What’s Up With EV Sales

My family and I spent the summer holidays in Germany. Our host explained that thanks to his €50,000 investment in rooftop solar and to his woodlot, he was pretty much grid independent, substantially reducing his CO2 footprint. In spite of this, the man was outspoken against EVs.??

What's up with EV sales? According to numerous articles on the subject, BEV sales are down. This Car Gurus report notes that EV monthly repayments average $277 more than an equivalent ICE vehicle and that they sit (on average) 82 days on dealer lots before finding a buyer, compared to 64 days for ICE vehicles.

Non-Californian Americans seem reluctant to buy EVs. Yahoo Finance partnered with Ipsos earlier this year to conduct this survey asking 1,025 Americans their EV buying preferences. Overall, 57% of respondents said they were not likely to purchase an electric vehicle (defined as either fully electric or plug-in hybrid). Only 31% of respondents were likely to purchase an electric vehicle, while 11% said they didn’t know. Not surprisingly, those against EVs tend to be older and more politically conservative (76% are Republican voters).?

Not only are American consumers having doubts about EVs, but so too are fleets. Hertz recently bought 50,000 EVs, mostly Teslas, which negatively impacted their earnings. Collision/damage repairs for EVs are twice the price of comparable combustion cars; further,? Tesla’s cut in prices means lower residual values. Interestingly, hybrid sales are up 48% in the US for the first three quarters of this year compared to the same period last year.?

The Valley of Death:

Philip Nothard of Cox Automotive describes the next five years as the “valley of death for EV manufacturers” as low residual values, high supply, and low demand make a perfect storm.. You could add policy uncertainty to this trifecta of woes. In the UK BEV sales dropped 17% this November compared to the previous year after the prime minister, Rishi Sunak, delayed the banning of fossil fuel vehicles until 2035. In the US a Trump presidency would – according to the Financial Times – “Gut Joe Biden's IRA climate deal”.

For European manufacturers there is the additional challenge of having to share the pie with new competitors: the Tesla Model Y is Europe’s biggest selling car (2023), and Chinese automakers are hyper-focused on selling to Europeans. Policy-makers will be sandwiched between consumers, who complain they cannot afford EVs, and European automakers, who cannot match the prices of Tesla and of Chinese brands.?

It doesn’t help that European politicians have not properly communicated the pathway for the energy transition. They have tried to sell it as green growth, green jobs and painless. A transition of this size is complex and costly and needs to win over companies first. There has been too much focus on consumers, who are generally resistant to change and price sensitive. Swapping oversized, underutilized petrol SUVs with oversized, underutilized electric SUVs is not an environmental solution, given the resource intensity of building a 2-ton vehicle.?

Governments need to encourage the electrification of high-mileage fleets and to reduce our reliance on car ownership for everyday commuting. Boosting EV mileage is more important than boosting EV sales. Europe has the opportunity to build a new mobility ecosystem by integrating cars, bicycles, trains, buses, trams and autonomous shuttles through public and private mobility partnerships. This will make for a more sustainable transport sector and a more robust European automotive, transport and mobility industry.

By Ross Douglas