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Car manufacturers all over the world are betting massively on electric cars. Collectively, these companies have invested hundreds of billions of dollars in battery manufacturing, R&D, tooling and marketing. There’s just one problem: EVs don’t sell nearly as fast as they can be produced.
A new study of Cox Automotive shows that dealers in the US are sitting on a significant number of brand new electric cars. As it turns out, car manufacturers are really good at building new cars on a large scale – who would have guessed? In fact, they are so good that the supply of new EVs is well ahead of current demand.
EVs currently account for about 6.5% of all new car sales in the US. That number is growing, however, with total electric car sales expected to break the one million unit mark for the first time in 2023.
Despite increasing adoption, manufacturers are finding they can produce EVs significantly faster than they can sell. This has resulted in both dealers and car manufacturers sitting on a large inventory of unsold electric cars. Specifically, the industry has enough EV inventory to last about 92 days. That is a lot, almost three times as many as a year earlier. And when placed next to the current 54-day stock of ICE-powered vehicles, it’s nearly double the current average stock. It is also worth noting that the total delivery of vehicles before the pandemic was about 70 days.
Especially luxury brands and expensive vehicles have a hard time moving new vehicles. For example, the GMC Hummer EV and Audi Q8 E-Tron have a stock of more than 100 days. Genesis’ EV stock in particular has blown up significantly with a 350-day supply of its electrified G80 sedan.
People are more aware of EVs than ever, with between 39% and 51% of new car buyers considering a battery-powered car as their next vehicle purchase. So why don’t they bite into new EV purchases?
New cars are also rapidly becoming more expensive. Adding batteries to the mix doesn’t help either, and stakeholders at major automakers believe that cost parity between electric cars and regular internal combustion engine vehicles is still a long way off. Consumers who are not interested in EVs overwhelmingly cite cost as the reason for their disinterest, meaning that the battle for EV adoption could be fought primarily at the bank. It could also be a reason why Tesla continues to dominate the EV market with its frequent price cuts.
Consumers can still be wary of technology. Consumers surveyed by Cox cite battery replacement costs and the lack of public charging, though that may be the tip of the iceberg.
Some people still view current EV buyers as early adopters, especially as automakers like Toyota are promising EVs with up to 1,500 miles of range, plus fast-charging batteries by the end of the decade. So from a buyer’s standpoint, why would someone buy an EV today when they might be able to get something with significantly better specs in a few years?
The renewed EV tax credit may also be a reason that consumers are not yet buying. Many new EVs still don’t qualify for the full tax credit, meaning consumers can choose to buy a Tesla Model Y instead of a Hyundai Ioniq 5 simply because one qualifies for the $7,500 and the other not. If a new car buyer has set their sights on a particular vehicle, they may eventually scour the used market for a decent deal, or simply wait for a vehicle to be assembled in North America, such as the Volkswagen ID.4 conversion. .
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