Electric vehicle sales recently climbed to a record high, but further growth surges may soon become more of an uphill battle, according to a new report.
Nearly 300,000 new full battery-electric vehicles (EVs) were sold in the U.S. from April through June, a record for any quarter and an increase of 48.4% from the same period a year ago, said automotive services and technology provider Cox Automotive. Additionally, EV share of the U.S. market was 7.2%, up from 5.7% a year ago and down from the high in the first three months of the year of 7.3%.
Still, one of the tell-tale signs that “the days of 75% year-over-year growth are in the rearview mirror” include building EV inventory, Cox said. In late June, the days’ supply of EVs topped 100, nearly double industry-wide inventory levels closer to 53 days, it said.
Numbers exclude Tesla, which sells direct to consumers. However, Tesla, the most wanted car brand in the world, according to an Auto Trader analysis of Google searches, is seeing its share of EV sales “fizzle,” Cox Automotive said. Tesla’s share fell below 60% for the first time, but the No. 2 seller of EVs in the U.S. – Chevrolet – is a distant second. Tesla outsold Chevrolet 10 to 1 in the three months through June, it said.
“When it comes to EV sales, the market is likely heading into its Trough of Disillusionment…where collaboration across many parties will be necessary to push through,” Cox said in a release. “Building EVs is one thing, and many in the industry are proving excellent at that skill. Selling EVs is something different altogether.”
Why are people hesitant to buy EVs?
A gap exists between consumer enthusiasm for EVs and their actual purchasing decisions, a recent Cox Automotive survey of 1,024 consumers and 152 dealers showed.
More than half (51%) of consumers is considering either a new or used EV, up from 38% in 2021. Yet, EVs will still only account for less than 8% of total new-vehicle sales in 2023, the researcher said. On the used side, EV share of the total market remains approximately 1%, Cox said.
Even with rebates and other incentives, affordability remains the top reason consumers aren’t buying EV. Forty-three percent, up slightly from 2021, of intenders noted EVs are too expensive.
Other barriers, however, are falling. In 2021, 40% of intenders cited a lack of charging stations as a top roadblock. That number has fallen to 32%. Cox said.
What do car dealers expect?
There’s also a gap between how consumers and dealers see the EV market evolving. While 53% of consumers agreed that EVs will eventually replace traditional ICE-powered vehicles, only 31% of dealers see an all-EV future, Cox said.
“Dealers have a front-row seat to the many challenges ahead,” Cox said. “And many dealers, recently, have been watching EV inventory building.”
Nearly half (45%) of dealers surveyed also feel that EVs still need to prove themselves in the marketplace.
Dealerships also aren’t prepared regarding sales and service capabilities, Cox Automotive said.
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How many EVs are available?
At the end of June, Cox Automotive reported:
- Ford’s F-150 Lightning had an 88 days’ supply, below the supply count for all F-Series pickups, which is above 100 days. Mustang Mach-E had 116 days’ supply.
- GM, which said many of its EVs in transit are already sold, had some of the lowest EV inventories. Cadillac Lyriq had a 50 days’ supply, and Bolt EV had only a couple thousand units available for a 23 days’ supply. The Bolt had just over 1,200 units available for a 23 days’ supply. GM is discontinuing production of the Bolt and Bolt EUV by year-end. However, GMC Hummer EV inventory had over 100 days’ supply.
- BMW’si4 was at the low end with only a 40 days’ supply.
What is the outlook for EV sales?
Despite challenges ahead for EVs, Cox still forecasts that 1 million new EVs will be sold in the U.S. this year, a record and more than twice the volume sold in 2021, powered by Tesla’s rapid expansion and a flow of new products into the market. Thirty-three new EVs are being launched this year, according to estimates from Kelley Blue Book, a Cox Automotive company. More than 50 additional new or updated EVs will be launched in 2024, it said.
Prices also have fallen, it noted. June saw new EV average transaction prices drop to levels not seen since the last three months of 2020 and increased incentives.
“Incentives were increased for the industry already in June and helped move sales for new EVs,” he said. “But the market supply remains heavy, so we would expect to see continued incentives in the future.”
June new EV average transaction prices were 19.5% lower year over year and incentives increased to almost $3,800 or 7.1% of the new EV transaction price, said Jeremy Robb, Cox Automotive’s senior director of economic and industry insights. In June 2022, incentives were 2.0% of the new transaction price.
“Yes, EV sales records will continue to be set, and EV growth will continue to outpace overall industry growth, but…the hard-growth days are ahead,” Cox Automotive said in a report.
Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at[email protected] and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday.
