No, the electric vehicle market isn’t crashing. It just needs recharging. | CNN Business (2024)

No, the electric vehicle market isn’t crashing. It just needs recharging. | CNN Business (1)

A car charges at a charging station in Lower Saxony, Germany's largest charging park for electric cars. Photo: Lars Penning/dpa (Photo by Lars Penning/picture alliance via Getty Images)

New York CNN

When pondering what’s really happening with the auto industry’s shift to electric vehicles, it’s important to remember that two things – two very different things – can be true at the same time.

The first is that electric vehicle sales are continuing to rise, and will reach record levels this year. The second is the rate of EV sales growth is slowing, at least temporarily. That means those record highs won’t be as high as they would have been had sales growth continued at the same high rate as it had in, say, 2023. The EV market is not collapsing, experts say, it’s just entering a new phase.

Worldwide sales of plug-in vehicles will rise a little more than 20% this year compared to last year, according to a recent report from the International Energy Agency. That’s a significant rise but still less than the 35% global increase between 2022 and 2023.

For now, the demands of well-off, tech-savvy “early adopters,” the sort of customers who bolstered Tesla’s rise, have largely been sated. The EV industry is now in the difficult phase of “crossing the chasm” from early adopters to mass market consumers.

“The consumers who could be potentially interested in buying one in the first place, they are more likely to have already bought an EV themselves,” said Coco Zhang, an analyst with ING, in an interview with CNN. “So now, the challenge comes to unlocking the second wave of consumer adoption in those advanced economies.”

New customers, those who just want a good car and don’t care so much how it’s powered, are clearly demanding more affordable EVs. Automakers now have to find ways to please those customers, while not putting themselves out of business in the process.

Tesla’s role in slowdown

Tesla itself is a major reason for the slow-down in EVs, especially in the US. Teslas still make up slightly more than half of all the electric vehicles sold in America, according to a report from Cox Automotive. But, just one year ago, Tesla produced more than 60% of all the EVs sold America. In the first quarter of this year, Tesla sold fewer EVs in America than it did during the same quarter a year earlier, taking its share of the EV market down to around 50%.

And it has slashed prices to try staunch the losses.

At the same time, though, a number of long-established automakers grew their own electric car sales by 50% or more in the first quarter of this year in the US compared to the same quarter last year, according to Cox.

Ford, for one, was the second biggest seller of EVs in the US last year, after Tesla. Lowering the price of the popular Mustang Mach-E just 17% helped Ford more than double sales of that model.

But Ford itself ended up paying a big price. Ford’s electric vehicle endeavor is still producing big losses, and cutting prices certainly doesn’t help raise profits. Ford will postpone future electric products, as a result, while its engineers work on cheaper EV designs that it can make profitably at the lower prices customers want.

If Ford waits too long, though, its neighbor and rival, General Motors, could gain a healthy head start. After having trouble cranking up production of its new generation of electric vehicles, GM seems to be accelerating. The Cadillac Lyriq is selling well – first quarter sales this year up more than 50% as it outsold European luxury EVs – and production has restarted for the Blazer EV after an earlier stoppage. The less expensive Equinox EV is about to hit the market, too.

The China problem

Of course, one country, China, is making products that could meet the demand for affordable EVs. But automakers in both Europe and the United States - the other two parts of the world with substantial EV markets - are wary of what an influx of Chinese EVs could do to their own industries. Chinese-made EVs are expected to account for 25% of all electric vehicles sold in Europe this year, according to the European Federation for Transport and Environment. Chinese-made EVs are entering the US market, too, through brands like Polestar and Volvo, owned by China’s Geely.

The Inflation Reduction Act, which provides tax breaks for EV buyers in the US, is geared to support domestic production of electric vehicles and, specifically, steer automakers away from vehicles and even EV components made in China. The tax credits are reduced, or could even be eliminated, based on where EVs and their battery packs and other parts are produced.

Meanwhile, in China itself, the battle for customers has become a brutal melee. Even with a market so vast – nearly 10 million EVs are expected to be sold in China this year – there are simply too many EV manufacturers competing to survive. In just the past year, more than a dozen have gone down, according to statistics from the China Passenger Car Association. The consolidation and bankruptcy process is expected to continue.

It will happen in the American market, too, although on a smaller scale.

If you study technology disruptions and transitions, this is to be expected, this is the playbook,” said Michael Lenox, a professor of business administration at the University of Virginia who studies the EV industry. “This is exactly what you expect to happen, a massive entry and a shakeout associated with it. Some of the legacy companies will fail, some of the entrepreneurial companies will succeed, though many of the startup companies will fail as well.”

Growth on the horizon

Sales and market demand could start to look better next year for a couple of reasons, said Corey Cantor, an industry analyst with Bloomberg New Energy Finance. For one thing, governments in Europe have started paring back some incentives this year but emissions regulations will become somewhat stricter next year. Similar dynamics are emerging in the US market.

Automakers may want to push some of their EV sales into next year when they could use them to push down their average fuel economy numbers to meet those stricter standards, Cantor said.

And the industry-wide shift to the Tesla charging standard will simplify some of the hurdles to EV adoption, including a lack of chargers and the needless complexity of charging, Cantor said.

Most importantly, a number of new models, including more affordable vehicles, will arrive later this year or next year. Vehicles like a new Chevrolet Bolt EV and an electric Dodge Charger could inject some new excitement.

“If you look at automakers, where they’re planning their kind of big EV bumps, or new EV models, a lot of it’s in ’25,” Cantor said.

No, the electric vehicle market isn’t crashing. It just needs recharging. | CNN Business (2024)


Why aren t more people buying electric cars? ›

EVs Are Too Expensive

EVs tend to have higher upfront prices than similar gas-powered cars. However, electric cars aren't necessarily more expensive to own over time. Moreover, all cars are much more expensive now than they once were. Read More: How Much Do Electric Cars Cost?

Why no one wants electric cars? ›

The most obvious reason for consumer disenchantment is the hassle of charging EVs. Few drivers are willing to plan their lives around finding a charging station and waiting around for their battery to top up. During the nation's recent Arctic blast, motorists found that getting a full charge took even longer.

How will the poor buy electric cars? ›

California has spent more than $400m on various incentive programs to help lower-income drivers purchase zero-emission vehicles. There is the CC4A program, which offers up to $9,500 toward a down payment for an electric vehicle if the applicant turns in a vehicle older than a 2005 model.

What is the biggest problem with electric cars? ›

One key disadvantage of electric cars is the battery life. Like all batteries, the capacity decreases over time. Researchers suggest battery capacity decreases by approximately 2.3% every year. Battery longevity is highly dependent on temperature.

Why are EV cars not selling? ›

Firstly, and most importantly, EVs are expensive. An EV's average price in the U.S. for 2023 was around $60,000. Even as the variety of EV models available rises and prices fall, and the U.S. brings in tax credits, EVs remain much more expensive than their gasoline-powered counterparts.

Why electric cars won't save us? ›

While producing an electric car, you still end up emitting greenhouse gases into the air. The resources required to build a sustainable and efficient system for electric transportation are way too costly, especially for smaller countries or emerging countries.

Is the EV industry in trouble? ›

Right now EV sales growth is slowing at a time when rapid expansion is needed to reach climate goals. Across the U.S., EV sale rose only 2.6% year over year for the first quarter of 2024, while EV market share against gasoline cars declined, to 7.3%, from 2023's 7.6% record high, according to Kelley Blue Book.

Why are gas cars better than electric cars? ›

Gas cars are cheaper compared to fuel than electric cars. Electricity is usually more expensive than gasoline, which means that it will cost you more per mile, so gas-powered cars offer better value for money in the long run.

Why are electric cars bad for the environment? ›

It found that EVs are 30 percent heavier on average than gas-powered vehicles, which causes the brakes and tire treads to wear out faster than standard cars and releases tiny, often toxic particles into the atmosphere.

Who profits the most from electric cars? ›

While non-union electric vehicle maker Tesla is the most profitable US automaker, it was losing money until 2019. At that point Tesla was making as few EVs as the legacy automakers, such as Stellantis, Ford and GM, are now manufacturing as they move towards a pure EV lineup.

How will low income people afford electric cars? ›

The revamped program will give people statewide who meet the income requirements up to $12,000 to scrap and replace their older gas-powered cars with cleaner alternatives. Those not getting rid of an older car can qualify for up to $7,500 in purchase grants.

Will electric cars ever become affordable? ›

While this is a complicated question that has befuddled car shoppers for years, in most cases, an EV will indeed be cheaper in the long run. And with automakers slashing prices for EVs in the past year on top of federal incentives for eligible buyers, you may even be able to score a bargain up front.

Why are so many EV charging stations broken? ›

They blame — with some justification — supply chain problems, software bugs, vandalism and more. Both Electrify America and ChargePoint say they're investing in operations centers, hiring more maintenance workers and installing new chargers that they hope will prove more dependable.

What would happen if everyone switched to electric cars? ›

Technically, we found that the switch to electric cars would save 14% from the total carbon emissions. However it would also cause an increase in carbon emissions from electricity power stations equivalent to about 2% of total national emissions (assuming current mix of fossil and renewable energy sources).

How Long Will electric cars last? ›

Plan on a service life of between eight and 12 years if your EV is regularly used in more extreme conditions. As of 2023, the average age of all passenger vehicles in the U.S. is currently 12 and a half years old. Your EV's battery health might never even come under consideration.

Why are EV sales declining? ›

More competition and flagging demand for electric vehicles has led to declining sales at Tesla. As sales of Teslas drop and demand for electric vehicles cools — even as more models enter the market — an increasing number of automakers are competing for a slice of a shrinking pie.

Why are electric vehicles a problem now? ›

The current report included data on more than 330,000 vehicles made between 2000 to 2023, with a few reports about new 2024 models. EV owners most frequently reported troubles with battery and charging systems, as well as flaws in how the vehicles' body panels and interior parts fit together.

Is demand for electric cars decreasing? ›

The EV industry in the U.S. has experienced a significant slowdown in growth during the last year, highlighted by changes in go-to-market strategies and capital deployment plans for major automakers.

Are Americans falling out of love with EVs? ›

The Wall Street Journal gave a November feature the provocative headline “Are Americans Falling Out of Love With EVs?” but quickly wrote in the story that, actually, “the jury is out”; that didn't stop their editorial board from issuing an opinion this month that claimed “Americans don't like the product.” Elsewhere in ...


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