EV sales in the dumps

If you are selling electric vehicles and your name isn’t Tesla, good luck getting your car off the lot.

Unsold EVs are stacking up in dealerships, even once hot-selling cars like the Mustang EV (which, by the way, I think is truly ugly).

Unsold electric cars are piling up on dealer lots https://t.co/Z6WDHNEOLZ

— Whole Mars Catalog (@WholeMarsBlog) July 10, 2023

The growing mismatch between EV supply and demand is a sign that even though consumers are showing more interest in EVs, they’re still wary about purchasing one because of price or charging concerns.

• It’s a “Field of Dreams” moment for automakers making big bets on electrification — they’ve built the cars, and now they’re waiting for buyers to come, says Jonathan Gregory, senior manager of economic and industry insights at Cox Automotive.

Driving the news: Cox Automotive experts highlighted the swelling EV inventories during a recent midyear industry review for journalists and industry stakeholders.

• EV sales, which account for about 6.5% of the U.S. auto market so far this year, are expected to surpass 1 million units for the first time in 2023, Cox forecasts.
• A Cox survey found that 51% of consumers are now considering either a new or used EV, up from 38% in 2021.
• Tesla’s rapid expansion, plus new EVs from other brands, are fueling the interest — 33 new models are arriving this year, and more than 50 new or updated models are coming in 2024, Cox estimates.

Yes, but: Sales aren’t keeping up with that increased output.

Inventories are saturated with EVs–up almost 350% this year as manufacturers respond not to market signals but to government mandates that are being pushed by the Biden Administration.

Tesla pretty much owns the electric car market at the moment, and every other manufacturer is working feverishly to catch up. That is a tough place to be though, since fewer than 7% of cars sold these days are EVs, and the demand just isn’t there for a massive expansion in sales.

Auto manufacturers though, are having to make massive investments in order to hedge their bets–if Biden gets a second term then the chances that regulations will force them to push unprofitable and, frankly, inferior EVs will be nearly 100%. A similar thing happened in the passenger car market, where fuel economy regulations forced manufacturers to, ironically, emphasize trucks and SUVs over smaller passenger cars that simply didn’t make them money. Ford got out of the business of “cars” entirely–go to their website and the only thing that qualifies is the Mustang.

Some brands are seeing higher EV inventories than others.

• Genesis, the Korean luxury brand, sold only 18 of its nearly $82,000 Electrified G80 sedans in the 30 days leading up to June 29, and had 210 in stock nationwide — a 350-day supply, per Cox research.
• Other luxury models, like Audi’s Q4 e-tron and Q8 e-tron and the GMC Hummer EV SUV, also have bloated inventories well above 100 days. All come with hefty price tags that make them ineligible for federal tax credits.
• Imported models like the Kia EV6, Hyundai Ioniq 5 and Nissan Ariya are also stacking up — likely because they’re not eligible for tax credits either.

Tesla’s price-cutting strategy could be taking a toll, too: The once-hot Ford Mustang Mach-E now has a 117-day supply. Ford says that’s the result of ramped-up production in anticipation of stronger third-quarter sales.

Tesla has a built-in advantage over everybody else in the EV market: a solid brand identity and a track record of customer loyalty. Even with the hiccups they hit their customers seem to love the cars, and nobody feels they are buying a pig in a poke. You can’t say either thing regarding the other brands.

Electric cars will keep growing market share both because the government will push them and because they actually fit a market slot, but Tesla will dominate for quite a while. I wouldn’t mind an electric as a second car–one that can be used for commuting and driving around town or for shorter trips of under 200 miles.

But nothing beats a gas car for being a general purpose vehicle that can do both short and long trips, or as a truck. And when the Cybertruck hits the market it will undoubtedly be more popular than any competitor for the same reason that Tesla sedans are kicking everybody’s butt. Right now the all-electric Hummer trucks sold only 47 units in the second quarter of this year.

You know…the EV President Biden used to tout his policies.