The landscape of electric vehicles (EVs) in the U.S. is witnessing a shift, but not quite in the expected direction. While the allure of environmentally friendly driving has gained traction, the actual adoption of fully electric cars hasn’t matched the fervor.
Despite increasing interest among consumers—51 percent considering new or used EVs, up from 38 percent in 2021—actual sales are trailing behind.
Cox Automotive anticipates EV sales breaching the 1 million mark for the first time in 2023, yet a discrepancy between supply and demand remains palpable.
The Oversupply of Electric Vehicles
The once-thought scarcity of EVs has turned into an oversupply conundrum, with dealers grappling as these cars linger for extended periods on lots. Reports show that EV inventory in the U.S. has surged by a staggering 350 percent this year, reaching over 92,000 vehicles. This influx translates to a 92-day supply, nearly doubling the average for gas-powered cars, signaling a worrying trend where EV supply far outstrips demand.
While the average industry supply during “normal times” typically rests at 70 days, conventional internal combustion engine (ICE) vehicles currently sit at a 54-day supply. Hybrid cars, in particular, are witnessing a boom, with supply levels plummeting to 44 days. Toyota’s hybrids, like the Prius and RAV4, are witnessing swift turnovers, emphasizing the automaker’s assertion that a gradual transition from ICE to EVs is paramount.
Hybrids Bridging the Gap
However, this growth in hybrids seems to counterbalance the sluggish performance of fully electric vehicles. Notably, the Toyota Bz4X and several other EV models—Audi Q4 e-tron, Q8 e-tron, GMC Hummer EV SUV, Ford Mustang Mach-E, and the Genesis Electrified G80—are lingering at an inventory well above a 100-day supply. The Genesis model, priced at around $82,000 and ineligible for federal tax credits due to its cost, has seen a meager 18 units sold in the first half of 2023.
This shift in the automotive paradigm has revealed an unexpected challenge: a burgeoning supply of EVs but a lukewarm demand. Despite industry promises of price parity between EVs and ICE vehicles by 2025, the present situation poses a puzzle. Elon Musk’s previous assertion of a “demand problem” seems to echo in the current scenario.
As the automotive sector grapples with this shift, the industry finds itself navigating uncharted territory. The rise of EV inventory raises significant questions about consumer interest, pricing strategies, and the critical interplay between supply, demand, and consumer preferences in the burgeoning EV market.