Is This Proof That No One Wants Electric Cars?

Those who follow the automotive sector may have noted that dealer stocks are gradually nearing levels that were deemed average prior to the outbreak.

Is This Proof That No One Wants Electric Cars?
Is This Proof That No One Wants Electric Cars?

While this is supposedly excellent news for individuals who have had it with dealerships overcharging for their products, some are concerned about how much electric vehicle stocks outnumber their gasoline-powered equivalents.

Despite high fuel prices, strong marketing, and most automakers committing to produce only electrified vehicles, America has an EV supply of more than 100 days on dealer lots. This is roughly double the national average for gasoline automobiles. While it appears that people are losing interest in battery-powered vehicles, industry insiders insist that this is not the case.

While purported experts have undoubtedly demonstrated their fallibility in recent years, there are reasons to believe the assertion. Things are frequently more complicated than they look on the surface, and EVs are no exception. To begin with, the market share of electrified vehicles has increased.

According to the Department of Energy, the United States’ proportion of battery electric vehicles increased from a tiny fraction of a percent to more than 6 percent between 2018 and 2023. Plug-in hybrid use has also increased, albeit at a considerably slower rate. It’s certainly not occurring at the rate that the Biden administration desired, despite the White House’s aim of having half of new-vehicle sales be electric by 2030. However, we are still making progress in that direction.

There is also a significant variance in what is popular among EVs. Some models aren’t really competitive and operate primarily as compliance vehicles. Others are worldwide models that are unsuitable for the North American market (too tiny, insufficient range). Then there are the premium luxury models, which differentiate themselves by providing additional features, larger batteries, and cultural cachet. The point is that the industry has yet to mature and currently caters to richer consumers who perceive these as status symbols.

Government incentives (EV tax credits, for example) have made them more appealing in general. The Tesla Model Y may remain on the more expensive side of inexpensive EVs, lack the fit-and-finish of other models, and be a little too bare on the inside for some tastes. However, after tax incentives, it is no more expensive than the average sedan sold today, wears a desirable badge, and emphasizes the foundations of what makes EVs popular in the first place. That’s enough to propel it into the top ten best-selling vehicles in North America.

Tesla is still sweeping the floor with rival EV providers, and it appears to be due to a combination of product design, careful pricing, and providing consumers with a sense of exclusivity. The latter point has been strengthened by the manner in which Tesla products are sold. While competitors’ electric vehicles are presently on display, Tesla requires customers to wait until the vehicle can be delivered.

Surplus inventory isn’t the best method to make something appear attractive. However, J.D. Power’s Tyson Jominy, vice president of data and analytics, recently told Automotive News that this is due to supply chain improvements. Because of how the globe handled the epidemic, supply networks were shattered, and everyone claimed that they would be unable to meet demand for years. This appears to be changing, with Jominy claiming that it is contributing to increased EV inventories.

“The story that demand for EVs is slowing is patently false,” he stated.

EV inventory statistics from Cox Automotive revealed a 103-day supply in June. However, Tesla models are not included because they are not based on the dealership model.

It’s not the only significant discrepancy in the data. As previously stated, there is a significant disparity between which electric models are popular, and this gap is reflected in supply.

According to Automotive News:

The number of days’ supply varies by model. Cox’s averages by model, for example, ranged from 23 days for the Chevrolet Bolt EUV to 181 days for the Nissan Ariya. According to Cox, most EV models have a supply of more than 100 days.

Is This Proof That No One Wants Electric Cars?
Is This Proof That No One Wants Electric Cars?

The standard days’ supply calculation, according to GM spokesperson Jim Cain, looks backward and can conceal what’s really going on in the market for a certain vehicle. To determine the days’ supply at the start of August, divide July’s month-end inventory by July’s sales, then multiply by the number of selling days in July. J.D.

Power’s approach differs slightly in that it always multiplies by 30 days instead of the number of selling days in a given month.
“If you have low sales, which is typical for new vehicles, and rising inventory, which is also typical for new vehicles, you get a high days’ supply number,” Cain explained.

“The reading may be even more misleading if a significant portion of that inventory is in transit to dealers and not for sale.”

Days’ supply data provide the greatest inventory story when the product is stable, according to Chris Harto, senior policy analyst at Consumer Reports. With EVs, some automakers are closing plants and dealing with production issues, while others have grown production in the United States beyond the level of demand.
“There are some issues… that are driving really significant conclusions from one point in time,” Harto explained.

There are also significant differences in where interest is coming from. Coastal metropolitan areas have the highest demand for all-electric automobiles in the United States. Rural areas are less interested because to poor charging infrastructure and low-income households. Driving ranges vary greatly at severe temperatures, therefore regions with very cold winters are unwilling to embrace electrification.

There are, of course, exceptions. Your author currently resides in the woods, where you’d expect to see a lot of pickup trucks and SUVs powered by gasoline. They are undeniably common. However, there are sufficient wealthy neighbors and surrounding cities to ensure above-average EV sales.

Even in California, where emission limits are stricter than the rest of the country and electric cars are far more popular, there is a noticeable drop in volume among dealerships located outside of major cities. The industry must understand regional demand as it strives to forecast overall demand for battery-powered vehicles.

“We are trying to strike a balance between having enough inventory and having enough demand,” said Sam Fiorani, vice president of vehicle forecasting at AutoForecast Solutions. “There will be points where one of them is ahead of the other.”

However, some of the optimism appears to be unfounded. EV sales may be steadily increasing in places like California, which has established a hard deadline for when all vehicles sold in the state must be electric. Other sections of the country, though, are not following suit.

While this may become immaterial when federal pollution requirements become EV mandates or fuel prices continue to break records, there is a segment of today’s purchasers who obviously aren’t interested.

Their motivations are diverse. Many people do not believe they will suit their lifestyle, some are concerned about serviceability, and some are skeptical of environmental promises when fresh information about the dangers of cobalt and lithium mining becomes available. There are also many who claim they simply don’t like the idea of EVs being forced upon them due to regulatory pressure.

Your author maintains regular contact with a number of individuals who spend their days selling autos. All of them have stated that selling all-electric vehicles this year will be tough. While some ascribed this to price differences, all of them agreed that there is a segment of consumers who are adamantly opposed to buying a car that is entirely reliant on battery power.

However, anecdotal evidence does not always explain why EV inventories outnumber liquid-fueled cars. It appears significantly more likely that it is a combination of everything we’ve discussed thus far. But it’s clear that legacy automakers haven’t solved the code for mainstream EV acceptance and may have gotten ahead of themselves.

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