Business

Shopper turnout across websites and stores hit an all-time high of 200.4 million over the five-day weekend from Thanksgiving Day through Cyber Monday, according to a survey by the National Retail Federation.
Shoppers shelled out an average of $321.41 on holiday-related purchases over the weekend. That’s roughly in line with last year.
The strong turnout comes as shoppers bargain hunt and retailers strike a more cautious tone.

Shoppers browse for dresses during the Black Friday sale at the Vivo Activewear women’s clothing store in downtown Nairobi, Kenya November 24, 2023. 
Thomas Mukoya | Reuters

Shoppers kicked off the holiday season with a bang, as a record 200.4 million people hit stores and searched websites for gifts from Thanksgiving Day through Cyber Monday, according to a survey by the National Retail Federation.
The turnout marks an all-time high since the major trade group and Prosper Insights & Analytics began tracking total in-store and online traffic in 2017. It topped last year’s figure of 196.7 million shoppers and the NRF’s forecast for about 182 million people during the five-day weekend.

The number of people shopping online rose to 134.2 million this year, up from 130.2 million a year ago, the NRF survey found. Consumers who shopped at stores fell slightly, from 122.7 million people in 2022 to 121.4 million people this year.
The major trade group did not estimate total spending, but said shoppers shelled out an average of $321.41 on holiday-related purchases over the weekend. That’s roughly in line with the $325.44 average last year. The number is not adjusted for inflation.
On a call with reporters, NRF CEO Matt Shay said the large turnout “speaks to the way consumers are feeling, but also the deals that were out there.” He said other factors including the weather worked in retailers’ favor. Cooler temperatures, which many parts of the country had this weekend, can help motivate shoppers to spring for seasonal items like jackets, sweaters and boots.

A shopper looks at clothes inside a store at Twelve Oaks Mall on November 24, 2023 in Novi, Michigan. 
Emily Elconin | Getty Images

Top gifts during the period were clothes and accessories, which about half of those surveyed purchased, and toys, which nearly a third of people surveyed bought. For the first time, personal care or beauty items also cracked into the top five most popular gifts, the group said.
As of Thanksgiving weekend, consumers said they were about halfway done with their holiday shopping, according to the results. NRF’s survey of 3,498 adult consumers was conducted Nov. 22 to 26.

Another early read on holiday spending showed strength in online sales. On Black Friday, consumers spent $9.8 billion in U.S. online sales, according to Adobe, up 7.5% from a year ago.
Cyber Monday topped that, as e-commerce spending in the U.S. totaled $12.4 billion, up 9.6% year over year.

Amazon workers move carts filled with packages at an Amazon delivery station on November 28, 2022 in Alpharetta, Georgia. Amazon is offering deep discounts on popular products for Cyber Monday, its busiest shopping day of the year. 
Justin Sullivan | Getty Images News | Getty Images

Adobe’s data covers more than 1 trillion visits to U.S. retail websites, 100 million unique items and 18 total product categories. It does not cover in-store purchases, where the majority of U.S. holiday spending still take place.
Yet it is too soon to predict how the rest of the peak retail season may play out. Strength in early shopping could reflect shoppers’ hunger for good deals rather than their desire to spend. It could also show a reversion to a pre-pandemic pattern of holiday shopping, when customers concentrated their spending during peak times like Black Friday sales events and the final days before Christmas.
Retailers struck a cautious note about the season when reporting earnings earlier this month. Some companies, including Walmart, say discretionary spending remains weak, but has picked up during promotional events.

Black Friday shoppers stand in line for a Lululemon store as retailers compete to attract shoppers and try to maintain margins on Black Friday, one of the busiest shopping days of the year, at Woodbury Common Premium Outlets in Central Valley, New York, U.S. November 24, 2023. REUTERS/Vincent Alban
Vincent Alban | Reuters

Holiday sales in November and December are expected to rise by 3% to 4% year over year to between $957.3 billion and $966.6 billion, according to the NRF. That’s slower growth than during the pandemic, but roughly in line with average sales increases before Covid.
NRF’s Shay said sales this holiday season may look modest, or even disappointing, because of comparisons with the pandemic spending boom.
“There’s no question that there’s been some moderation and deceleration in consumption relative to the last 36 months,” he said. Shay referred to the end of stimulus checks and the return of higher spending on services.
But he, added, “there’s a difference between moderation and bleak” sales.
Don’t miss these stories from CNBC PRO: More

Home prices were 3.9% higher in September compared with the same month a year earlier, according to the S&P CoreLogic Case-Shiller Index.
The growth coincided with the 30-year fixed mortgage rate’s climb toward 8%.
Rents are easing, however, while home prices rise.

A townhouse for sale in the Upper East Side neighborhood of NYC.
Adam Jeffery | CNBC

Higher mortgage rates appear to be doing very little to cool home prices.
Nationally, prices were 3.9% higher in September compared with the same month a year earlier, up from a 2.5% annual gain in August, according to the S&P CoreLogic Case-Shiller Index. This occurred as the average rate on the 30-year fixed mortgage climbed toward 8%.

Of the 20 metropolitan markets highlighted in the report, Detroit saw the biggest annual increase at 6.7%, followed by San Diego at 6.5% and New York at 6.3%. Three of the 20 cities, Las Vegas, Phoenix and Portland, Oregon, reported lower prices compared with a year ago. Those cities were some of the biggest gainers in the first few years of the Covid-19 pandemic.
“We’ve commented before on the breadth of the housing market’s strength, which continued to be impressive,” Craig Lazzara, managing director at S&P DJI, said in a release. “Although this year’s increase in mortgage rates has surely suppressed the quantity of homes sold, the relative shortage of inventory for sale has been a solid support for prices.”
Rates have eased in recent weeks, meanwhile, leading to slight growth in mortgage demand.
Year to date, home prices nationally have risen 6.1%, much more than the median full calendar year increase in more than 35 years of this index’s data.
“Unless higher rates or exogenous events lead to general economic weakness, the breadth and strength of this month’s report are consistent with an optimistic view of future results,” Lazzara added.

What about rents?

As home prices continue to gain, rents are easing up.
The national median rent dropped 0.9% in November from October, according to Apartment List. The benchmark has now fallen 3.5% from its all-time high in August 2022. Rent is nearly $250 a month more than it was three years ago, however.
Rents are dropping due to both seasonal and supply factors. There is a record amount of new apartment supply coming on this year, after a construction boom in the sector.
“Vacancies get harder to fill as we draw closer to the holidays, so now is the time when renters have the most sway in lease negotiations,” according to the report.
Rent growth will continue to be moderated by more supply next year. Nationwide, the apartment vacancy rate is now 6.4%, a touch higher than the pre-pandemic average, and it could rise even more next year.
“Rental growth will pick up again in the spring seasonally, but it’s obvious the deceleration is here and will eventually flow thru the CPI data,” noted Peter Boockvar, chief investment officer at Bleakley Financial Group and a CNBC contributor.
“While inflation here will further cool in 2024, we are setting ourselves up for a reacceleration in the years after. That said, markets we know only care about the here and now and renters will certainly appreciate the slowdown when mortgage rates are above 7% and affordability to buy a home is tough,” he added.
Don’t miss these stories from CNBC PRO: More

Shein has confidentially filed to go public and is moving forward with its long-rumored IPO.
The retailer was last valued at $66 billion.
Shein has tapped Goldman Sachs, JPMorgan and Morgan Stanley to be the lead underwriters on the offering.

A Shein pop-up store inside a Forever 21 store in Times Square in New York on Nov. 10, 2023.
Yuki Iwamura | Bloomberg | Getty Images

Shein has confidentially filed to go public in the U.S. as the Chinese-founded fast-fashion juggernaut looks to expand its global reach with a long-rumored initial public offering, CNBC has learned. 
The retailer was last valued at $66 billion and could be ready to start trading on the public markets as soon as 2024, people familiar with the matter said Monday. 

It is unclear how much the company is currently worth, but its valuation has been a central point of debate among Shein and the advisors it’s working with, people familiar with the matter said. 
A confidential filing is common, as it allows companies to communicate with the U.S. Securities and Exchange Commission and make any necessary adjustments to their filings in private. Over the next few months, Shein will likely make tweaks to its paperwork and answer numerous questions from the agency. The filing will be made public once the company is ready to move forward with its IPO. At that point, those communications with the SEC and any adjustments to its paperwork will be released as well.
Shein has been on a meteoric rise over the past few years after it won over consumers across the globe with its fashion-forward designs, endless assortment and dirt-cheap prices. But Shein has faced a series of challenges along the way and faced accusations of using forced labor in its supply chain, violating labor laws, harming the environment and stealing designs from independent artists.
The company is currently under investigation by the newly formed House Select Committee on the Chinese Communist Party and has faced scrutiny over its ties to Beijing. Numerous lawmakers, including 16 Republican attorneys general, have called on the SEC to ensure Shein isn’t using forced labor in its supply chain before it’s allowed to start trading in the U.S.
In October, Marcelo Claure, the company’s newly minted group vice chair and former SoftBank CEO, told CNBC in an interview that Shein is cooperating with lawmakers and taking time to meet with them to explain the business. He said, “there’s no such thing as forced labor” in the Shein factories that he has visited. But the company has repeatedly acknowledged that forced labor has been found in its supply chain and noted that it’s taking steps to fix it.

As Shein grew from an obscure Chinese retailer into a global behemoth with headquarters in Singapore, it largely stayed in the shadows. It said and did very little publicly until this year, when it began to open up in an apparent attempt to prepare for a U.S. IPO.
With Chinese CEO Sky Xu still at the helm, Shein tapped former Bear Stearns investment banker Donald Tang to be its executive chair and public face earlier this year. It has hosted a series of well-publicized pop-up events, sent influencers to its Chinese factories in a poorly received public relations campaign and courted the business press with splashy parties that featured its independent designers and other friends of the company.
Shein has worked hard to beat the many negative accusations that have come to define the company and has made its executives available for interviews as it worked to change the narrative.
Recently, it acquired about one-third of Sparc Group — a joint venture that includes brand management firm Authentic Brands Group and mall owner Simon Property Group — and in doing so, made a powerful U.S. ally that could help legitimize the company in the eyes of U.S. regulators.
As part of the deal, Shein has partnered up with former rival Forever 21 to unveil a co-branded clothing line that will see Shein design, manufacture and distribute the clothes primarily on its website. Shein has been hosting pop-up events inside of Forever 21’s stores.
Shein still has more work to do before it can win the trust of U.S. regulators. Beyond its myriad of issues, its CEO remains a mysterious figure who doesn’t give interviews or speak publicly about the company. The practice is a major departure from other firms that are publicly traded in the U.S., which regularly make their CEOs available. In October, the company did not tell CNBC whether Xu is still a Chinese citizen.
The company has tapped Goldman Sachs, JPMorgan and Morgan Stanley to be the lead underwriters on the offering, the people said. 
Shein declined to comment. Goldman Sachs, JPMorgan and Morgan Stanley did not comment.
Earlier Monday, Chinese media reported on Shein’s filing.Don’t miss these stories from CNBC PRO: More

The diabetes drug Mounjaro is more effective for weight loss than Ozempic in overweight or obese adults, according to a large analysis of real-world data.
Patients taking Eli Lilly’s Mounjaro were significantly more likely to lose weight and saw larger reductions in body weight compared with those on Novo Nordisk’s Ozempic.
The results come as both drugs and similar treatments approved for weight loss soar in demand in the U.S. for their ability to help patients shed unwanted pounds over time.

George Frey | Reuters

The blockbuster diabetes drug Mounjaro is more effective for weight loss than another highly popular diabetes treatment, Ozempic, in overweight or obese adults, according to a large analysis of real-world data published Monday.
Patients taking Eli Lilly’s Mounjaro were significantly more likely to lose 5%, 10% and 15% of their body weight overall and saw larger reductions in body weight after three months, six months and a year compared with those on Novo Nordisk’s Ozempic in the study by Truveta Research. The firm compiles and analyzes patient data from a collective of health-care systems. 

The results from the study, which is not yet peer-reviewed, come as both drugs and similar treatments approved for weight loss soar in demand in the U.S. for their ability to help patients shed unwanted pounds over time. Mounjaro and Ozempic are only approved for the treatment of Type 2 diabetes, but many people use the weekly injections off-label to lose weight. 
A spokesperson for Eli Lilly said the company does not promote or encourage off-label use of any of its medicines and noted that the new study was not sponsored by the drugmaker.
A Novo Nordisk spokesperson similarly said that the company was not involved in the study. They also said the study does not consider that Ozempic is administered at slightly lower doses than its weight-loss drug counterpart, Wegovy. Both drugs contain the active ingredient semaglutide.
Meanwhile, Mounjaro and another version of the drug approved for weight loss called Zepbound are the same medicine with the same dosage level, the spokesperson added.
Previous head-to-head studies have similarly suggested that Mounjaro is more effective than Ozempic for weight loss and controlling blood sugar in adults with Type 2 diabetes. 

But Monday’s study suggests that Mounjaro has an edge over Ozempic in a real-world setting, specifically among adults who are overweight or obese. Notably, head-to-head clinical trials in that population are not yet available, according to Truveta Research. 
Eli Lilly is pitting Zepbound and Wegovy in an ongoing clinical trial in obese or overweight patients. But results won’t be released until 2025.
“We’ve been able to compare the head-to-head efficacy of these two important medications for weight loss in advance of randomized clinical trials,” said Dr. Nick Stucky, an author of the study and vice president of Truveta Research, in a statement. “This study can help to inform patient care and outcomes today, not months from now.”

Study results on Mounjaro and Ozempic

Truveta Research specifically examined health-care data on roughly 18,000 adults who are overweight or obese and first started taking Mounjaro or Ozempic between May 2022 and September 2023. Nearly 52% of those patients had Type 2 diabetes.
Researchers found that patients taking Mounjaro were three times more likely to lose 15% of their weight than those on Ozempic. Patients on Mounjaro were also 2.6 times more likely to achieve 10% weight loss and 1.8 times more likely to lose 5% of their weight.

More CNBC health coverage

Those taking Mounjaro also experienced “significantly larger reductions” in body weight at specific time points, according to Truveta Research.
At three months, patients on Mounjaro lost 5.9% of their weight, while those on Ozempic lost 3.6%. At six months, people taking Mounjaro lost 10.1% of their weight, while patients on Ozempic lost 5.9%. And at one year, those on Mounjaro lost 15.2% of their weight, while those on Ozempic lost 7.9%.
Truveta Research also found that patients without Type 2 diabetes lost more weight than those with the condition. But the differences in effectiveness between Mounjaro and Ozempic were similar in both populations.
Rates of adverse gastrointestinal events were similar between patients taking Mounjaro and Ozempic.

The big difference between the weekly injections

Mounjaro and Ozempic, along with their weight loss counterparts, are both weekly injections that change the way patients eat and lead to decreased appetite by mimicking certain hormones in the gut. 
Ozempic and Wegovy only mimic one hunger-regulating hormone called glucagon-like peptide-1, also known as GLP-1, which increases the feeling of fullness and lowers blood sugar levels.
Meanwhile, Mounjaro and Zepbound mimic GLP-1 and another hormone in the gut called glucose-dependent insulinotropic polypeptide, or GIP.
The dual approach means that Mounjaro and Zepbound have an enhanced effect on regulating appetite and blood sugar levels, which some experts say could potentially lead to more significant weight loss than medications only targeting GLP-1. 
In Eli Lilly’s late-stage study of more than 2,500 adults with obesity but not diabetes, those taking 5 milligrams of Zepbound for 72 weeks lost about 16% of their body weight on average. Higher doses of the drug were associated with even more weight loss, with a 15-milligram dose leading to 22.5% weight loss on average.
More than 2 in 5 adults have obesity, according to the National Institutes of Health. 
About 1 in 11 adults have severe obesity.
Don’t miss these stories from CNBC PRO: More

Disney’s “Wish” fumbled at the box office during the Thanksgiving holiday weekend, tallying just $31.6 million over the five-day period.
It faced ticket sale competition from “Hunger Games: The Ballad of Songbirds and Snakes,” “Napoleon” and “Trolls Band Together.”
It’s historically rare for Disney to lag at the Thanksgiving box office, but it’s struggled since the pandemic to inspire moviegoers to head to cinemas for its newest features.

Ariana DeBose stars as Asha in Disney’s new animated film “Wish.”

Disney needs to do more than wish on some stars to get out of its animation rut.
Its latest animated feature “Wish,” billed as a celebration of 100 years of storytelling, fumbled at the box office during the Thanksgiving holiday weekend. It tallied just $31.6 million over the five-day period, far below box office analysts’ expectations of between $45 million and $55 million.

Lionsgate’s “Hunger Games: The Ballad of Songbirds and Snakes” took the top spot for the five-day holiday, generating $42.2 million in ticket sales. Apple and Sony’s “Napoleon,” an R-rated war epic from Ridley Scott, came in second with $32.75 million.
It’s historically rare for Disney to lag at the Thanksgiving box office. The company has for more than a decade released top-grossing animated films during the Wednesday-to-Sunday frame and even set records for highest-grossing openings for films released on Thanksgiving.
But it’s struggled since the pandemic to inspire moviegoers to head to cinemas for its newest features.
“A set it and forget it strategy based on past performance can no longer be employed by any studio,” said Paul Dergarabedian, senior media analyst at Comscore. “There are some hard lessons being learned as this confounding movie marketplace continues to re-write the rules and audiences make their preferences known with either their presence or the absence at the multiplex.”
The underperformance of “Wish” extends an unfortunate pattern for the company, which operates two animation studios — Walt Disney Animation and Pixar.

Much of Disney’s trouble has come from executive decisions to pad its fledgling streaming service Disney+ with content, stretching its creative teams thin and sending theatrical movies during the pandemic straight to digital.
Parents, confused about when and where animated films were being released, didn’t show up to theaters for a number of titles from Disney in the wake of the pandemic. And many of those films weren’t well-received by those who did.

Then there’s the added pressures of shareholders who have become focused on the profitability of Disney+, tight marketing budgets and audiences that have become more selective about when and what they go out to see at cinemas.
Disney, which ruled the animation genre for decades, is also facing steep competition from Netflix, Universal, Sony and Warner Bros., among others, for moviegoers’ attention. Just a week before “Wish” hit theaters, Universal’s DreamWorks animation studio released “Trolls Band Together,” the third installment in the popular Trolls franchise.
“Trolls Band Together” secured $25.6 million in ticket sales during the five-day Thanksgiving frame, just a few million shy of “Wish.” Box office analysts believe “Trolls” ate into “Wish” ticket sales.
“Entering a marketplace with a familiar ‘Trolls’ movie already in the mix was a recipe for a less than stellar result for the company’s latest release,” Dergarabedian said.
Still, the story of “Wish” isn’t done. Disney has found success over the run of a theatrical release for films like “Elemental,” which tallied just $29.6 million during its domestic opening, but went on to secure nearly $480 million globally before leaving theaters.
Similarly, “Encanto” snared $40.3 million for the five-day Thanksgiving period in 2021. Although it captured less than $250 million globally during the pandemic, it found new life on Disney+. The film quickly became a fan favorite with kids and adults alike, who gravitated towards catchy tunes like “We Don’t Talk About Bruno.”
“‘Wish’ fortunately has the December holiday family moviegoing corridor and of course a future on Disney+ to bolster its fortunes,” said Dergarabedian.
Disclosure: Comcast is the parent company of NBCUniversal and CNBC. NBCUniversal distributed “Trolls Band Together.” More

Rivian on Monday started leasing select models of its all-electric R1T pickup truck.
It’s a move to expand sales and its customer base beyond early adopters of electric vehicles.
Leasing has become a popular way for customers to try out an electric vehicle without any long-term commitment.

A Rivian electric pickup truck sits in a parking lot at a Rivian service center in South San Francisco, California, on May 9, 2022.
Justin Sullivan | Getty Images

Rivian on Monday started leasing select models of its all-electric R1T pickup truck, a move to expand sales and its customer base beyond early adopters of electric vehicles.
The company said the program is available to customers in 14 states: Arizona, California, Colorado, Florida, Georgia, Massachusetts, Michigan, Missouri, New Jersey, New York, Nevada, Pennsylvania, Texas and Washington.

A Rivian spokeswoman said the automaker is working with its existing financial partner Chase for the leasing program, which she said will expand over time.
“We chose these launch states based on many factors including where our customers are located and where leasing is most popular,” she said in an email to CNBC.
Based on the company’s website, leasing is largely available on higher-end models of the vehicle that can cost more than $90,000.
Leasing has become a popular way for customers to try out an electric vehicle without any long-term commitment. Doing so also qualifies a buyer for a full $7,500 federal tax credit under the Inflation Reduction Act, compared to the $3,750 that purchasers of Rivian models currently qualify for.

Leasing is categorized as commercial business under the IRA and therefore exempt from regulations that require the vehicle and battery components to be made in North America. Most EVs for sale today do not qualify for the full tax credit because of where the vehicles or components are built.

“Today, Rivian launched a new way for customers to get behind the wheel of a Rivian with the introduction of leasing,” the company said in an emailed statement. “Rivian’s leasing program offers the adventure of owning a Rivian with more flexibility.”
Rivian, earlier this month, raised its production forecast for the full year by 2,000 vehicles to 54,000 units on the back of sustained demand.Don’t miss these stories from CNBC PRO: More

The remarkable capabilities of generative artificial intelligence (AI) are clear the moment you try it. But remarkableness is also a problem for managers. Working out what to do with a new technology is harder when it can affect so many activities; when its adoption depends not just on the abilities of machines but also on pesky humans; and when it has some surprising flaws.Study after study rams home the potential of large language models (LLMs), which power AIs like ChatGPT, to improve all manner of things. LLMs can save time, by generating meeting summaries, analysing data or drafting press releases. They can sharpen up customer service. They cannot put up IKEA bookshelves—but nor can humans.AI can even boost innovation. Karan Girotra of Cornell University and his co-authors compared the idea-generating abilities of the latest version of ChatGPT with those of students at elite American universities. A lone human can come up with about five ideas in 15 minutes; arm the human with GPt-4 and the number goes up to 200. Crucially, the quality of these ideas is better, at least judged by purchase-intent surveys for new product ideas. Such possibilities can paralyse bosses; when you can do everything, it’s easy to do nothing.LLMs’ ease of use also has pluses and minuses. On the plus side, more applications for generative AI can be found if more people are trying it. Familiarity with LLMs will make people better at using them. Reid Hoffman, a serial AI investor (and a guest on this week’s final episode of “Boss Class”, our management podcast), has a simple bit of advice: start playing with it. If you asked ChatGPT to write a haiku a year ago and have not touched it since, you have more to do.Familiarity may also counter the human instinct to be wary of automation. A paper by Siliang Tong of Nanyang Technological University and his co-authors that was published in 2021, before generative AI was all the rage, captured this suspicion neatly. It showed that AI-generated feedback improved employee performance more than feedback from human managers. However, disclosing that the feedback came from a machine had the opposite effect: it undermined trust, stoked fears of job insecurity and hurt performance. Exposure to LLMs could soothe concerns.Or not. Complicating things are flaws in the technology. The Cambridge Dictionary has named “hallucinate” as its word of the year, in tribute to the tendency of LLMs to spew out false information. The models are evolving rapidly and ought to get better on this score, at least. But some problems are baked in, according to a new paper by R. Thomas McCoy and his co-authors at Princeton University.Because off-the-shelf models are trained on internet data to predict the next word in an answer on a probabilistic basis, they can be tripped up by surprising things. Get GPT-4, the LLM behind ChatGPT, to multiply a number by 9/5 and add 32, and it does well; ask it to multiply the same number by 7/5 and add 31, and it does considerably less well. The difference is explained by the fact that the first calculation is how you convert Celsius to Fahrenheit, and therefore common on the internet; the second is rare and so does not feature much in the training data. Such pitfalls will exist in proprietary models, too.On top of all this is a practical problem: it is hard for firms to keep track of employees’ use of AI. Confidential data might be uploaded and potentially leak out in a subsequent conversation. Earlier this year Samsung, an electronics giant, clamped down on usage of ChatGPT by employees after engineers reportedly shared source code with the chatbot.This combination of superpowers, simplicity and stumbles is a messy one for bosses to navigate. But it points to a few rules of thumb. Be targeted. Some consultants like to talk about the “lighthouse approach”—picking a contained project that has signalling value to the rest of the organisation. Rather than banning the use of LLMs, have guidelines on what information can be put into them. Be on top of how the tech works: this is not like driving a car and not caring what is under the hood. Above all, use it yourself. Generative AI may feel magical. But it is hard work to get right.■Read more from Bartleby, our columnist on management and work:How not to motivate your employees (Nov 20th)The curse of the badly run meeting (Nov 13th)How to manage teams in a world designed for individuals (Nov 6th)Also: How the Bartleby column got its name More

AMERICANS LOVE their automobiles. So long, it seems, as they don’t run on batteries. According to a poll published in July by the Pew Research Centre, less than two-fifths of Americans would consider buying an electric vehicle (EV). Despite continually expanding charging networks and there being ever more EV models to choose from, that is a slightly lower share than the year before.Those words are backed up by relative inaction. In the third quarter of 2023 battery-powered vehicles made up 8% of all car sales. So far this year fewer than 1m EVs (not counting hybrids) were sold in America, a little more than half the number in less car-mad Europe (see chart). Chinese drivers bought almost four times as many. Between July and September General Motors (GM) shifted a piddling 20,000 in its home market, compared with more than 600,000 fossil-fuelled vehicles. Fully 92 days’ worth of EVs languish on dealership forecourts, compared with 54 days of gas-guzzler inventory. Outside California, Florida and Texas, which together account for over half of American EV registrations, electric cars mostly remain a curiosity.image: The EconomistDisappointing demand is now prompting American carmakers to reassess some of their ambitious electrification plans. In October Ford said it would delay $12bn of EV investments. The same month GM put off by a year a $4bn plan to convert an existing factory to one for electric pickups. The Detroit giant also ditched its EV-production targets, including the goal of churning out 100,000 EVs in the second half of this year, without setting new ones. Manufacturers of batteries that have teamed up with carmakers to build battery factories in America are turning cautious, too. In September SK Battery laid off more than 100 employees and reduced output at a plant in Georgia. In November LG Energy, a fellow South Korean firm, said it was laying off 170 workers at its factory in Michigan.All this presents bumps on the road to electrified motoring in America. The car industry’s ability to swerve around them will determine the fate of its energy transition. And, since passenger cars contribute a fifth of American total carbon emissions, it will have an effect on the country’s decarbonisation efforts, too.The biggest obstacle to higher EV enthusiasm in America is price. The average EV there sells for $52,000, reckons Cox Automotive, a consultancy. That is not a world away from the $48,000 that Americans typically pay for a petrol vehicle. But total costs of ownership, which combine the sales price of a vehicle and its running costs for five years, vary more widely. At $65,000, the typical EV is $9,000 more expensive to own than a petrol car (owing to factors like the need to install a pricey home charger, dearer insurance and, at least compared with Europe and China, inexpensive gasoline). On Ford’s latest earnings call executives grumbled that Americans were stubbornly “unwilling to pay premiums” for EVs.A new tax credit of up to $7,500 for EV purchases offsets some of this cost disadvantage. But this sweetener applies only to cars with batteries who components are manufactured or assembled in North America or that have a minimum content of critical minerals from countries with which America has a free-trade agreement. It is also fiddly; buyers need to file a form with their federal income-tax return.. Electric cars’ low adoption, relative novelty and fast-changing technology, meanwhile, make it hard for buyers to tell how fast they lose their worth, which may put some off the purchase.More of them may be discouraged by quality problems. Over the past few years some EVs have been recalled because of faulty battery packs. Seven of the ten car models that face the most basic problems, such as with door handles, are EVs, according to a quality survey by J.D. Power, a research firm.Cheap and cheerful EVs tend to offer better value for money. But in America it is hard to find a set of electric wheels for less than $30,000. American carmakers have followed Tesla, the EV pioneer, in focusing first on higher-margin premium models rather than EVs for the masses. GM and Honda, a Japanese giant, recently dropped their joint $5bn plan to build an affordable EV. Inexpensive and decent-quality Chinese EVs from companies such as BYD have turned China into the world’s biggest EV market and are now flooding Europe. They are, however, all but excluded from America by high tariffs and other barriers.All this leaves America’s car industry circling a roundabout. Consumers’ unwillingness to splurge on expensive EVs is forcing carmakers to offer steep discounts to shift inventory. Tesla has slashed its prices several times in the past year. Carmakers are offering average discounts of almost 10% on their EVs, more than twice as generous as for petrol cars. But this is making it even harder for the companies to make money from battery power. Ford’s electric division is losing about $62,000 for every vehicle it sells, in contrast to a net profit of $2,500 apiece for the company’s petrol cars. Continued losses in turn may temper car firms’ appetite to invest in a broader electric offering that would appeal to buyers.American carmakers are still hoping they can escape this vicious circle. They are mostly postponing their American EV investments rather than pulling the plug on them. In the next year or two many companies are expected to unveil dedicated electrified “platforms”, as a car’s structural backbone is known, rather than lumping batteries unsatisfyingly onto existing petrol-driven skeletons. Some of the EVs’ quality problems are teething pains typical of all new models, be they electric or petrol-powered, which will be sorted out as production lines mature. And from January the EV tax credits will also be available at the point of sale, making it less burdensome for buyers to take advantage of them.All this could eventually improve quality, expand product ranges, push down costs and, with luck, generate profits for car firms. Eventually may just come a bit later than hoped. ■ More