Tesla Model Y vehicles sit on the lot for sale at a Tesla car dealership
in Austin, Texas, on May 31, 2023. (Brandon Bell/Getty Images)
The number of unsold electric vehicles at dealers in the second quarter tripled compared to the past year, signaling a weakened demand for the segment, said a recent report by leading auto-dealer data company Cox Automotive.
In second quarter 2023, the average inventory for electric vehicles (EVs) topped more than 92,000 units on the ground at dealer lots, according to the 2023 Cox Automotive Mid-Year Review presentation. This is up 342 percent compared to second quarter 2022. During this period, the new “EV days’ supply,” which refers to the average number of days a warehouse holds inventory before selling it, rose 166 percent, to 92 days from 38.5 days. While the pace of EV sales is up, it is “not rising as fast as inventory builds,” said Jonathan Gregory, senior manager, Economic and Industry Insights.
Original equipment manufacturers (OEMs) are facing a “field of dreams moment,” he stated. “They have built inventory, and now they wait for buyers to come. This is one of the hottest topics we’ve had this year.”
Brands like Jaguar, Infiniti, and Lincoln had the highest days of supply, at over 100 days. The lowest numbers were seen among Toyota, Honda, Kia, and Lexus, with each brand having less than 30 days of supply.
Tesla continued to dominate the luxury EV segment with a market share of 25.5 percent, followed by Mercedes at 12.5 percent, BMW at 12.2 percent, and Lexus at 11 percent. Among EVs priced above $50,000, Ford held the biggest share at 22.1 percent, followed by Chevrolet at 12.1 percent.
Unlike other parts of the world, U.S. citizens remain on the sidelines when considering an EV purchase.
According to an April 2023 report by consumer intelligence company JD Power, more Americans are unwilling to buy EVs. In March, 21 percent of new vehicle shoppers said they were “very unlikely” to consider an EV, up from 17.8 percent in January.
During this period, the proportion of people who said they were “very likely” to buy an EV remained flat at around 26 percent.
“Lack of public charging infrastructure and price have been the top two concerns for the past 10 months, along with related issues involving range anxiety, time required to charge, and power outage and grid concerns,” the report said.
Dealer-Customer EV Expectations Diverge
While inventory is building up at dealer lots, a study by Cox Automotive found a wide gap between dealers and customers regarding future expectations of EV use.
According to Cox Automotive’s 2023 Path to “EV Adoption: Consumer and Dealer Perspectives” study, even though 53 percent of consumers see EVs as a future and that such vehicles will replace gas engines over time, only 31 percent of dealers held such a view.
“Nearly half (45 percent) of dealers surveyed feel that EVs still need to prove themselves in the marketplace,” said a press release on June 27.
In addition, the study also found that while customer interest in EVs is rapidly rising, sales continue to remain far lower in comparison. The research found that 51 percent of consumers were considering a new or used EV even though electric vehicles are only expected to make up less than 8 percent of total new vehicle sales this year.
Cox Automotive is expecting the sale of new EVs to surpass one million units for the first time in 2023. According to the firm’s Dealer Sentiment Index, the biggest factor which held back EV dealers during the second quarter was the state of the economy. This was followed by interest rates, limited inventory, market conditions, and credit availability for consumers.
Pro-EV Push by Democrats
Electric vehicles are being promoted across the United States mainly by Democrats who are putting in place a series of policies that provide incentives to consumers who buy such vehicles and subsidies to companies that set up plants to manufacture them.
These programs, however, are coming under criticism from several quarters. In a July 5 video, for example, Shawn Fain, president of the United Auto Workers (UAW) union, expressed concerns about the Biden administration’s policy of handing out benefits for EV plants.
“The Big Three automakers—Ford, General Motors, and Stellantis—are taking billions of dollars in government subsidies to go electric, but those benefits aren’t trickling down to UAW members,” he said.
According to the union, when GM shut down its traditional vehicle plant in Ohio in 2019, workers were on track to make as much as $30 per hour. When the company opened a new EV plant in 2022, workers were being paid just $16.50 per hour, on track to make only $20 per hour after seven years.
Former president Donald Trump, and a 2024 presidential candidate, has slammed the federal government’s EV push. “Driven by [President Joe Biden’s] ridiculous regulations, electric cars will kill more than half of U.S. auto jobs and decimate the suppliers that they decimated already,” he said in a speech in Michigan on June 25.
“It’s going to decimate your jobs, and it’s going to decimate, more than anybody else, the state of Michigan,” Mr. Trump warned.
Earlier during a June 10 rally in Atlanta, Mr. Trump promised that he “certainly will be ending on day one” the EV policies of Democrats once reelected.