EV Sales Forecast to Rise 8% in Q3 as Overall Car Market Slows

• Tesla will have sold 152,829 vehicles in the third quarter of this year when the numbers are final in early October, and Cox Automotive says Ford was second in EV sales for the quarter, with Chevrolet third and Rivian fourth.

• US auto sales are expected to drop 5.4% for the third quarter. While most major automakers lost sales from Q2 to Q3, Honda and Mazda grew 5.3% and 14.1%, respectively, to 375,281 and 116,786 deliveries.

• New EV average transaction prices, at $56,574, remain higher than ICE models, which now average $47,870. That’s up 0.1% for EVs from August ATPs, but down 0.9% year-over-year.

Electric-vehicle sales in the US are expected to rise 8% for the third quarter of 2024 over Q3 2023 when sales numbers are released next week, pushing EVs up to nearly 9% market share, Stephanie Valdez Streaty, director of industry insights for Cox Automotive, said during the firm’s industry insights and sales forecast call.

Used EVs, meanwhile, will be up a whopping 69%, to make EVs’ share of the used market about 1.7%.

Tesla still leads automakers in both new and used EV sales, Valdez Streaty says, though Cox Automotive forecasts a 2.4% year-over-year drop and a 7% quarter-over-quarter drop for Tesla sales as more and more EVs enter the market.

Tesla will have sold 152,829 vehicles in the third quarter of this year when the numbers are final in early October, and Valdez Streaty says Ford was second in EV sales for the quarter, with Chevrolet third and Rivian fourth.

In the used EV market, Tesla again is first, followed by Chevy, Ford, and Nissan. Valdez Streaty said tax credits now applicable to used EVs have helped boost their sales.

EV leasing also got a boost when the Treasury Department announced in December 2022 that electric vehicles not assembled in North America are eligible for a tax credit.

Although EV leasing dropped slightly to 39%, that’s still nearly double the overall industry leasing average and up 148% year-to-date versus the first nine months of 2023, Cox reports.

But inventory supply for new EVs is at 90.2 days, down 12.4% year-over-year, and higher than the 67.4 days’ supply of internal-combustion plus hybrid and plug-in hybrid models. Used EV days’ supply of 38.2 is down 32.4% year-over-year and just 0.6 days higher than for used ICE, HEV, and PHEV models.

These data are coming some 18 months into the much-reported softening EV market, which appears the result of more models from both new all-electric vehicle startups and full-line legacy automakers rather than lack of consumer interest.

Meanwhile, gas and plug-in hybrid sales are “soaring,” according to Valdez Streaty, with hybrids up 16% and PHEVs up 14%.

For the third quarter, PHEVs made up 1.9% of overall sales, compared to 8.5% for hybrids, 8% for EVs, and 81.8% for internal-combustion-powered vehicles.

New EV average transaction prices, at $56,574, remain higher than ICE models, which now average $47,870. That’s up 0.1% for EVs from August ATPs, but down 0.9% year-over-year, while the ICE-plus-hybrids and PHEV ATPs are down 1.7% from last year and off 4% from the peak set in the fourth quarter of 2022.

So, is this a good time for you to buy an EV, an ICE, a hybrid, or a PHEV?

Yes, if you consider that EV inventories remain high as still more new models enter the market.

And, yes, if you consider that new vehicle inventories of all types of power sources are approaching pre-COVID levels, according to Cox Automotive Senior Economist Charlie Chesbrough.

There are 800,000 more units, or plus-40%, over last year with 77 days’ supply, up 26%.

This means incentives are on their way back up, though slowly and at 7% of transaction price, not nearly at the five-digit discount levels many full-size pickups and SUVs offered before the pandemic.

“Things are a bit less negative than before,” says Cox Automotive’s chief economist, Jonathan Smoke. Falling interest rates with an employment market “not overheated” indicates a “soft landing is indeed the right scenario.”

The auto market needs to see at least one more Federal Open Market Committee rate cut before the end of the year to see any real effect on auto loan interest rates, Smoke says, and attention must be paid to auto loan default rates.

Meanwhile, policy-induced changes in the auto market are likely in 2025, he says, no matter whether Vice President Kamala Harris or ex-President Donald J. Trump wins the November 5 election.

Cox Automotive forecasts that US auto sales will have dropped by 5.4% for the third quarter compared with the second quarter, and a 2.1% drop compared with Q3 of 2023. While most major automakers lost sales from Q2 to Q3, Honda and Mazda grew 5.3% and 14.1%, respectively, to 375,281 and 116,786.

Thanks to a stronger first-half of the year, sales will still increase 0.9% for the first nine months, to 11.8 million vehicles sold year-to-date.

That’s a Seasonally Adjusted Annual Rate (SAAR) of 15.9 million, though Cox analysts are sticking with their beginning-of-the-year forecast that the US will buy 15.7 million new vehicles during the entire year, up from 15.5 million in 2023.

Leasing and fleet sales are driving those SAAR gains for ’24, Chesbrough says.

Subcompact sport/utility sales are up 22% for the year, and compact car sales are up 14%—think rentals, especially for the compacts, as Hertz, Budget, and the rest continue to replenish their post-pandemic fleets.

Chesbrough says Cox Automotive expects buyers will return to larger, higher profit-margin models as incentives increase and interest rates ease.

“Once affordability improves, it seems likely consumers will return to purchasing more aspirational products—or what they really want,” Chesbrough says.

“Americans will buy compacts and subcompacts when necessary, but these segments are still only desired by a portion of the vehicle market. Many folks need larger sizes for their lifestyles.”

What trends are you seeing as you shop for new or used vehicles? Is the market looking more attractive? Please comment below.