Donald Trump is trying to score political points against President Joe Biden by citing data that electric vehicles are no longer flying off the auto sales floor.
“Thousands of electric cars are piling up on car lots, all unsold,” the former president and leading Republican presidential candidate said in a video address on auto policy in late July.
But do new cars lingering at the dealership mean that the EV — the transportation centerpiece of Biden’s energy and climate agenda — has suddenly lost its appeal?
Not really, say experts who closely follow the EV market.
“A hiccup for adoption” is what Kayla Reynolds, the customer and market research manager at Cox Automotive, calls it. Cox started the speculation about EVs with a report last month saying electric cars are spending more than twice as long as traditional ones on dealer lots before being sold.
What’s going on, according to Reynolds and other analysts, is that EVs are expensive and not quite suited to the needs of the next generation of EV buyers — for now.
Despite the current hesitance, the overall market for electrics is booming and growing faster than that for gasoline-powered cars. Observers say the hurdles preventing many EV purchases are likely to ease as automakers continue to cut prices and a wider range of vehicles come online.
“Some of the EVs that they sell aren’t moving as fast as they were during the pandemic,” conceded Brian Maas, the president of the California New Car Dealers Association (CNCDA), of his member dealerships.
But he added, “That’s not that surprising, frankly, as EVs are generally more expensive than internal-combustion cars.”
‘EVs have dang near stopped’
Steady demand for EVs has been a backdrop for the Biden administration’s agenda, justifying the billions of dollars in subsidies for the technology that the president campaigned on and that Congress embedded in the 2021 bipartisan infrastructure law and the Inflation Reduction Act.
The Cox study seemed to undercut the notion that EVs are beloved by customers and ready to dominate the market. It reported that in June, EVs spent on average 103 days at the dealership before being sold, roughly twice the industry average of 53 days.
Some anecdotal evidence backs up Cox’s conclusions.
“EVs have dang near stopped,” said an Arkansas auto dealer who asked not to be named in order to speak frankly and not upset his supplier, Ford Motor Co.
His worry was the seven electric Ford F-150s sitting on his lot that were special ordered by buyers who ended up purchasing a vehicle from elsewhere. Many sales of electric F-150s are customized and ordered online. The dealer was left holding models tailored to individuals’ particular tastes that were not necessarily a fit for other potential customers. The fancy versions are priced so high that they don’t qualify for federal EV purchase incentives.
“The demand is saturated. If we make them cheaper, they will sell, but I can’t afford to go there,” he said.
Indeed, EVs are listed at prices about $18,000 higher than standard, internal-combustion-engine vehicles. In June, Cox reported, the average advertised price for a new vehicle was $45,571, far below the $63,486 for EVs.
That price margin narrows, however, at the point of sale. A wave of EV price cutting by automakers, prompted by aggressive discounts from Tesla Inc., has lowered the prices customers actually pay. When considering what customers paid, as opposed to the listing price, the price gap between traditional cars and EVs narrowed to less than $5,000, according to Cox.
The price cutting comes as U.S. auto sales of all types are booming. Last year and early this year, desirable vehicles were in short supply because of a post-pandemic supply chain squeeze. But as automotive supply chains that were snarled have straightened out, vehicles are available again, and customers are in a mood to buy. The trend holds true despite higher interest rates, which usually dampen demand for big-ticket purchases.
EV sales are growing far more quickly than the overall market. In a separate study, Cox estimated that EV sales in the United States will cross the 1 million mark this year, or more than twice the amount sold in 2021. Last year, total U.S. vehicle sales dropped by 8 percent, while the market for EVs grew by 65 percent.
In California, the CNCDA found that EV sales by traditional auto dealers are up 125 percent in the first half of the year. That tracks with growing EV adoption, which grew from 16 percent last year to more than 21 percent in the first half of this year.
In light of those strong sales, the fact that EVs are staying longer on the lot may not be a harbinger of doom. “I’m not sure I would characterize it as a slowdown yet. I would call it a slowdown in the rate of growth,” Maas said.
When asked for reaction to the experts’ views on EVs, the Trump campaign sent links to news stories that suggest EVs are unpopular, including two that reported on Cox’s report.
Growing pains
The seemingly contradictory crosscurrent — high EV sales versus slow EV purchases — may be because the market for EVs is undergoing a transition.
“We are really in the process of moving from early adopters to early mass majority,” said Joel Levin, the executive director of Plug In America, a customer-oriented EV nonprofit.
Another Cox report released in June found a huge gap between those who want electric cars and those who are actually buying them. Its survey of more than a thousand drivers found that 51 percent are considering buying an EV. Meanwhile, EVs this year will likely account for less than 8 percent of vehicle sales.
For that mass majority, the vehicles aren’t quite there yet.
“There need to be more models that come onto the market with more range, [charging] infrastructure needs to be growing by then, and customers need to understand the costs of those vehicles and how they fit into their lifestyle,” said Reynolds, the Cox analyst.
With a bevy of larger and more family-oriented electric vehicles due to hit dealerships later this year, from the Chevrolet Equinox to the Kia EV9, that moment may soon be at hand.
“It’s not a surprise that we go through ebbs and flows as we start to match supply with demand,” said Nick Nigro, the founder of Atlas Public Policy, an EV analysis group. “I don’t think it’s anything like a cause for concern in the strength of the EV market.”
