With hybrid electric vehicle sales soaring, and the badly needed EV charging infrastructure lagging, there is considerable discussion among auto executives and industry pundits about the EV market.*
As always a walk or in this case an electrified drive into the unknown provokes considerable speculation and anxiety about where things are added. Compounding the EV market grumblings are the intensive capital investments involved and the dire state of our climate with the deleterious effects of global warming increasingly laying waste to large areas of the planet. (AutoInformed: Honda Tops US 2023 HEV Sales with Accord and CRV)
“There are many federal, state, and local-level tax incentives for new and used EVs, but OEMs, dealerships, and customers must carefully understand the laws. For example, starting in 2024, a point-of-sale discount will be offered to customers by participating dealers. Customers no longer must wait until tax season, the year after purchase,” said Dr. Snehasis Ganguly, Senior Industry Analyst at the Center for Automotive Research in Michigan (CAR).
Moreover, there are stark warnings for the Detroit Three based on what happened in China, the world’s largest auto market. Ignore EVs at you peril. EVs now account for 1 of every 3 new cars sold in China. See this: “In 2023, the Detroit Three sold 3 million fewer cars in China than they did in 2017: 2.3 million vs 5.4 million. That is six straight years of falling sales – and we have not hit bottom yet. – from the The Dunne Insights Newsletter. Click here
Here’s another perspective: “During 2023 BEV Light Vehicle sales exceeded 1.2 million units – the first year to surpass the million-unit mark – and closed with a 7.7% market share,” observes Matt Lucki, Senior Analyst, Americas Powertrain Forecasts, the GlobalData consultancy.** “After years of double-digit growth in the US BEV market, pessimism now looms over the industry with the recent sales slowdown, and automotive executives are changing their tune on future growth targets” observes Lucki.
GlobalData Observations and Commentary
- Tesla made up half the 2023 volume after setting an aggressive sales growth target supported by multiple price cuts throughout the year. Other automakers also reduced pricing in order to compete and took advantage of IRA federal tax incentives before new battery sourcing stipulations went into effect for 2024.
- Other automakers also cut pricing in order to compete and took advantage of IRA federal tax incentives before new battery sourcing stipulations went into effect for 2024. Q4 typically sets BEV sales records each year as dealers sell off prior year models at discounted rates and buyers can quickly benefit from tax credits early in the new year, but Q4 2023 remained flat compared with Q3, signaling a potential softening in the market.
- It remains too early to say that the market is trending downward, but the sales headwinds are gaining traction. After years of double-digit growth in the US BEV market, pessimism now looms over the industry with the recent sales slowdown, and automotive executives are changing their tune on future growth targets.
- Many models lost tax credit eligibility on January 1st, 2024, causing further sales decline as we moved into the new year. With inflationary pressures and vehicle prices remaining high, automakers are under pressure to cut prices further and offer discounts to offset the tax credit loss.
- The overall auto market condition continues to deteriorate as interest rates remain elevated with relief not expected until the Fed introduces rate cuts towards the middle of the year.
- Vehicle pricing will always be at the forefront of the decision-making process when purchasing a new vehicle, but the lack of sufficient US charging infrastructure is the Achilles heel holding back BEV sales for the mainstream audience.
- Outside of the Tesla Supercharger network, public infrastructure scale and reliability score poorly nationally. Range anxiety is now shifting to charge availability anxiety with many charge points being inoperative and the ones that do work being occupied by other plug-in vehicles.
- It also now seems to be a yearly occurrence that electric vehicles make the national news when freezing weather negatively impacts range and causes charging stations themselves to fail. In January, Chicago BEV owners were left stranded at public chargers waiting for days while the infrastructure thawed or having to get their vehicles towed to repair facilities.
- Negative stories around owning a BEV further perpetuate the belief that the technology is market-dependent and specific to a localized use case.
- While dedicated electric vehicles face challenging market conditions, hybrid sales are surging. Toyota is standardizing the technology on many of its new generation launches and Honda had a successful year launching new CR-V and Accord hybrid variants, applying the technology to its most popular trims.
- As other automakers see the buyer pool for BEVs dry up, they are now shifting their near-term strategies to push hybrids, using them as a stepping stone until a robust charging infrastructure builds out with federal funding support.
- We expect the hybrid surge to continue into 2024 and that they will outsell battery electric vehicles by a slim margin of 9.9% to 9.6% respectively.
- There is an inherent risk that the BEV market will stagnate this year and remain close to an 8% share.
- An upside for consumers will be the likelihood of price cuts offsetting tax credit losses, further discounts on models sitting unsold on dealer lots, and rising lease penetration rates to take advantage of the tax credits.
*AutoInformed on
**GlobalData
GlobalData says that “4000 of the world’s largest companies, including over 70% of FTSE 100 and 60% of Fortune 100 companies, make more timely and better business decisions thanks to GlobalData’s unique data, expert analysis and innovative solutions, all in one platform. GlobalData’s mission is to help our clients decode the future to be more successful and innovative across a range of industries, including the healthcare, consumer, retail, financial, technology and professional services sectors.” J.D. Power is also part of GlobalData. Inquiries at: customersuccess.automotive@globaldata.com
EV Grumblings – Auto Execs Waffling on Growth
With hybrid electric vehicle sales soaring, and the badly needed EV charging infrastructure lagging, there is considerable discussion among auto executives and industry pundits about the EV market.*
As always a walk or in this case an electrified drive into the unknown provokes considerable speculation and anxiety about where things are added. Compounding the EV market grumblings are the intensive capital investments involved and the dire state of our climate with the deleterious effects of global warming increasingly laying waste to large areas of the planet. (AutoInformed: Honda Tops US 2023 HEV Sales with Accord and CRV)
“There are many federal, state, and local-level tax incentives for new and used EVs, but OEMs, dealerships, and customers must carefully understand the laws. For example, starting in 2024, a point-of-sale discount will be offered to customers by participating dealers. Customers no longer must wait until tax season, the year after purchase,” said Dr. Snehasis Ganguly, Senior Industry Analyst at the Center for Automotive Research in Michigan (CAR).
Moreover, there are stark warnings for the Detroit Three based on what happened in China, the world’s largest auto market. Ignore EVs at you peril. EVs now account for 1 of every 3 new cars sold in China. See this: “In 2023, the Detroit Three sold 3 million fewer cars in China than they did in 2017: 2.3 million vs 5.4 million. That is six straight years of falling sales – and we have not hit bottom yet. – from the The Dunne Insights Newsletter. Click here
Here’s another perspective: “During 2023 BEV Light Vehicle sales exceeded 1.2 million units – the first year to surpass the million-unit mark – and closed with a 7.7% market share,” observes Matt Lucki, Senior Analyst, Americas Powertrain Forecasts, the GlobalData consultancy.** “After years of double-digit growth in the US BEV market, pessimism now looms over the industry with the recent sales slowdown, and automotive executives are changing their tune on future growth targets” observes Lucki.
GlobalData Observations and Commentary
*AutoInformed on
**GlobalData
GlobalData says that “4000 of the world’s largest companies, including over 70% of FTSE 100 and 60% of Fortune 100 companies, make more timely and better business decisions thanks to GlobalData’s unique data, expert analysis and innovative solutions, all in one platform. GlobalData’s mission is to help our clients decode the future to be more successful and innovative across a range of industries, including the healthcare, consumer, retail, financial, technology and professional services sectors.” J.D. Power is also part of GlobalData. Inquiries at: customersuccess.automotive@globaldata.com