Electric cars are piling up at the dealers lot. U.S. EV market struggles with unsold EVs and price cuts. The U.S. Auto Industry’s EV sales problem is impacting the market growth. The EV market is growing, but not fast enough during the latest quarter to prevent dealer lots with unsold EVs stacking up or to allow Tesla to avoid new price cuts, as per analysts and industry data.
Auto Industry’s EV sales problem
The growing mismatch between EV supply and demand is a sign that even though consumers are showing more interest in EVs, they’re still wary about purchasing one because of price or charging concerns leading to slow-selling of EVs.
As per a Cox survey, 51% of consumers are now considering either a new or used EV, up from 38% in 2021.
So, rising unsold EVs and price-cutting could represent only a short-term pause in EV market growth. But there could be signals that boosting U.S. EV sales above the current 7% market share level will be more costly and difficult than expected, even with federal and state subsidies.
Challenges with EV sales for dealers of established automakers such as General Motors (GM.N), Ford (F.N), Hyundai (005380.KS) and Toyota (7203.T) is they have more than 90 days’ worth of unsold EVs at their stores at current sales rates, as per a report from Cox Automotive. Slow-selling EVs is definitely a headache for the U.S. Auto industry.
The Auto Industry’s EV sales problem can be clearly seen with U.S. dealers having more than 92,000 electric cars piling up in stock, which is more than three times the number on their lots about a year ago, as per Cox data. Overall, dealer lots with unsold EVs are up 74% from a year ago.
Challenges with EV sales
Established automakers face challenges with EV sales keeping up with demand and supply ratio.
- Electric cars are piling up at GM. GM had 50 days’ worth of Cadillac Lyriqs available as of June 30, below the industry average of 52 days’ supply at current sales rates, Cox said. GM said in a statement that it has “very low inventory and high demand” for its EVs.
- There are more electric cars piling up at Ford. Ford had unsold EVs with 86 days’ worth of F-150 Lightnings and 113 days’ worth of Mustang Mach-E on hand, Cox said. Cox’s figures as per Ford are overstated.
- Volkswagen dealers had 131 days’ worth of ID.4 electric SUVs in inventory, according to Cox data. In a statement, Volkswagen’s U.S. sales arm said “we have seen some softening in EV sales in the U.S. recently” as supply chain bottlenecks have eased, allowing for increased production.
EV in formative phase
As per industry officials and analysts, the U.S. EV market is still in a formative phase, with many consumers still evaluating whether EVs fit their needs and major automakers still ramping up production.
Tesla is using its lead in EV production costs to accelerate demand with price cuts. It seems, Tesla’s price-cutting strategy is also taking a toll on dealer lots with unsold EVs of other companies.
Legacy automakers are facing challenges with EV sales, they are losing money on most of their electric models.
Tesla’s price cuts, and competitors’ responses, pushed average selling prices for EVs for the second quarter to $53,438, this has been down 19.5% from the peak of $66,390 in June 2022, Cox said.
The Biden administration has proposed emissions rules that effectively require U.S. automakers to shift their sales to two-thirds EVs by 2032, which is deemed unrealistic by major automakers.
As per analyst, it is too soon to declare that U.S. EV demand has hit a plateau. “We see it as choppy growth, but continued growth,” he said.
Some more brands with unsold EVs
- Hyundai Genesis, sold only 18 of its Electrified G80 sedans in the 30 days leading up to June 29, and had 210 in stock nationwide, per Cox research.
- Audi’s Q4 e-Tron and Q8 e-Tron, also have bloated inventories well above 100 days. As it is expensive making them ineligible for federal tax credits.
- Imported models like the Kia EV6, Hyundai Ioniq 5 and Nissan Ariya are also electric cars that are piling up, likely because they’re not eligible for tax credits either.
