Americans are bombarded with two conflicting messages regarding electric vehicles. That means electric cars are booming. But no one wants them, so they’re piling up on dealer lots.
Both things happen to be true, just as the next election will put EVs in the spotlight for the first time as a campaign issue.
The U.S. EV market is growing, but not at the breakneck pace it was a few months ago. Americans bought 1 million electric vehicles in a single year for the first time in November, breaking a record, according to the National Automobile Dealers Association.
At the same time, sales of certain high-profile electric vehicles have been delayed, including Ford Motor Co.’s Lightning F-150, whose production goals were cut in half last week.
“The answer to every question is ‘yes,’ followed by ‘but,'” said Alan Baum, an independent auto analyst in Detroit, about the current state of EVs.
Democrats say President Joe Biden’s aggressive support for EVs will benefit the economy and the environment, while some Republicans criticize it as heavy-handed government profiteering benefiting elites. . The coming months could solidify whether many voters directly associate new cars with the politics surrounding them, with Biden’s allies in the U.S. auto industry and the president’s broader climate change goals will also have an impact.
“Here’s the problem with electric cars… They don’t go very far, and they cost a lot of money,” former President Donald Trump told rallygoers in Ankeny, Iowa, earlier this month. “I’m not going to buy it unless I want to go to a local store or something.”
What’s clear is that EVs took a slow 15-year journey to reach the mass market, traveling down an unfamiliar path. Wealthier early buyers are now getting the EVs they want, while more modest buyers continue to tiptoe into the market. This group of curious shoppers still has questions about the availability of chargers, the range of cars within their budget, and whether the models being released will suit their needs.
Next year, U.S. drivers may have access to a slew of new, more affordable EVs, along with a rapidly increasing number of charging stations. Some of these vehicles will make him eligible for at least a portion of the $7,500 tax credit.
At the same time, it will elect a president and a new Congress, including in many districts whose hopes for economic growth depend on new battery and EV manufacturing plants. The market turmoil raises questions about whether EVs will grow as expected or meet Biden’s goal of reducing carbon pollution from the transportation sector.
If the White House flips party lines, there could be an attempt to overturn Biden’s emissions regulations, which were designed to slow EV incentives and work with both parties.
President Trump’s message resonates with Republicans in Congress and others who oppose the Biden administration’s traffic rules. Earlier this month, the House of Representatives, with support from some Democrats, passed a bill blocking the EPA’s proposed tailpipe regulation that would effectively require 67% of new cars to be electric by 2032.
Meanwhile, the Biden administration has strongly pushed back on the idea of a slump in EVs.
Although the Department of Energy issued a statement in November saying it was “correcting the record on electric vehicle sales,” White House National Climate Advisor Ali Zaidi said on a recent call with reporters that sales had increased year over year. He emphasized the high customer satisfaction of EVs.
“No matter how you measure it, the trend here is secular. It’s persisting. Frankly, it’s accelerating because of President Biden’s leadership,” Zaidi said.
Biden’s re-election campaign is also having an impact. Campaign spokesman Seth Schuster said in a statement that Trump “doesn’t care about the facts or the consequences” surrounding EVs.
“President Biden is bringing auto manufacturing back to America in a way that Republicans could only dream of,” Schuster said. “A return to President Trump’s failed policies would send manufacturing jobs overseas and allow China to beat the US in the EV race.”
Duel data
Despite passing the 1 million EV mark this year, the strongest growth occurred seven months ago, with May sales almost 77% higher than May 2022, according to data from Argonne National Laboratory. % exceeded. By November, the monthly comparison had dropped to 27 percent.
“Most industries would be very happy with this level of growth,” Colin McKerracher, transportation analyst at BloombergNEF, said in a market update.
Much of the political debate was sparked in August, when Cox Automotive, a conglomerate that collects car sales data, found that EVs spend 98 days on dealer lots, compared to 58 days for internal combustion engine cars. reported. These numbers don’t include Tesla, the best-selling EV that sells directly to consumers without going through dealers, but the gap between dealers has only widened since the summer. In November, conventional cars stayed for 70 days and EVs stayed for 117 days.
As the initial numbers began to take shape, Republican presidential candidates had already announced their opposition to Biden’s EV efforts. Data from cars piled up on dealer lots quickly became a major topic of discussion.
“We mandate that [the auto industry] It’s a product they can’t sell,” Republican Rep. Lisa McClain, who represents a suburban Detroit district, said in an interview. She said, “If you try to force car companies to sell a product that no one wants to buy, and you end up creating fewer jobs…that doesn’t really sell.”
McClain said he had talked with Trump about how to use federal rules in the presidential race.
“In my district, where car manufacturing is big, this is not going well,” she says. “And to be honest, Michigan is a very influential state in the upcoming election.”
Some of the most “American” EVs, those produced by American automakers and once heavily promoted, are among the worst sellers. And analysts don’t know why.
Ford’s flagship EV crossover, the Mustang Mach-E, was installed at 141 dealer lots between early 2022 and November, according to data from industry analysis group Words Auto and data provided by the National Automobile Dealers Association. It stayed there for days. The Cadillac Lyric, an early EV that caught General Motors’ attention, took 176 days to build.
Congressional Democrats argue that the recent slowdown in growth is not significant, but rather a jump from a larger trend line, indicating Americans are buying more and more EVs. The argument is that with each passing year, prices will continue to fall while the expansion of electric vehicles reduces domestic carbon emissions and demonstrates industry investment in the EV supply chain.
“I just don’t think so. [negative] The story and the data are completely consistent,” Sen. Martin Heinrich (DN.M.) said in an interview.
Many EV policy experts say they are not alarmed either.
According to data from Experian, a global data analysis company, even though major domestic manufacturers such as Ford and GM are lagging in EV sales, vehicles manufactured by Hyundai Motor, Rivian Automotive, BMW, Mercedes-Benz, etc. , some cars are selling well. According to WardsAuto data, his Hyundai Ioniq 5 shipped at an accelerated rate in his 60 days.
“I don’t want to conflate the struggles of individual automakers with the state of the EV market as a whole,” said Tony Dutsik, a policy analyst at Frontier Group, an environmental think tank.
wrong assumption
In a sense, automakers are responsible for setting extremely high expectations for what miracles EVs will bring to the market.
The reason goes back to the COVID-19 pandemic and subsequent supply chain disruptions.
After pandemic lockdowns, consumers eager to replace their aging cars bought EVs in record numbers, making it difficult for automakers to catch up. Dealers were selling cars at steep markups, and demand for EVs seemed limitless, prompting major automakers like GM and Ford to set aggressive production schedules.
Ford also announced in March that it would triple production of the electric F-150, aiming to produce 3,200 aircraft per week. Two weeks ago, Ford cut that plan in half, now targeting 1,600 units per week, citing “changing market demand.”
“The assumptions they made during COVID-19 are not what happened after COVID-19,” said Arun Kumar, managing director at consultancy AlixPartners.
As inflation soared, the price of EVs, which were already more expensive than traditional cars, became unaffordable for most consumers. High interest rates have made car loans prohibitively expensive. The pandemic has also revealed that the number of car buyers who are ready to pay more than $50,000 for a new type of car is limited.
“Once you get past the early adopters, you get into the early majority. The early majority are still on the fence, deciding whether to buy or not, and whether it’s cost-competitive or not,” Kumar said.
According to a study by S&P Global, 86% of consumers surveyed wanted to purchase an EV in 2021. This figure had fallen to 67% in May of this year. People cited price as the main factor, overcoming concerns about EV battery range limitations and the availability of charging stations.
The White House depicts these swinging numbers as a long arc of wavy lines.
“When you’re in the early process and you’re getting a feel for what the demand is like, you’re going to see occasional overshoots and undershoots as you figure out exactly how to adjust to where your customers are. But , response to “I think there was overtorque” [the summer inventory data]” a senior White House official said on the background to discuss the issue openly.
2024 factors
The key question heading into 2024 is what will happen to EV demand?
Many vehicles expected to hit dealerships next year will offer new options and perhaps lower prices. For example, the Chevrolet Equinox EV, a small, top-selling crossover, comes with a base price of $35,000. On the other hand, there are also larger three-row family movers like the Volkswagen ID. Buzz and Kia EV9 are also planned.
“This is hurting a niche market that American drivers like,” said Baum, an independent auto analyst based in Detroit.
Advocates say Biden should let automakers compete to sell cars while backing billions of dollars in spending to build the domestic EV supply chain.
“If you build a factory where you want jobs, people will remember it two, three, five years from now,” Heinrich said. “EVs will sell themselves as long as we fulfill our national responsibility and not just buy them from somewhere else.”
Reporter Kelsey Tamborino contributed.