Even though electric vehicle (EV) sales in the United States topped 300,000 for the first time in this year’s third quarter, sales of electric vehicles (EVs) have stalled in Europe and the U.S., prompting manufacturers to slow or halt production and dealers to slash prices to move the cars off their lots.
Ford and Hyundai are offering cash rebates as high as $7,500. Many makers are offering low-interest financing. Even Mercedes and market leader Tesla have cut prices.
Sticker prices for EVs often surpassed $65,000 last year; in September this year, they averaged $50,683, data provider Cox Automotive reported.
Ford has reported surprisingly large losses in its EV business after Tesla launched a price war to try to hold a larger share of a stalled market. Ford also is making fewer Mustang Mach-E EVs and has reined back its $12-billion plan to expand EV production.
General Motors has abandoned its goal of turning out 100,000 EVs in the second half of this year and 400,000 more in the first six months of next year. This fall, Volkswagen completely shut down its EV production lines for a few weeks. Toyota has nearly halved its 2023 sales forecast from 202,000 EVs to 123,000.
In late 2022, EVs were commanding a $1,500 premium over the manufacturer’s suggested price, according to data service Edmunds. In September this year, buyers received an average $2,000 discount from the sticker price.
In recent years, EVs have been the auto industry’s Next Big Thing. What happened?
First, “the early adopters have adopted,” as Forbes magazine put it. That group includes the wealthy and green energy devotees. Now dealers are trying to persuade middle-class households to part with $50,000 or more for an EV – and to take out high-interest-rate loans to do so.
Unlike gas buggies, EVs offer few choices under $40,000. Tesla’s recent price cuts brought its cheapest Model 3 to $40,240.
“In Europe, weak consumer sentiment, shrinking subsidies, and the inability to supply EVs at affordable prices have all dampened EV demand, especially after European customers found out they must pay more than twice the price vs. their Chinese peers for essentially the same” cars, UBS analysts wrote in a report.
Second, a large share of the public remains fearful of the “fuel” issue.
The typical EV can go more than 250 miles on a charge and most drivers travel fewer than 35 miles a day, according to the American Automobile Association. However, surveys show people still worry that EV batteries will run out of charge mid-trip.
The problem is worsened not only by a lack of EV chargers every few miles, mimicking gas stations, but also by recent news reports that many chargers are not working at any given time.
Those concerns, prices remaining higher than fossil fuel vehicles, and high interest rates will continue to stunt EV sales until the last third of this decade, analysts predict.
EVs will make up 47 percent of new car sales in Europe and the U.S. in 2030, according to UBS, not the 53 percent the bank’s analysts had forecast previously. Growth in sales will be a modest 10 to 15 percent annually, the analysts said.
EV sales in Europe will settle at 2.1 million this year, 3.0 million in 2024, 4.8 million in 2025, and 9.3 million in 2030, according to researchers at Jefferies.
Schmidt Automotive Research said EVs in Britain, France, Germany, Italy, and Spain will account for 15.7 percent of the market in 2023, 16.5 percent in 2024, 20 percent in 2025, and will zoom to 9.2 million vehicles, or 65 percent of the market, in 2030.
TRENDPOST: In articles such as “Electric Vehicles to Kill Gas-Powered Cars? Don’t Bet on It” (19 Jul 2017), we have correctly predicted for years that EVs will not sweep the market anywhere near as rapidly as their enthusiasts have predicted.
EVs have bumped into economic realities.
Battery technologies have added range to EVs but charging infrastructure remains limited, giving potential buyers concerns about ease of recharging on the fly. A significant number of recharging kiosks are not working at any given time. EVs’ sticker prices remain prohibitively high for typical households, due to large amounts of pricey metals they contain and still-limited production.
Also, there have been rare but well-publicized incidents of EVs catching fire. (Tesla says its cars combust far less often than gas-powered vehicles.)
TREND FORECAST: EV adoption will remain in its slump until interest rates begin to fall and the global economy stabilizes, a combination that will occur no earlier, and probably later, than mid-2024.