The rocky path forward for EV sales

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September 29, 2023 by Adam Malik

The rocky path forward for EV sales​

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Image credit: Depositphotos.com
A recent report is warning that there are signs of trouble with electric vehicle sales in the United States.

While acknowledging that EV numbers are and will continue to increase on the road, an analysis from Lang Marketing observed that evidence grows that its rise will be a longer process than initially thought — and maybe won’t even occur.

“Dark clouds are casting shadows over the once sunny picture of electric vehicles filling U.S. roads and reducing pollution,” said its Aftermarket iReport.

The rise of EV models has been well documented. It’s been predicted that North America will have 135 models for sale by 2025 with 500 globally.

“There’s not yet a full range of vehicle types that people need particularly around that lower, entry-level threshold,” observed Nino Di Cara, founder and president of Electric Autonomy Canada, in the inaugural issue of EV World.

But up until this point, EV sales are not where many proponents would hope them to be. The Mobility Consumer Index from business advisory firm EY placed EV interest — battery, hybrid and plug-in — at 48 per cent among Americans, below the global average of 55 per cent and behind Canada at 52 per cent.

Lang pointed to five factors creating a bumpy path for EVs to grow rapidly: Ballooning inventories, price cutting, spotty resale value, a challenging and untested secondary market for EVs and a sharp decline in projected EV sales.

As noted, EV model options are set to boom in the next 18 months. Lang warned that supply will outstrip demand.

“This is worrisome since a flood of new EV models will reach dealers’ showrooms over the next 18 months, requiring a super spike in demand to avoid a disastrous supply glut,” the report said. “So far, even before the flood of new EV models, demand is not keeping pace with growing shipments of EVs to dealers.”

So, price cutting seems to be the next step. Tesla did this recently. “While this might be effective in the short run, it is a body blow to many EV owners who have seen their recently purchased EVs decrease in value due to price cuts,” Lang observed.

Meanwhile, EVs depreciate in value quickly due to range and safety issues when compared to similar internal combustion engine models.

“This has implications for the attractiveness of new electric vehicles to potential buyers at a time when a flood of new EV models is set to hit dealer showrooms,” the report said.

The secondary market is of concern as most vehicles on roads today are driven by second owners. Potential second owners may avoid EV options as comparable ICE versions may be more preferred.

So sales projections are being reduced. Lang observed that while some analysts expected EV would make up half of new vehicles by 2030, that number has been cut to 35 per cent, and perhaps even lower.

“Even if EV sales reach 35 per cent of new car and light truck volume by 2030, which is unlikely, their impact on the VIO and aftermarket product sales will remain limited for a number of years beyond,” Lang’s report said.
 
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