Sales of electric vehicles (EVs) have reached unprecedented levels in the United States, yet dealerships find themselves grappling with an increasing pile of unsold EV inventory. This discrepancy raises questions about consumer readiness for electric cars and the challenges faced by the auto industry in navigating the transition to electrification.
While annual EV sales in the U.S. surpassed the 1 million mark in November, representing a remarkable 50.7% year-over-year increase compared to 2022, the unsold inventory of new EVs is causing concern among dealers. At the end of November, dealerships reported a 114-day supply of new EVs, significantly higher than the industry’s historical ideal of a 60-day supply.
Diverse Inventory Levels
Inventory levels vary by automaker, with some models experiencing more significant surpluses than others. For instance, the Ford F-150 Lightning boasts a 111-day supply, while the Chevy Bolt EUV has a 59-day supply. Several EV models, including the Nissan Leaf, Kia EV6, and the Mustang Mach-E, also grapple with “higher-than-average” inventory. Notably, these figures do not encompass Tesla, Rivian, or other manufacturers who sell directly to consumers, bypassing dealership inventory.
Consumer Readiness and Dealers’ Concerns
Dealerships assert that the majority of U.S. consumers remain hesitant to embrace electric cars. In November, nearly 4,000 dealerships penned a letter to President Joe Biden, expressing concerns about the administration’s EV mandate and its impact on their inventory. While early adopters initially displayed enthusiasm for EVs, this interest has stalled, leading to a backlog of unsold vehicles on dealership lots. Challenges such as EV pricing and access to charging infrastructure, both at home and in public, have contributed to consumer hesitancy.
Some automakers are adjusting their production strategies in response to slowing EV sales. Ford recently announced a reduction in its 2024 F-150 Lightning production goals, and General Motors delayed the production of several electric models. Competition from brands like Tesla and internal challenges at battery plants are affecting these automakers the most.
The Price Factor
EV prices, coupled with high-interest rates, have become a primary concern for consumers. Although Tesla’s Model Y achieved bestseller status, the company experienced slower sales in the third quarter and has implemented price cuts to remain competitive. While tax credits for EVs are available, a Department of Treasury proposal aims to make these credits more accessible to customers, potentially stimulating demand in 2024.
Navigating the Road Ahead
The growth of the EV market is undeniable, but the increasing inventory of unsold vehicles underscores the challenges faced by dealerships and automakers alike. The road to widespread EV adoption will require addressing consumer concerns, enhancing charging infrastructure, and fine-tuning pricing strategies to align with consumer expectations.