Golf car industry portends a hazard for Detroit.
Originally published in Callaway Climate Insights by Bill Sternberg, a veteran Washington journalist and former editorial page editor of USA Today.
PORT ST. LUCIE, Fla. (Callaway Climate Insights) — I bought my first electric vehicle recently.
This vehicle seats four people comfortably and comes equipped with a maintenance-free lithium battery, lifted all-terrain tires, headlights, tail lights, turn signals, shoulder belts, Bluetooth, a sound bar, an adjustable steering wheel, a back-up camera and a locking trunk.
No, it’s not an automobile. It’s a golf cart.
Golf carts (or golf cars, as people in the industry call the variety propelled by gasoline or electricity) like my 2024 Evolution Maverick 4 are all the rage in our over-55 community along Florida’s Treasure Coast.
Never mind that the community doesn’t have a golf course, and the nearest one is miles away. The plug-in carts are a clean and fun way to get around, whether it’s to visit neighbors, the pool and fitness center, the racquet sports complex, the arts and cultural building, or just the mailbox cluster.
Some families here have opted for one conventional car and one golf cart, instead of two cars. And that’s not the only reason auto executives ought to be paying close attention to what’s happening in the “neighborhood EV” sector.
Like the domestic auto industry, the golf cart industry has long been dominated by three big manufacturers: Club Car, which Ingersoll-Rand (IR) sold to Platinum Equity in 2021; E-Z-GO, a unit of Textron (TXT); and Yamaha, a division of Yamaha Motor Company (YAMHF). The Big Three have traditionally focused on fleet sales to golf courses.
In recent years, companies that make their carts in China, or assemble them in the United States from Chinese-made parts, have established a foothold in the market for the sort of low-speed vehicles that are popular in retirement communities.
“A lot of Chinese and Korean companies are trying to make inroads,” says Michael Feinstein, managing editor of the trade publication Golf Car Advisor. Over the past 10 to 15 years, “they’ve come a long way.”
Companies that have made the biggest splash include Evolution Electric Vehicles, ICON Electric Vehicles, Star EV Corp. and Tomberlin. Such companies have introduced innovative models with both seats facing forward and the sorts of bells and whistles normally associated with automobiles. They’ve also engaged in aggressive price-cutting to maintain or grow market share.
“I think there’s a real groundswell” for these types of vehicles for short-distance driving, Stephen Metzger, managing director of Small Vehicle Resource, told me. “There’s a whole host of new brands that have come on the market over the past two years, and there doesn’t seem to be any letup in that particular trend.”
All of this should concern Detroit, where the Big Three domestic automakers — General Motors (GM), Ford (F) and Chrysler-parent Stellantis (STLA) — face a looming challenge from Chinese EV makers. As the blunt headline on a recent guest essay in The New York Times put it, “China’s Electric Vehicles Are Going to Hit Detroit Like a Wrecking Ball.”
Even Tesla (TSLA), which has more than half of the EV market in the United States, is vulnerable to China-based rivals with global ambitions, particularly BYD. After BYD surpassed Tesla late last year as the world’s top EV seller, CEO Elon Musk warned that, without trade barriers, the Chinese EV makers “will pretty much demolish most other companies in the world.”
Chinese companies have a significant cost advantage over car makers based in the United States and Europe thanks to cheaper labor, government subsidies, battery technology, and easier access to lithium and other raw materials. BYD’s Atto 3, a stylish five-passenger SUV with all the latest safety features, starts at $31,000, about half the cost of the average electric vehicle sold in the United States. BYD’s Seagull starts at under $10,000.
The Chinese-brand cars captured an estimated 8% share of the European EV market in 2022, which might be good for the climate but bad for automakers like Renault. When the Chinese EVs will arrive in the United States is anyone’s guess. The barriers to entry for automobiles are far higher than for golf carts: Foreign companies must comply with U.S. safety regulations and protocols, build retail networks, raise brand awareness, and establish systems for servicing vehicles, supplying parts and backing up warranties.
Then there are political hurdles. The auto industry employs more workers in Michigan, one of the most important battlegrounds in the U.S. presidential election this November, than any other state. Not surprisingly, President Joe Biden’s administration is pouring billions of dollars of subsidies into helping U.S.-manufacturers compete in the EV race, and Donald Trump has vowed to hit cars manufactured by Chinese companies in Mexico with a 100% tariff.
Back in Florida, I probably won’t know for a few years whether my Evolution Maverick was a smart purchase. The Facebook group for Evolution owners features a mix of satisfied customers and horror stories. Experts like Feinstein and Metzger expect a shakeout and consolidation in the golf car industry.
But the rows of Evolutions and Icons parked at the pickleball courts here serve as a vivid reminder about globalization: People will buy the product that suits their needs and provides the best value, regardless of where it’s made. You might even say it’s par for the course.
