Electric Vehicle Sales Slowing Down Despite Industry Investment

Despite consumers investing nearly $400 billion in electric vehicles (EVs) globally in 2022, and the United States projecting the addition of 1 million new EVs to its roads this year, dealers report a deceleration in EV sales. The automotive industry has pledged to invest $616 billion in EVs from 2023 to 2027, yet EVs pile up on dealership lots. A metric known as 'days supply' reveals that while the supply of internal combustion engine (ICE) vehicles has stayed steady, the stockpile of EVs on lots has notably expanded. By October, dealers had an adequate EV inventory to last 97 days, a downturn from a zenith of nearly 111 days in early July. By August 2023, it took twice as long to sell an EV compared to January.

Factors Influencing the Slowdown

Factors contributing to the slowdown include lofty prices, worries over charging infrastructure, and limitations on subsidies. Less than a third of dealers believe that EVs will supersede combustion engines, even though over half of consumers envision EVs as the future. Key EV players like Tesla have slashed prices, while companies such as Lucid have witnessed disappointing sales, and Ford Motor has ramped up hybrid production due to plateauing EV demand. Despite the majority of charging taking place at home, concerns about public charging and long journeys persist.

Industry Insiders Remain Optimistic

Industry insiders, including dealership owners, acknowledge these challenges but remain steadfast that the shift to EVs is long-term inevitable. America's automakers find that EV sales are on the rise, but their pace is falling short of expectations, with EVs accounting for approximately 7% of all U.S. auto sales. In contrast, sales of gas-electric hybrids have grown, with over 1 million sold in 2023, a 76% increase from the previous year. This surge in hybrid sales is credited to higher prices of similar EVs, concerns about the scarcity of charging stations, and hybrids providing many of the same benefits without the hassles of EVs.

Future Projections

Analysts at Standard & Poors anticipate EV market share in the U.S. to hit another record high with expectations for potential substantial gains in 2024. S&P Global Mobility assuages concerns about rising inventories of Electric Vehicles, stating that advertised dealer inventories of most non-Tesla EVs have plateaued. The rollout of several eagerly-awaited models is anticipated to spur the growth of EV sales in the U.S. By the end of 2024, nearly 100 BEV models will be available, double the number in 2022, offering consumers more choice.