EV Sales: Manufacturers Brace for a Plateau
Electric vehicle adoption appears to have found a ceiling. For years, the EV market segment has fluctuated within a relatively small window of rapid year-on-year growth. Industry analysts believe that the 7% market share average might be unsustainable.
EV sales must bridge the gap between early adopters to regular customers, a transition heavily impacted by the state of EV charging infrastructure.
EV Sales By-the-Numbers
For nearly a decade, EV sales accounted for approximately 1% of the total market. That changed in 2020, when a mix of factors caused a spike in adoption. Pandemic-related stimulus, a slew of new EV models from several manufacturers, and substantial improvements to EV charging infrastructure drove EV purchases to new heights.
By 2022, roughly 6% of all vehicle sales were EVs, a number that is expected to reach 8-9% in 2023.
Supply Is Growing…
Increased consumer demand has pushed manufacturers to realign production schedules. Ford committed to building 600,000 EVs in 2023, with GM planning to roll 15,000 EVs off their production lines. Tesla isn’t likely to meet its lofty goal of 2 million vehicles this year, but it’s a sign of the brand’s confidence that the market has plenty of runway.
…But Demand May Not Match
To be clear, EVs are certainly the future of automotive sales. Emissions standards are becoming more strict every year, and the Biden administration set a goal of 50% EV sales for all passenger and light truck sales by 2023.
But the rate of adoption faces many hurdles. Early adopters are more willing to live with the quirks of new ownership and to overcome problems like inconsistent access to chargers or having to install charging stations at home or at local businesses.
Broader economic factors will also play a role, especially in the near term. The expected “higher for longer” interest rate environment, paired with tightened lending standards, will make credit access difficult. And most buyers will need credit; even as new EV prices dropped by almost 20% from their peak of $66,390, new vehicles are still $52,000 or more in most cases.
Lowering EV Adoption Barriers
Manufacturers appear to acknowledge the realities of the market. In 2023, Ford and GM moved to the North American Charging Standard, the EV charging design first introduced by Tesla. That may accelerate (and ultimately protect) EV charging network construction, which is the carrot that lures market segment growth. Watch for more creative financial options to mitigate tight credit conditions and increased competition in the used EV market.
Build Your Network with Keen
Keen Technical Solutions supports Midwest businesses making the move to EVs. From fleet solutions to commercial charging stations, we can source, install, and analyze your EV charging needs. Learn more about our work and lay the foundation of your organization’s energy environment wit