EV Sales On Verge Of Acceleration, Studies Predict

Forbes

19 hours ago

While sales of battery electric vehicles remain fairly sluggish, that is likely to change as ... More automakers introduce a greater portfolio of products at more affordable price points, studies predict.
The sluggish sales rate for battery electric vehicles has turned EVs into the industry problem child. But new forecasts predict that while EV sales may still under-achieve automaker aspirations for some time, purely electric vehicles will find more buyers as a result of changing market dynamics, competition and product offerings.
It's a prediction tough to divine when plowing through the latest sales trends.
'At the start of the year, we forecasted EVs would reach a 10% share of new vehicle sales by year end. But based on current trends, we now expect that number to land closer to 9%,' said Stephanie Valdez Streaty, director of industry insights at Cox Automotive during a webcast this week.
She went on to say that while final numbers for Q2 aren't yet in, Cox is predicting EV sales for the three-month period will be down 6% from last year.
Cox Automotive/Kelly Blue Book graph showing sales trends for electric vehicles.
The prediction is almost as sobering from J.D. Power, which compared slumbering EV sales with those of hybrids.
'Hybrids are making waves again, setting a monthly record for June with a retail share of 14.1%, up 3.8 percentage points from a year ago. In contrast, EV share has dipped 1.9 percentage points, a notable shift from June 2024 when both technologies were even at 10.3%,' wrote Tyson Jominy, senior vice president of data and analytics at J.D. Power, in a report released Wednesday.
Jominy chalked up the surge in hybrid sales on familiarity with technology that's been around for decades and dealers promoting high fuel economy leading to savings that could offset any price premium over internal combustion engine vehicles in less than two years.
It all sounds pretty bad until you raise the gaze to a wider view.
For one, many consumers rejecting EVs have done so because they were too expensive. That's changing.
In May, the average transaction price, or ATP, for EVs fell to $57,734, down 2.3% from April and 1.1% from May, 2024, while average incentives rose to 14.2% of ATP in April, according to Cox.
'This downward trend highlights growing competition and pricing pressure across the EV segment,' noted Streaty. 'At the same time, EV incentives surged to 14.2% of ATP, the highest share in the modern EV era.'
Cox Automotive/kelly Blue Book graph showing average transaction prices and incentives for battery ... More electric and electrified internal combustion engine vehicles.
A key driver of lower EV transaction prices is discounting by EV market leader Tesla, which has seen its sales decline 15.2% in the first half of this year according to Cox data. Its ATP fell to $55,277, but that's still too rich for many consumers considering an EV.
Hope for consumers, however, is not an empty emotion, as the industry's EV hierarchy is on the cusp of a major shuffling.
'While Tesla pulls back, GM is stepping up,' said Streaty. 'All three of their EV brands, Chevrolet, GMC, Cadillac, are showing strong momentum across the board. We're also seeing new players gain share, including Honda, Jeep and dodge. So while the overall market is softening, the story underneath the surface is one of redistribution.'
That redistribution comes from a massive influx of new models, body styles and price points either in production or planned by automakers other than Tesla.
Cox Automotive/Kelly Blue Book graphic showing growing EV body style and pricing choices.
In 2020 EV shoppers had just 17 models from which to choose, split evenly between luxury and non-luxury. Today, that number has grown to 75 and luxury offerings have surged from seven to 39 models, while non-luxury options have expanded from 10 to 36, Cox data shows.
'EVs now are available across nearly every major vehicle segment. SUVs have seen the most dramatic expansion, and for the first time, trucks and vans are meaningfully represented in the EV space.'
Things are looking up for greater EV choices on the used vehicle lots as well.
Cox data shows about one million EVs have been leased since 2022. When those leases come due a surge of nearly new EVs will suddenly hit used vehicle lots according to Jeremy Robb, senior director of economic and industry insights at Cox.
'The mix of units coming back to the market will change dramatically when we get to 2027. EV lease maturities will comprise 16% of all volume, with plug-in hybrids being another 5% and the hybrid market being about 6% that means the traditional ICE market will only be about 72% of the total, and then we will have far greater diversification of units out there for used EV buyers,' Robb explained during this week's webcast.
Not only are used EVs less expensive than new models, but their average price is about $2,000 less than used internal combustion engine vehicles, added Streaty.
The bottom line, she notes, is consumers who had been holding off making the plunge into battery-powered mobility, may soon find some of their key reasons for doing so are evaporating, declaring, 'More consumers than ever can now find an EV that fits their lifestyle budget and brand preference.'