Let’s get one thing straight: Contrary to what you may have heard, electric vehicle sales are on the rise.
I know that recent headlines suggest otherwise. Tesla sales drop. Ford is scaling back its electric vehicle rollout. General Motors is delaying the launch of electric trucks and suspending investments in EV battery mining. Hertz is selling electric vehicles as its stock price struggles. All automakers are losing millions, and some even billions, as customer demand appears to have flattened after the initial excitement. As they say, the atmosphere was serious.
However, sales are still growing. JD Power predicts that U.S. electric vehicle sales will reach 1.2 million by the end of 2024, an increase from 1 million last year. This represents 9% of total vehicle sales, down from the previous forecast of 12%.
So, obviously, we’ve gone a little too far with the “the future is electric” thing. It still might be! In fact, it might happen—just not as soon as we first thought.
“Welcome to the chaotic middle of EV growth,” JD Power said in an EV retail share forecast released Friday.
So, what’s going on? As automakers continue to refine their strategies to offer a more diverse portfolio of vehicles, including hybrids and plug-in hybrids (PHEVs), things are becoming increasingly unpredictable. Significant growth in leasing Can Leading to future electric vehicle conversions. Meanwhile, charging remains a considerable sticking point for many consumers, who are reluctant to spend so much money on a new car if they’re not satisfied with their ability to maintain a proper charge.
JD Power said that overall, electric vehicle sales in the first seven months of 2024 increased by 35,000 units compared with last year. These include hybrids and plug-in hybrids, which I believe is the source of the problem. Those who expected an equal exchange (battery electric for internal combustion engine) did not anticipate the popularity of hybrids in the market. If anything, hybrids are cannibalizing EV sales, making competition from pure battery electric vehicles fiercer than expected. But in retrospect, it makes sense. In a sense, what’s a better way to deal with “range anxiety” than a car that runs as electric until the battery dies, then switches to gasoline?
Environmentalists and EV purists will decry hybrids as “false promises,” but this ignores the psychology of most car buyers. Most people don’t have the ability to consider environmental impact alone when making what is often the first or second most expensive thing they buy. They also have to worry about price and where to charge it.
“Welcome to the chaotic middle of electric vehicle development”
Electric cars are still too expensive, shocking potential buyers. According to data from Kelley Blue Book, the average transaction price of an electric vehicle in July 2024 will be $56,520. Meanwhile, the average sales price for a gasoline-powered car was $48,401.
There is also the issue of depreciation. New research from George Washington University finds that older electric vehicles lose value faster than traditional gas-powered vehicles. Some even lost 50% of their resale value within one year. The upside is that newer models with longer mileage retain their value better and approach the retention rates of many gas-powered cars.
For most people, the charging experience is still very out of sync. This is either the most satisfying thing about owning an electric car, or the worst thing about it. The difference is often between someone who lives in a house and can install a home charger in the garage versus someone who lives in an apartment complex or multi-unit dwelling and must rely on unreliable public chargers. The former lives a luxurious life, while the latter should probably buy an electric bike.
But JD Power is optimistic about the trend, especially as public satisfaction with Level 2 and DC fast charging has grown for two consecutive quarters. The Biden administration also continues to invest heavily in public charging, which should slowly transform the public charging experience from “soul-sucking” to “honestly.”
When talking about electric vehicle trends, the overarching issue is Tesla’s continued dominance. For years, no conversation about sales, charging, or anything to do with electric vehicles could be complete without Tesla, given its overwhelming market share. When overall sales slow, it’s largely because Tesla is selling less. Tesla’s outsized role is distorting the way we talk about electric vehicles, and it’s likely to stay that way for much longer.
This may also change as more models from different companies join the mix. Deliveries of mainstream models such as the Chevrolet Blazer and Equinox electric vehicles have begun. Hyundai and Kia promise more affordable models. Even high-end pure electric vehicle brands like Rivian are expected to offer products that are cheaper than their current lineup.
Things remain fluid. A Trump victory in November could signal the end of generous tax breaks for manufacturers and consumers, which could further slow development. More automakers may get cold feet and scale back more plans. Promising new electric vehicles may end up being just a flash in the pan.
This won’t be a walk in the park. Or even a quiet drive through the countryside, punctuated by false engine sounds. The industry needs to slow down past six-figure luxury pickups and SUVs and start offering more low-cost compact sedans and sedans. Automakers will need to respond to this moment of profound historical change with greater flexibility and patience. Anything else delays the inevitable.
