Automakers across the globe are betting big on electric cars. Collectively, these companies have invested hundreds of billions of dollars into battery plants, R&D, tooling, and marketing. There's just one problem: EVs aren't selling nearly as fast as they can be produced.
A new study by Cox Automotive shows that dealerships across the U.S. are sitting on a significant number of brand-new electric cars. As it turns out, automakers are really good at building new cars at volume—who could have guessed? They're so good, in fact, that the supply of new EVs has outpaced the current demand way ahead of schedule.
EVs presently make up about 6.5% of all new car sales in the U.S. That number is growing, though, with total electric car sales projected to break the million-unit barrier for the first time ever in 2023.
Despite the increase in adoption, manufacturers are finding that they are able to produce EVs significantly quicker than they can sell them. This has led to dealers and automakers alike sitting on a large supply of unsold electric cars. Specifically, the industry has enough EV inventory to last approximately 92 days. That's a lot—almost three times the stock from a year prior. And when placed alongside today's 54-day supply of ICE-powered vehicles, it's nearly double the current average inventory. It's also worth noting that the pre-pandemic supply of vehicles as a whole was around 70 days.
Luxury marques and high-dollar vehicles in particular are having a tough time moving new vehicles. The GMC Hummer EV and Audi Q8 E-Tron, for example, have a supply of more than 100 days. Genesis' EV inventory in particular is significantly bloated with a 350-day supply of its electrified G80 sedan.
People are more conscious of EVs than ever, with between 39% and 51% of new car buyers considering a battery-powered car as their next vehicle purchase. So why aren't they biting on new EV purchases?
New cars are also quickly becoming more expensive. Adding batteries to the mix doesn't help either, and stakeholders at major automakers believe the cost parity between EVs and regular combustion-powered vehicles is still far away. Consumers who aren't interested in EVs overwhelmingly cite cost as the reason for their disinterest, meaning that the battle for EV adoption may be fought at the bank first and foremost. It could also be a reason that Tesla continues to dominate the EV market with its frequent price drops.
Consumers may still be wary of tech. Consumers surveyed by Cox cite battery replacement costs and lack of public charging, though that may be the tip of the iceberg.
Some people still view current EV buyers as early adopters, especially since automakers like Toyota are promising EVs with up to 900 miles of range, plus quick-charging batteries by the top of the decade. So from a buyer's standpoint: why would someone buy an EV today when they might be able to get something with significantly better specs in just a few years?
The revamped EV tax credit may also be a reason that consumers aren't buying just yet. Many new EVs still aren't eligible for the full tax credit, meaning that consumers may choose to buy a Tesla Model Y over a Hyundai Ioniq 5 simply because one is eligible for the $7,500 while the other is not. If a new car buyer has their heart set on a particular vehicle, they may end up scouring the used market for a decent deal, or simply plan to wait out for a vehicle to be assembled in North America, like the Volkswagen ID.4's switchover.
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