{"id":448052,"date":"2023-12-12T09:38:00","date_gmt":"2023-12-12T14:38:00","guid":{"rendered":"https:\/\/www.automoblog.com\/?p=448052"},"modified":"2024-02-17T11:13:50","modified_gmt":"2024-02-17T16:13:50","slug":"automakers-are-quietly-cooling-on-evs-despite-growth","status":"publish","type":"post","link":"https:\/\/www.automoblog.com\/automakers-are-quietly-cooling-on-evs-despite-growth\/","title":{"rendered":"Despite Growth, Automakers Are Quietly Cooling on EVs"},"content":{"rendered":"\n<p>One of the biggest stories in the automotive industry over the past decade has been the rapid growth of electric vehicles (EVs) as a share of new cars sold. In the last few years, most major automakers have released at least one EV model and have indicated plans to make battery-powered cars a large part of their future plans.<\/p>\n\n\n\n<p>As a result, signs have pointed to automakers charging full-on into the EV transition \u2013 at least until recently. While the EV market continues to grow, some major manufacturers have quietly signaled that they&#8217;re tempering their aggressive rollout plans following a relatively disappointing year for market share growth.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">The EV Market Is Still Growing, but Growth Has Slowed<\/h2>\n\n\n\n<p>From 2012 to 2022, <a href=\"https:\/\/www.bls.gov\/opub\/btn\/volume-12\/charging-into-the-future-the-transition-to-electric-vehicles.htm\" rel=\"noopener\">EV market share grew by 1,022%<\/a>, solidifying the vehicles\u2019 place as an increasingly important sector of the industry. This included staggering year-on-year growth figures, such as a 109% growth in market share between 2020 and 2021.<\/p>\n\n\n<div class=\"visualizer-front-container visualizer-lazy-render\" id=\"chart_wrapper_visualizer-439783-338223093\"><style type=\"text\/css\" name=\"visualizer-custom-css\" id=\"customcss-visualizer-439783\">.locker,.locker-loader{position:absolute;top:0;left:0;width:100%;height:100%}.locker{z-index:1000;opacity:.8;background-color:#fff;-ms-filter:\"progid:DXImageTransform.Microsoft.Alpha(Opacity=80)\";filter:alpha(opacity=80)}.locker-loader{z-index:1001;background:url(https:\/\/www.automoblog.com\/wp-content\/plugins\/visualizer\/images\/ajax-loader.gif) no-repeat center center}.dt-button{display:none!important}.visualizer-front-container.visualizer-lazy-render{content-visibility: auto;}.google-visualization-controls-categoryfilter label.google-visualization-controls-label {vertical-align: middle;}.google-visualization-controls-categoryfilter li.goog-inline-block {margin: 0 0.2em;}.google-visualization-controls-categoryfilter li {padding: 0 0.2em;}.visualizer-front-container .dataTables_scrollHeadInner{margin: 0 auto;}.visualizer-editor-front-container{position:relative;width:auto;margin:5%;background:#fff}.visualizer-editor-front{overflow:hidden;width:100%;height:500px}.visualizer-editor-front-actions{padding-bottom:3px}.visualizer-editor-save,.visualizer-editor-cancel{margin:0 4px;padding:2px 15px}.visualizer-cw-error .visualizer-actions{display:none !important;} <\/style><div id=\"visualizer-439783-338223093\" class=\"visualizer-front  visualizer-front-439783\"><\/div><!-- Not showing structured data for chart 439783 because license is empty --><\/div>\n\n\n<p>While growth has continued, it&#8217;s fallen from the breakneck pace that the auto industry has seen in recent years \u2013 a pace that was perhaps expected to continue. Between the first and second quarters of 2023, <a href=\"https:\/\/caredge.com\/guides\/electric-vehicle-market-share-and-sales\" rel=\"noopener\">EV market share actually dropped from 7.3% to 7.2%<\/a>.<\/p>\n\n\n\n<p>According to a report from S&amp;P Global Mobility, EV new vehicle market share <a href=\"https:\/\/www.autonews.com\/retail\/ev-transition-slows-amid-inventory-woes-sluggish-demand\" rel=\"noopener\">started to dip again in September<\/a>, down to 7.7% from 7.8% in August. The S&amp;P report also projected that market share would drop again in October, down to 7.5% of all new vehicles sold.<\/p>\n\n\n\n<p>One of the most immediate examples of this diminished growth can be seen on dealership lots around the U.S. While EVs had been difficult to keep on the lot in the recent past, dealers have started to see them sit around for much longer in 2023.<\/p>\n\n\n\n<p>\u201cIndustrywide, EVs sit on dealer lots 22 days longer than their gas-powered counterparts on average,\u201d said Edmunds Consumer Insights analyst Joseph Yoon.<\/p>\n\n\n\n<p>The small but surprising dip in EV sales may have given manufacturers a reason to temper expectations and reevaluate their plans. That sentiment was echoed in a Cox Automotive report that <a href=\"https:\/\/www.coxautoinc.com\/market-insights\/q2-2023-ev-sales\/\" rel=\"noopener\">detailed the developments in July<\/a>.<\/p>\n\n\n\n<p>\u201cEV sales records will continue to be set, and EV growth will continue to outpace overall industry growth, but the days of 75% year-over-year growth are in the rearview mirror,\u201d the report said. \u201cThe hard-growth days are ahead.\u201d<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Some Automakers Are Scaling Back Once-Aggressive EV Plans<\/h2>\n\n\n\n<p>Surging demand and what seemed to be a rapid and inevitable transition to EVs prompted most automakers to develop battery-powered models. By October 2023, automotive manufacturers were scheduled to release more than 50 new EV models onto the market in 2024. Some manufacturers staked their flags even more firmly on the side of EVs, such as Volvo \u2013 <a href=\"https:\/\/www.media.volvocars.com\/us\/en-us\/media\/pressreleases\/277409\/volvo-cars-to-be-fully-electric-by-2030\" rel=\"noopener\">which vowed to become all-electric by 2030<\/a>.<\/p>\n\n\n\n<p>But in the third quarter of 2023, signs started to appear that <a href=\"https:\/\/www.autonews.com\/manufacturing\/gm-ford-delay-some-ev-investments-citing-slowing-demand-growth\" rel=\"noopener\">some of the world\u2019s largest automakers were becoming cautious about EV-related spending<\/a>. Ford announced that it would delay $12 billion in EV spending from its plans. The cuts include pushing back the construction of one of two EV battery plants in Kentucky and reducing production on its Mustang Mach-E vehicles.<\/p>\n\n\n\n<p>In August, General Motors announced that it would no longer provide EV production targets \u2013 although the company maintained that it would still reach its goal of delivering 1 million EVs per year by the end of 2025. The company also <a href=\"https:\/\/www.autonews.com\/manufacturing\/honda-shelves-plans-build-evs-gm\" rel=\"noopener\">scrapped plans announced in April 2022<\/a> to collaborate with Honda to develop low-cost EVs based on its Ultium EV battery technology.<\/p>\n\n\n\n<p>EVs remain a central focus for automakers, but the announced changes were in stark contrast to what had been an industrywide full-speed-ahead approach toward the EV transition. While not a reversal of course, these moves could signal somewhat of a sea change for the industry.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Why Automakers May Be Getting Hesitant About EVs<\/h2>\n\n\n\n<p>The second-quarter dip in market share may have only been a temporary setback, but it\u2019s not the only trend that could be giving manufacturers pause. Despite strong growth, there are several other indications that the path to EV market penetration may not be as smooth or as rapid as once thought.<\/p>\n\n\n\n<p>Yoon told Automoblog that there are a few key reasons why that might be the case.<\/p>\n\n\n\n<p>\u201cWhile all-electric market share has risen from 6% to 7.5% year-over-year, it has remained relatively stagnant for the past half year due to high interest rates, high prices, and lagging interest from consumers, outside of early adopters who have already bought in,\u201d he said.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Price Is Still a Concern for Prospective EV Buyers<\/h3>\n\n\n\n<p>One of the primary reasons many car shoppers have been hesitant about buying an EV for their next vehicle is simply economic. Despite a more developed, competitive market and price drops from major brands like Tesla, new EVs still cost more on average than new internal combustion engine (ICE) vehicles.<\/p>\n\n\n\n<p>According to data from Kelley Blue Book, <a href=\"https:\/\/www.kbb.com\/car-advice\/how-much-electric-car-cost\/\" rel=\"noopener\">the average cost of a new EV<\/a> was $53,469 in July 2023 compared to $48,334 for an ICE auto. Under different economic conditions, the 10.6% cost difference may have impacted buyers\u2019 decisions less. However, as Americans\u2019 household budgets are under pressure from inflation, car shoppers may weigh that difference more carefully. In addition, <a href=\"https:\/\/www.automoblog.com\/fed-rate-hike-march-2023\/\">sky-high interest rates<\/a> further increase the cost gap for buyers looking to finance their new purchase.<\/p>\n\n\n\n<p>An <a href=\"https:\/\/epic.uchicago.edu\/wp-content\/uploads\/2023\/04\/EPIC-Energy-Policy-Survey-2023_Topline.pdf\" rel=\"noopener\">April 2023 survey conducted by the University of Chicago<\/a> asked respondents why they wouldn&#8217;t consider buying an EV. The most common reason was \u201cthe cost of a new electric vehicle is too high,\u201d with 60% of respondents citing it as a \u201cmajor reason\u201d and another 23% citing it as a \u201cminor reason.\u201d<\/p>\n\n\n\n<p>Cost is what Yoon sees as one of the biggest obstacles to more widespread EV adoption.<\/p>\n\n\n\n<p>\u201cEV pricing is still pacing well above the average new vehicle,\u201d he said. \u201cIn October 2023, EVs [at an average price of] $59,064 transacted more than $11,000 above the industry average of $47,753.*\u201d<\/p>\n\n\n\n<p><em>*Edmunds average transaction price data does not include figures from the direct-to-consumer brands, including Tesla, Rivian, and Lucid.<\/em><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Charging Infrastructure Continues To Be a Concern<\/h3>\n\n\n\n<p>The breakneck pace at which EVs have grown as a sector of the market is one of the primary reasons why they&#8217;ve become a priority for manufacturers. However, that same growth rate has also raised <a href=\"https:\/\/www.automoblog.com\/electric-vehicle-charger-shortage\/\">concerns about whether charging infrastructure growth<\/a> and development can keep pace.<\/p>\n\n\n\n<p>In the aforementioned University of Chicago poll, 50% of respondents listed a lack of charging stations as a \u201cmajor reason\u201d why they wouldn&#8217;t purchase an EV. An additional 27% said that lack of charging infrastructure was a \u201cminor reason\u201d why they wouldn&#8217;t think about purchasing an EV.<\/p>\n\n\n\n<p>According to <a href=\"https:\/\/afdc.energy.gov\/fuels\/electricity_infrastructure_trends.html\" rel=\"noopener\">data from the U.S. Department of Energy<\/a> (DOE), the number of public charging stations grew 34% from Q2 2021 to Q2 2023. While the total number of stations has grown to 141,714 as of the second quarter of 2023, the growth rate hasn\u2019t kept pace with the growth of EVs sold as a share of new vehicles. EV market share increased 41% between Q3 2022 and Q3 2023 alone.<\/p>\n\n\n<div class=\"visualizer-front-container visualizer-lazy-render\" id=\"chart_wrapper_visualizer-448076-1978535235\"><style type=\"text\/css\" name=\"visualizer-custom-css\" id=\"customcss-visualizer-448076\">.locker,.locker-loader{position:absolute;top:0;left:0;width:100%;height:100%}.locker{z-index:1000;opacity:.8;background-color:#fff;-ms-filter:\"progid:DXImageTransform.Microsoft.Alpha(Opacity=80)\";filter:alpha(opacity=80)}.locker-loader{z-index:1001;background:url(https:\/\/www.automoblog.com\/wp-content\/plugins\/visualizer\/images\/ajax-loader.gif) no-repeat center center}.dt-button{display:none!important}.visualizer-front-container.visualizer-lazy-render{content-visibility: auto;}.google-visualization-controls-categoryfilter label.google-visualization-controls-label {vertical-align: middle;}.google-visualization-controls-categoryfilter li.goog-inline-block {margin: 0 0.2em;}.google-visualization-controls-categoryfilter li {padding: 0 0.2em;}.visualizer-front-container .dataTables_scrollHeadInner{margin: 0 auto;}.visualizer-editor-front-container{position:relative;width:auto;margin:5%;background:#fff}.visualizer-editor-front{overflow:hidden;width:100%;height:500px}.visualizer-editor-front-actions{padding-bottom:3px}.visualizer-editor-save,.visualizer-editor-cancel{margin:0 4px;padding:2px 15px}.visualizer-cw-error .visualizer-actions{display:none !important;} <\/style><div id=\"visualizer-448076-1978535235\" class=\"visualizer-front  visualizer-front-448076\"><\/div><!-- Not showing structured data for chart 448076 because creator is empty --><\/div>\n\n\n<p>Other <a href=\"https:\/\/www.automoblog.com\/public-charging-range-cost-ev-concerns\/\">issues related to charging infrastructure<\/a> also present potential obstacles to providing an adequate charging network for EV drivers. Automakers <a href=\"https:\/\/www.automoblog.com\/ev-charging-standard-war\/\">have yet to settle on a single charging port standard<\/a>, meaning not all cars can be charged at the same charging stations. Some of the charging stations included in the DOE dataset may also have been built or installed before updated charging standards, making them unusable for many EV owners.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">EV Recalls Have Become More Common<\/h3>\n\n\n\n<p>Electric vehicles have made regular appearances in headlines over the past several years, not always for positive reasons. In the last year especially, the automotive world has seen several high-profile recalls from major brands.<\/p>\n\n\n\n<p>In February, the National Highway Traffic Safety Administration (NHTSA) issued <a href=\"https:\/\/static.nhtsa.gov\/odi\/rcl\/2023\/RCLRPT-23V085-3451.PDF\" rel=\"noopener\">a recall of more than 360,000 vehicles<\/a> from the country\u2019s leading <a href=\"https:\/\/www.automoblog.com\/is-tesla-in-trouble-2023\/\">EV manufacturer Tesla<\/a>. The recall was issued due to safety failures related to the company\u2019s so-called Full Self-Driving feature. Tesla was the subject of <a href=\"https:\/\/static.nhtsa.gov\/odi\/rcl\/2023\/RCLRPT-23V489-8374.PDF\" rel=\"noopener\">another recall in July<\/a> related to its onboard cameras.<\/p>\n\n\n\n<p>Tesla was far from the only EV manufacturer to experience mass recalls. In October, more than <a href=\"https:\/\/www.reuters.com\/business\/autos-transportation\/ford-recalling-35000-us-mach-e-evs-over-power-loss-reports-2023-10-18\/\" rel=\"noopener\">35,000 Ford Mustang Mach-E vehicles were recalled<\/a> over power loss issues. Earlier in the year, <a href=\"https:\/\/www.motorbiscuit.com\/nissan-recalls-nearly-65000-leaf-evs\/\" rel=\"noopener\">Nissan issued a recall<\/a> affecting nearly 65,000 of its long-running Leaf vehicles related to software issues that could potentially cause the vehicle to accelerate on its own. Other manufacturers such as Porsche, Audi, and Chevrolet also saw some of their EV models subjected to recalls.<\/p>\n\n\n\n<p>These recalls could be a sign that automakers have rushed EVs to market or have yet to solve fundamental issues unique to battery-powered vehicles. Even if high-profile recalls haven\u2019t swayed public opinion on EVs, the expense of these recalls and even the potential for fallout may have pushed automakers to rethink their strategies.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Used EVs Are Becoming More Available and Less Expensive<\/h3>\n\n\n\n<p>Another factor that may be influencing manufacturers\u2019 EV rollout plans is the emergence of used EVs as a viable sector of the market. The rapid growth in new EV sales means that relatively few battery-powered vehicles were on the roads until recently. As such, the majority of car shoppers who wanted to purchase an EV had few used options and were mostly limited to buying new models.<\/p>\n\n\n\n<p>The exponential growth in the number of new EVs sold over the past few years means that there are now far more used options for EV-curious buyers. In addition, <a href=\"https:\/\/www.automoblog.com\/new-ev-tax-credit-effects\/\">the federal government expanded its EV-buying tax incentive<\/a> to include a $4,000 credit toward the purchase of used EVs that meet specific criteria.<\/p>\n\n\n\n<p>As a result, used EVs are becoming more available and significantly cheaper. While many buyers will still buy new battery-powered cars, the emergence of used EVs on the market could potentially eat into new EV sales.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">The EV Transition Continues, Even if the Future Looks Murky<\/h2>\n\n\n\n<p>Even with the announced rollbacks from major manufacturers, EVs still appear to be the future of the automotive industry. In <a href=\"https:\/\/www.coxautoinc.com\/wp-content\/uploads\/2023\/06\/Path-to-EV-Adoption-Study-Summary-June-2023.pdf\" rel=\"noopener\">a June 2023 study from Cox Automotive<\/a>, 51% of people surveyed in 2022 said they would consider an EV for their next purchase, up from 38% in 2021. That same survey showed that 53% of people thought that EVs would eventually replace ICE-powered vehicles.<\/p>\n\n\n\n<p>Still, the developments in the EV market in 2023 showed that there are very real obstacles to EV proliferation \u2013 obstacles that manufacturers may have underestimated in their zeal to capitalize on the trend toward EVs. Yoon said that these developments may have given car companies a strong reason to reevaluate their business plans.<\/p>\n\n\n\n<p>\u201cWith that context, along with the fact that EV programs are a ground-up development in almost every facet of production, it makes sense that automakers would rather reprioritize their resources to focus on what they do best while they wait for customers to demand a more comprehensive EV product portfolio,\u201d Yoon said.<\/p>\n\n\n\n<p>While manufacturers may be getting slightly less aggressive about their EV rollout plans, they&#8217;re still a focal point for most in the industry. Those manufacturers have a powerful ally in the federal government to help them push the transition forward. The U.S. government has announced funding incentives for EV manufacturing and the development of charging infrastructure in addition to offering tax credits for new and used EV purchases.<\/p>\n\n\n\n<p>Exponential growth in the EV sector combined with billions of dollars in government support may have created an exhilarating situation for automakers looking to capitalize on the market. As growth slows and unexpected concerns arise, however, manufacturers seem to be finally awakening to the new realities of a still-developing market.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>One of the biggest stories in the automotive industry over the past decade has been the rapid growth of electric vehicles (EVs) as a share of new cars sold. In the last few years, most major automakers have released at least one EV model and have indicated plans to make battery-powered cars a large part of their future plans. As a result, signs have pointed to automakers charging full-on into the EV transition \u2013 at least until recently. While the [&hellip;]<\/p>\n","protected":false},"author":174,"featured_media":448078,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_lmt_disableupdate":"","_lmt_disable":"","footnotes":""},"categories":[43031],"tags":[],"model":[],"acf":[],"modified_by":"Kristin McClure","_links":{"self":[{"href":"https:\/\/www.automoblog.com\/wp-json\/wp\/v2\/posts\/448052"}],"collection":[{"href":"https:\/\/www.automoblog.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.automoblog.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.automoblog.com\/wp-json\/wp\/v2\/users\/174"}],"replies":[{"embeddable":true,"href":"https:\/\/www.automoblog.com\/wp-json\/wp\/v2\/comments?post=448052"}],"version-history":[{"count":0,"href":"https:\/\/www.automoblog.com\/wp-json\/wp\/v2\/posts\/448052\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.automoblog.com\/wp-json\/wp\/v2\/media\/448078"}],"wp:attachment":[{"href":"https:\/\/www.automoblog.com\/wp-json\/wp\/v2\/media?parent=448052"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.automoblog.com\/wp-json\/wp\/v2\/categories?post=448052"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.automoblog.com\/wp-json\/wp\/v2\/tags?post=448052"},{"taxonomy":"model","embeddable":true,"href":"https:\/\/www.automoblog.com\/wp-json\/wp\/v2\/model?post=448052"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}