American consumers are more interested in electric vehicles, but affordability and other concerns are holding many back from making a purchase. And now, EVs, once hard to come back, are accumulating on dealership lots, according to Cox Automotive, which tracks industry trends.
Why It Matters
- The supply-demand mismatch comes as more EV models come into the market. Competition is becoming more fierce.
- The Biden administration, through its Inflation Reduction Act, may be choosing winners and losers in the market. The IRA has strict sourcing requirements for EV tax credits, which has hit demand for foreign-made vehicles by Hyundai, Kia, and Genesis.
What the Data Says
- The glass is half full. EV sales are seeing healthy growth — with around 500,000 units sold in the first half of this year compared to 355,000 in the same period last year.
- The problem: inventory growth is outpacing demand. Cox Automotive estimates EVs remain on dealer lots for around 92 days on average — a big increase from 36 days a year ago and far beyond the industry-wide average of 51.
- The reason: 43 percent of those considering an EV purchase in 2022 said they’re too expensive. Concerns about charging station availability are declining, but remain a significant 32 percent.
What the Experts Are Saying
- Cox Automotive’s chief economist Jonathan Smoke says electric vehicles “finally means something in every part of the industry, but it also means we’ve got ample opportunity to find where it’s successful and where it’s not quite as successful.”
The Big Picture
New vehicle sales remain resilient despite elevated inflation and relatively high interest rates.
- Cox Automotive forecasts new vehicle sales will grow by over 11 percent over the first half of this year.
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