportunity for the city to investigate. Maybe there’s streets on there that we can get support for electrification.”
He described the fight over gas pipelines in Newton as “a David and Goliath situation.” Activists want the opportunity to get ahead of these projects and figure out alternatives, he said, but aren’t given enough notice or details. “They have all the cards. They have a monopoly on gas, and they also have a monopoly on information.” He wants the state legislature to help them put up a fairer fight by passing two new bills that would require the utilities to disclose more information, sooner.
Albright, meanwhile, told me she thinks National Grid has acted in good faith. “The people that I’ve been working with, I trust that they’re trying to do the best for the company and for us as customers. I mean, they don’t want these pipes to explode.”
For about a year, Albright said, she has been having conversations with Smith of National Grid about what the city could do to start getting off gas. At the end of 2024, Smith came back with an offer — National Grid would work with Newton on an electrification pilot project. The company has since provided the city with a list of streets to consider for the pilot — mostly dead ends on the outskirts of the gas system, areas where taking out a stretch of pipe won’t affect other customers downstream.
Meanwhile, a lot has changed at the state level. Late last year and continuing into this spring, lawmakers and regulators enacted new policies to reform GSEP and better align it with the Commonwealth’s clean energy plans. That meant focusing on the highest risk pipes, prioritizing repairs instead of replacements, lowering the cap on spending for companies, and enabling them to spend some of the money on alternatives to pipelines, including electrification projects.
Perhaps these changes help explain what led National Grid to approach Newton earlier this summer with its proposal to collaborate. At the Public Facilities Committee’s June 18 meeting, representatives from National Grid and Eversource spent nearly three hours explaining their “integrated energy planning” effort, figuring out how to transition from gas to electricity while containing costs and ensuring reliable service. Now they wanted the chance to begin testing it out in a community.
“The technical stuff is easy,” Foley of National Grid told the Committee. “When it comes to knocking on a door and saying, Hey, how do we get you to electrify? That’s the challenging part. That’s what we’re going to learn.”
The Committee, the mayor, and city staff welcomed the idea. Even Barrer is optimistic. “I think it is unprecedented,” he told me, “and it could be very, very useful.” But he’s also skeptical. Will the company actually share the information advocates like him are looking for to analyze alternatives? And will it work quickly?
“From my perspective, every year that the plan doesn’t turn into action is another half a billion dollars of ratepayer money the National Grid gets to invest.” But, he added, “I’m hopeful. Let’s see what actually develops.”
On Fervo’s megadeal tease, steel’s coal gamble, and Norway’s CO2 milestone
Current conditions: Manila is facing severe flooding amid days of monsoon rains • Of the seven Marshall Islands that the U.S. Drought Monitor tracks, two are currently suffering extreme drought, and another three are under severe drought conditions • Wildfires are blazing in Oregon, where the Cram Fire has already scorched nearly 100,000 acres just 50 miles south of Portland.
OpenAI CEO Sam AltmanKevin Dietsch/Getty Images
Six months after the top executives of OpenAI and Softbank stood shoulder to shoulder at the White House to announce a $500 billion joint venture to build out the infrastructure for artificial intelligence across the United States, the so-called Stargate project has yet to complete a deal for a single data center. The companies promised in January to “immediately” invest $100 billion. But in a sign of the dialed-back ambitions, the project is now targeting the more modest goal of constructing one small data center by the end of this year, likely in Ohio, The Wall Street Journal reported.
That’s bad news for the power companies that have lavished in the projected demand from data centers. Crusoe Energy, a developer of gas- and renewable-powered data centers, boasted earlier this year that it was “pouring concrete at three in the morning” to build out its portions of the Stargate project at “ludicrous speed,” Heatmap’s Katie Brigham reported in March. Over the course of just one month this spring, Morgan Stanley ratcheted up its estimates for capital expenditures in cloud computing this year by a whopping $29 billion, to $392 billion, as Heatmap’s Matthew Zeitlin reported in May. Perhaps that’s another AI hallucination.
Fervo Energy’s breakthrough in harnessing fracking technology to tap into the Earth’s molten heat in far more places than ever before effectively launched the next-generation geothermal industry in the U.S. Now the Houston-headquartered startup is poised to vault “enhanced” geothermal power into a gigawatt-scale electricity source.
In a Monday post on LinkedIn, Fervo CEO Tim Latimer teased a “multi-GW development deal” currently in the works. He promised “more to come on this soon.” He did not respond to my inquiry Monday night. The company already has a deal for a 500-megawatt project called Cape Station in Utah, for which it netted a $206 million investment last month. But a project several times that size would put next-generation geothermal in the big leagues with nuclear power as a potential source of large-scale, baseload power.
Shares of Cleveland-Cliffs soared nearly 13% on Monday afternoon after the steelmaker said President Donald Trump’s tariffs had boosted demand. The company’s second-quarter earnings bested estimates, thanks to cost cutting and record steel shipments. CEO Lourenco Goncalves even suggested the company could sell parts of itself in the wake of Japanese steelmaker Nippon Steel’s megadeal to take over American rival U.S. Steel. He confirmed “active conversations” to sell non-core assets but said “everything else is possible.”
On the call, Goncalves also suggested the administration’s embrace of coal had improved market conditions for the company. As my colleague Matthew Zeitlin reported, the chief executive confirmed that Cleveland-Cliffs would abandon its landmark green steel project because the hydrogen it needed was not available widely enough. Instead, Goncalves said, the company would revamp the project “in a way that we preserve and enhance Middletown using beautiful coal, beautiful coke.”
The chief executive of the largest natural gas company in the U.S. is urging Congress to overhaul energy permitting or risk losing the AI race to China. In an interview with the Financial Times, EQT CEO Toby Rice said, “The threat of not getting infrastructure built has only gotten larger — not only from bad actors getting rich by selling energy that could be replaced with American energy — it’s also the threat of China winning the AI race.” Specifically, he called on lawmakers to end what’s called “judicial review,” a period of six years during which opponents of a project can challenge the federal permits in court.
The U.S. has come to the cusp of easing federal permitting for years. After the passage of the Inflation Reduction Act, Democrats tried to ease permitting rules but faced opposition from progressives and conservationists who deemed any relaxing of regulations that could benefit fossil fuels a nonstarter. Democrats tried to revive the issue last year, but Republicans walked away from the negotiations once the election turned in the GOP’s favor. With the One Big Beautiful Bill revoking many of Democrats’ energy priorities, it’s unclear how much leverage Republicans have to restart talks ahead of next year’s midterm elections.
The world’s first carbon shipping terminal designed to permanently store captured CO2 that would have otherwise gone into the atmosphere just took its first shipment, The Washington Post reported. Located on an island on the edge of the North Sea, Norway’s Northern Lights facility accepted 7,500 metric tons of liquefied CO2 from a Norwegian cement factory. The plant — funded by the government in Oslo and fossil fuel companies — could serve as Europe’s primary carbon dump, and as a model for Asian countries looking to establish their own storage facilities.
China’s exports of clean-energy technologies such as solar panels, batteries and electric vehicles shaved 1% of the global emissions outside China last year, a new Carbon Brief analysis found.