Automakers from Tesla to Ford and Nissan are spreading their defenses either through hybrids, more affordable starting options, or price cuts to entice customers to buy in an increasingly volatile market. Permanent gains in electric vehicle (EV) sales are expected, but before that, there will be bumps and bruises.
“With few exceptions, all electric vehicles we monitor are moving slower than their ICE counterparts. Of the 36 battery-electric vehicles (BEVs) in our Retail Advertised Inventory database, only the GMC Hummer EV Truck, GMC Hummer EV SUV, and the Volvo XC40 have a ‘days advertised before sale’ that is lower than their brand’s average. A year ago, the majority of BEV models were selling faster than their ICE brethren,” Matt Trommer, associate director at S&P Global Mobility told Newsweek.
Despite that, with new models coming online in the first half of 2024, including expected high-volume players like the Chevrolet Equinox EV and Honda Prologue, electric vehicle sales, especially electric SUVs according to S&P Global, are still poised to grow.
Tesla cut prices on two versions of its popular Model Y by $2,000, both of which are eligible for the $7,500 EV tax credit, and Nissan said it would cut EV production costs by nearly a third and pass the savings on to customers with its 16 upcoming electric vehicles by 2030.
General Motors
“In general, total US monthly volumes, including all types of powertrains, are expected to be volatile over the next several months. High interest rates, still high new vehicle pricing levels are translating to an overall high vehicle cost environment for anybody in the market for a new car,” Chris Hopson, principal analyst at S&P Global Mobility told Newsweek.
“Sales of EVs are subject to the same dynamics, and if anything could be subject to even higher affordability headwinds given the higher average prices on electric vehicles.”
Tesla cutting prices, not only on the Model Y but across the board, is a sign the company Musk built is trying to retain its decade of dominance as more competitors come online.
“Tesla accounted for 71 percent of total U.S. BEV sales in 2021, 64 percent in 2022 and 56 percent in 2023. While new competition is helping move overall BEV volumes, Tesla remains the dominant force in the US market, and therefore Tesla results will very much determine ‘EV sector’ performance in any given month,” said Hopson.
“BEV share is expected to advance over the next several periods though, supported by the pending the launches of vehicles such as the Equinox EV, Prologue and Fiat 500e, all scheduled for market introductions over the first half of 2024, as well as advancing Tesla Model 3 and Cybertruck sales.”
Hybrid Vehicles Appeal to Many Buyers
Hybrid vehicles make sense for most North American new car buyers. They reduce emissions into the atmosphere, lessen the cost at the gas pump, and deliver the same, if not better performance then their strictly gasoline-powered counterparts. In recent years, the cost of electrified vehicles has come into line with those with internal combustion engines. That, paired with additional customer and dealership education, is a winning combination for buyers and the environment.
So far in 2024, the best-selling EVs are mostly as expected, though the Rivian R1S electric SUV stepped into fourth place above the Ford F-150 Lighting, Hyundai Ioniq 5 and Volkswagen ID.4, which all hold their place in the top ten. The top three in order, Tesla Model Y, Model 3 and Ford Mustang Mach-E, have held their positions for several quarters in a row. The Y and 3 together still accounted for 44.7 percent of total EV market share, even as the company’s influence shrinks.
The current top hybrids are the ones that have been around for a while, and the companies selling more hybrids are doing better overall. In the first quarter of 2024 Toyota sales are up 21.3 percent, Lexus is up 15 percent and Honda is up 20.9 percent. The Honda CR-V is up almost 20 percent, with hybrids responsible for about half that gain. Toyota Camry Hybrids sales are up 143 percent.
“As automakers quickly recalibrate EV rollouts to match market demand, those already heavily invested in hybrids benefit the most as consumer awareness grows. EVs are still too expensive compared to internal combustion equivalents, and that’s reflected in the market with slowing EV sales, growing inventories, and rising incentives,” Paul Waatti, director of industry analysis for AutoPacific told Newsweek.
“Hybrids, especially plug-ins, present a compelling proposition for consumers to venture into electrification and enjoy some advantages. In the near future, Toyota, Hyundai, Kia, Honda, and Jeep will further establish their presence by offering practical hybrid alternatives, effectively bridging a significant gap in the market.”
Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.