Is The Current U.S. EV Market Speeding Toward A Sales Plateau?
In July, an auto industry analyst claimed that current EV market growth “cannot be sustained.” He surmised that the shift from EV “early adopters” to the vast pool of regular customers is nothing less than a landmark change — and the timeline is difficult to predict. But here’s the state of the EV market in the U.S. today: the current cap for even accelerated EV growth is estimated at 7% of the market. That’s actually a big piece of the pie, considering the lack of infrastructure and price considerations.
Is seven percent the cap? Is it.9%? How long will it take to convert just 50% — think of it, half! — of gas over to electric.When will the average car buyer thing of electric first — and exclusively — over a gas car? Most rational folks would say that it’ll take a while. Maybe quite a while. Automakers still produce (and heavily advertise) vehicles powered by (highly efficient) internal combustion engines. And now, concern is mounting about the potential dangers of cobalt, lithium and others.
The Emergence of the EV.
“Plug-ins” only accounted for a bit more than 1% of the market for year — as options were limited and adoption was slow. Then came 2020, the year that saw a manic industry — flooding the market with new electric models. With Tesla as the lead dog, came improvements to charging infrastructure, a push to educate customers on EV vehicles.
In 2022, EV sales in the U.S. were at 6% of all vehicle sales last year — a record — and this year, in June alone EV sales ballooned to nearly 9% of sales to individual customers for that month alone, according to JD Power.
EV Makers Announce Big Production Plans
So far, EV sales have grown quickly, and that growth has inspired some lofty goals for the future of all-electrics. Tesla says it will produce two million vehicles in 2023, and Ford stated that its plans include the production of 600,000 electric vehicles in 2023, while GM is planning to produce somewhere around 150,000 vehicles.
Is The “Early Adopter” Stage Over?
Given the relative quick spin-up of the EV industry, will it equally as quickly reach the limit of enthusiastic early adopters? Many analysts suggest that the plateau for the “early adopter” segment is coming. “The spectacular growth we’ve seen over the last few years cannot be sustained. It’s just not possible,” said Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions. “The further up this growth curve we go, the harder it’s going to be to get to the next level.”
The new ‘Wild West’ of the EV market
So who are the current 90% who drive gas cars and just how long before they buy an electric car?
As with any new technology, and willingly — early adopters know that they most will likely suffer the usual issues of ownership and quality issues, to more average and practical car-buyers will be the next big growing pain for the industry, analysts say. It will be nearly impossible for companies to anticipate demand over the next several years as this new cohort of EV buyers enters the market.
“This is the closest to the Wild West this industry has seen since the 20s,” Fiorani said.
With a lower barrier to entry for EVs and a slew of new competitors in the segment, the avalanche of new plug-in cars has led to a pileup at dealerships. In June, there were double the amount of EVs compared to gas cars on dealer lots.
The states with the biggest share of electric vehicle sales are also the slowest to grow sales at the moment, according to a recent study from iSeeCars. California, Oregon, and Washington – where EV sales account for between about 7% and 10% of the market – are currently among the slowest-adopting states, the study found.
“There seems to be this natural resistance somewhere between 7% and 10% of market share in a given state,” said iSeeCars analyst Karl Brauer. “That seems to be the cap, and then it gets much harder to grow it further.”
