We’re constantly told that electric vehicles are the future. But a closer look at recent sales data suggests that, for some models at least, the future isn’t quite here yet. Let’s switch gears and delve into fresh data to understand what all the fuss is about.
The Current State of the EV Market
The market for electric cars, trucks and SUVs is growing, no doubt about it. Our updated analysis of EV market share has EV sales above 7 percent for the first time. However, as with any burgeoning market, there are growing pains. Some new electric models are spending months on dealer lots, while others seem to be driving off as soon as they arrive.
So, what’s causing these unexpected hold-ups in EV sales? To answer that, we need to take a closer look at a metric of market health that is too often overlooked by car buyers: days supply. “Days supply” is a term used in the automotive industry to represent the number of days it would take to sell all of a particular car model in inventory, given the current sales rate.
In 2023, the days supply of non-Tesla EV models keeps getting weirder and weirder. Why don’t we have Tesla data to share? Well, no one has that except Tesla, since they sell direct-to-consumer, along with Rivian, Polestar, Lucid and a few other low-volume automakers. Analysts have to wait until sales numbers are released for any real insight. We DO, however, have some interesting USED Tesla numbers to dig into. More on that in a bit.
EV Inventory Surges Ever Higher
The latest from CarEdge Data reveals some surprising numbers. New EV inventory is above and beyond anything we’ve ever seen before.
The Mustang Mach-E, despite being highly anticipated and once labeled a ‘Tesla-killer’, now has a supply of 153 days. Meanwhile, other popular EVs like the Hyundai IONIQ 5 and 6, are taking 110 and 159 days, respectively, to sell. The IONIQ 5 was last year’s Car and Driver EV of the Year, only to pass that same title on to the IONIQ 6 in 2023. You’d think they’d be selling like crazy, right?
And that’s not all. Nissan’s Ariya is sitting for a whopping 219 days before finding a new home, and the Subaru Solterra isn’t far behind with 199 days.
Here’s current dealer inventory for every new electric vehicle in America, except Tesla and the other direct-to-consumer automakers.
|Make||Model||New/Used||Days Supply (7/28/23)|
The ‘T Word’ Crashes the EV Party
Remember when GM executive Bob Lutz couldn’t stop hating on Tesla? For years, he went on and on about how the then-EV startup was doomed to fail. Making cars was just too hard and unprofitable, he said.
Three short years later, and boy was he wrong. Tesla is STILL the king of EV sales, and to rub salt on the wound, Tesla is now convincing one legacy automaker after another to adopt their once proprietary charging standard, GM included. What does all of this have to do with EV inventory numbers in 2023? Let me explain.
Tesla’s bold pricing strategy is driving a shift in the EV market. They initiated massive price cuts this year, predominantly affecting their widely circulated Model 3 and Model Y, and creating a ripple effect in the sector.
These strategic reductions, alongside stabilizing gas prices, rising interest rates, and thrifty consumers, resulted in less demand. When demand dropped, Tesla lowered prices.
Tesla’s price reductions triggered a downward trend in the new EV market. The Model Y began 2023 at $65,990 in the U.S., but price cuts and a cheaper base variant slashed the base price of the Model Y to $47,240 by early May. With access to the Supercharger network, over-the-air updates and longer range, many drivers looking to go electric simply went for the Tesla, leaving the competitors to pile up on dealer lots.
By the way, used Tesla models are still in demand. Days supply remains just slightly above average, and far below new EV inventory. Here’s a look at used Tesla inventory nationwide in July 2023:
|Make||Model||New/Used||Days Supply||Total For Sale||Total Sold (45 Days)|
EVs Are Not For Everyone
Let’s take a closer look at the demand issue. Despite the buzz, not all EVs are finding eager buyers right off the bat. Let’s plug into a few potential reasons: price, charging infrastructure, vehicle range, and brand reputation.
First, despite the falling prices and high inventory, electric cars are expensive. The average EV price remains about 15% higher than that of the average conventional car. Those who really put on the miles can recoup that money through fuel and maintenance savings, but what about urban dwellers who may drive just 5,000 miles a year?
This higher upfront cost might deter many potential buyers, especially those with a limited budget or those who drive less frequently.
Secondly, the charging infrastructure for EVs is still developing and leaves much to be desired. This is especially true in rural America. Those who live in apartments, condos, or similar situations may not have any way to charge at home to begin with. And then there are variables like cold weather, towing, and high-speed driving that all impact an electric vehicle’s range, and undermine consumer confidence in EVs.
Lastly, there’s a cultural shift required to adapt to the EV lifestyle. Transitioning from gas stations to charging points, understanding charging times, and adjusting to the inability to simply work on your car in the garage are just some of the challenges for the everyday driver. In addition, for those who love the roar of an internal combustion engine or frequent long, remote road trips, an EV might not be ideal.
Better Electric Car Deals Are Here
So what does this mean for you, the potential EV buyer? If you’re considering one of these slow-sellers, you might be able to secure a great deal. Some (but not all) dealers could be more than ready to sell their electric inventory, which could increase your negotiating power.
In fact, even before the most recent spike in electric vehicle inventory, we shared a few of the many examples of CarEdge community members negotiating thousands off of EV sticker prices. Yup, EVs are indeed negotiable!
Are EVs Losing Power or Just Charging Up?
What does it all mean for manufacturers? These trends could be a wake-up call. Legacy automakers and newcomers alike may need to adjust their strategies, rethink pricing, improve vehicle specs, or invest more in marketing and public education to attract buyers who may be on the fence about going electric.
Perhaps it’s too early to claim that these EVs are ‘struggling’. After all, every new technology takes time to become mainstream. And as more people embrace the benefits of electric driving, demand for these slow-selling models might well pick up speed.
But for now, savvy buyers could use this opportunity to drive a hard bargain on a brand-new EV.