Despite Major Investments, Dealerships Report Slowdown in EV Sales
Despite an unprecedented surge in the electric vehicle (EV) market, with nearly $400 billion spent globally in 2022 and the United States poised to add a million new EVs in 2023, a slowdown in EV sales has hit dealerships. Major automotive companies have collectively pledged a whopping $616 billion investment in EVs for the period 2023 to 2027, as noted by consulting firm AlixPartners. Nevertheless, EVs are piling up in dealerships, and as of October, they had a 97-day supply, down from a peak of 111 days in early July, suggesting a decelerating demand. In stark contrast, the supply of internal combustion engine (ICE) vehicles has remained stable between 52 and 58 days.
The Slowdown in EV Sales
In August 2023, it took nearly twice as long to sell an EV compared to January of the same year, while ICE vehicles continued to sell rapidly. The consumer sentiment is mixed, with slightly more than half of them envisioning EVs as the future that will eventually replace combustion engines. However, less than a third of dealers are convinced of this transition. Tesla, a frontrunner in the EV market, has significantly slashed prices, while other electric vehicle startups like Lucid have reported disappointing sales. Ford Motor has even ramped up hybrid production as EV demand has plateaued.
Ford’s Response to the Slowing Market
Ford announced a cut in the production of the F-150 Lightning electric pickup due to dwindling electric vehicle sales growth. Despite an overall increase in EV sales, the pace is not meeting industry expectations, leading to slower sales and burgeoning inventories at dealerships. Ford sold just over 24,000 Lightnings last year, marking a 55% increase from 2022, yet dealerships are witnessing a slowdown. The EV market share edged up from 5.8% in 2022 to 7.6% last year, but sales growth decelerated towards year-end, with December registering a 34% increase.
Challenges Affecting EV Sales
Dealerships and industry insiders attribute the sluggish EV sales to various factors, including the high prices of EVs, concerns about the availability of charging infrastructure, and limitations on subsidies. Despite these hurdles, many, including dealership owner Jeff Aiosa, are convinced that the shift toward EVs is an inevitable long-term development. However, the transition appears to be slower and more complex than initially anticipated, casting a shadow over the aggressive EV adoption targets set by governments and industry leaders.