Why EVs Are Piling Up At Dealerships In The U.S.

Summary

The electric vehicle (EV) market is experiencing a slowdown despite massive investments, with consumers and dealers showing hesitancy due to range anxiety and insufficient charging infrastructure. While sales of EVs are softening, Tesla's aggressive pricing impacts the market, and the industry faces challenges with supply chain, government mandates, and economic factors. However, there is optimism as consumers are willing to accept trade-offs in charging times and range for the benefits of EVs, indicating a shift in mindset towards embracing electric mobility.

Takeaways

• 🚀 The auto industry is experiencing an unprecedented level of investment in electric vehicles (EVs), with $6.5 billion dedicated to this sector alone.
• 📈 Wedbush predicts that spending on commercial EVs will exceed 1.2 trillion dollars between now and 2030, highlighting a significant growth in the EV market.
• 🌐 In 2022, global consumer spending on electric cars reached nearly $400 billion, indicating a substantial market for EVs worldwide.
• 🇺🇸 The US is projected to add 1 million new EVs to its roads annually from 2023 to 2027, showcasing a strong domestic commitment to EV adoption.
• 💰 Automotive companies have pledged a total of $616 billion in investments, emphasizing their dedication to the future of electric mobility.
• 🛑 Despite these investments, EV sales are experiencing a slowdown, with consumers expressing concerns about range anxiety and charging infrastructure.
• 📉 The time to sell an EV in the US doubled from January to August 2023, while traditional gas-powered vehicles continued to sell well.
• 🤔 Consumer sentiment towards EVs is mixed, with less than a third of dealers believing that EVs will replace combustion engines, despite over half of consumers seeing EVs as the future.
• 💸 Tesla has significantly reduced its vehicle prices, affecting the market dynamics and putting pressure on other EV manufacturers.
• 📊 There is an oversupply of EVs in the industry, with dealerships holding a 52-day supply of internal combustion engine (ICE) vehicles compared to 90-100 days for EVs.
• 🔋 The average transaction price for an EV in the US is higher than that for ICE vehicles, which may be a factor in the slowing sales of EVs.
• 🔄 The EV market is seeing a shift in buyer demographics, with more consumers trading in their existing vehicles for new EVs, indicating a growing acceptance of EVs as primary vehicles.

Q & A

What is the current investment trend in the electric vehicle (EV) industry?

The investment in the EV industry is significant, with $6.5 billion strictly dedicated to EVs and a projection by Wedbush that spending on commercial EVs should top 1.2 trillion between now and 2030.

How much did consumers spend on electric cars worldwide in 2022?

Consumers spent nearly $400 billion on electric cars worldwide in 2022.

What is the expected number of new EVs to be added to the US roads from 2023 to 2027?

The US is expected to add 1 million new EVs to its roads each year from 2023 to 2027.

What is the total investment committed by automotive companies towards EVs?

Automotive companies have committed a total of $616 billion in investments towards EVs.

Why is there a slowdown in EV sales despite the significant investments?

EV sales are slowing due to factors such as consumer anxiety about range, lack of public charging infrastructure, and the high cost of EVs compared to traditional combustion engine vehicles.

What is the current sentiment among consumers and dealers regarding the future of EVs?

While slightly more than half of consumers say EVs are the future, less than a third of dealers share this belief, indicating a gap in perception between the two groups.

How has Tesla responded to the changing EV market conditions?

Tesla has responded by slashing prices dramatically, which has affected the market dynamics and put pressure on other EV manufacturers.

What is the average transaction price for a vehicle in the US as of September 2023?

The average transaction price for a vehicle in the US was about $48,000 in September 2023.

How does the transaction price for an EV compare to the average vehicle transaction price?

The average transaction price for an EV was between $53,000 and nearly $60,000, which is higher than the average transaction price for a vehicle in the US.

What challenges are faced by the EV industry in terms of supply and demand?

The EV industry is facing an oversupply of vehicles that is greater than the demand, with EVs sitting on lots for longer periods compared to internal combustion engine (ICE) vehicles.

What is the impact of regional factors on the adoption of EVs?

EV adoption rates closely track economic metrics such as pump prices and home energy rates, with higher gas prices in regions like California driving more consumers toward EVs.

What is the current market share of Tesla in the EV segment?

Tesla dominates the EV market, accounting for about two-thirds of all EVs sold, largely due to their aggressive pricing and extensive charging network.

How do consumers' attitudes towards EVs compare to their attitudes in 2019?

Although the number of buyers considering an EV fell from 2021 to 2023, it is still higher than it was in 2019, indicating a growing interest in EVs over time.