The Barefoot Investor’s Concerns About Electric Vehicles
Scott Pape, known as the Barefoot Investor, has recently shared a thought-provoking warning about electric vehicles (EVs) in his newsletter. His concerns were sparked by a conversation with his father, who was not interested in purchasing an EV despite the growing popularity of such vehicles.
During their discussion about buying a new car, Pape suggested that his father consider investing in a Tesla Model Y. He described the vehicle as something that would have surprised even Henry Ford, the founder of Ford Motor Company. According to Pape, the Model Y recently rolled off the factory line and drove itself 30 minutes to its new owner’s house without any human intervention. He humorously added that if a buyer missed a payment, the car might send a notification, start itself, open the garage door, and silently return to the showroom during the night.
However, his father was not impressed. “Why would I want a bloody electric car?” he asked. Pape explained that his father’s skepticism was not unusual. Many people still have practical concerns about EVs, such as where they can charge them, the cost of repairs, and their resale value. Despite government predictions that most people will be driving EVs soon, they only accounted for 10.3% of car sales last month, which is a record high but still a small portion of the market.
Pape warned that car manufacturers are likely to continue discounting prices, which could lead to a significant drop in the value of used electric vehicles. He pointed out that China is flooding the market with affordable EVs, which is driving prices downward. For example, BYD, the world’s largest EV manufacturer, recently slashed its local car prices by 34% overnight.
While EVs may give the impression of being environmentally friendly or socially responsible, Pape argues that they are still poor financial investments. He emphasized that cars have always been a terrible investment, regardless of whether they are electric or traditional. The high initial costs, maintenance expenses, and depreciation rates make them a risky choice for many consumers.
Reflecting on how the car market is evolving, Pape noted that his childhood was defined by the rivalry between Ford and Holden. However, he believes that his children will grow up in a completely different environment. He predicts that for the next generation, choosing a car will be similar to shopping for a TV at JB Hi-Fi—there will be many unfamiliar Chinese brand names that become better and cheaper each year.
In essence, Pape sees the future of the automotive industry as an “electric race to the bottom,” where no one is in control. This shift highlights the need for consumers to carefully evaluate their options before making a purchase, especially given the rapid changes in technology and market dynamics.
As the automotive landscape continues to evolve, it is crucial for individuals to stay informed and make decisions based on both personal needs and long-term financial considerations. Whether it’s an electric vehicle or a traditional gasoline-powered car, the key is to understand the implications of each choice and how it fits into one’s overall financial strategy.
