In August 2023, it took about twice as long to sell an EV in the U.S. as it did the previous January. Prices of EVs are down 22% year-over-year and that's mainly driven by Tesla. About two thirds of EVs sold are Elon Musk's brand. Companies like Ford have ramped up hybrid production as demand has leveled off. While slightly more than half of consumers say EVs are the future and will eventually replace Internal Combustion Engines, less than a third of dealers say so. This all comes at a time when investments in EVs are more than ever. So what's really going on? Watch the video to learn more.
Chapters:
00:00 — Introduction
02:06 — Shifting preferences
05:48 — High costs and uncertainty
10:38 — A trend of a blip?
14:08 — The future
Produced by: Robert Ferris
Edited by: Dain Evans
Camera by: Shawn Baldwin
Senior Managing Producer: Tala Hadavi
Animation: Christina Locopo, Andrea Schmitz
Additional Footage: Ford, Getty Images, Lucid, Mercedes-Benz, Tesla
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Why EVs Are Piling Up At Dealerships In The U.S.
I've been in the auto
industry 40 years, and I've never seen this kind of
investment. $6.5 billion strictly
dedicated to EVs. Wedbush says spending on
commercial EVs should top 1.2 trillion between now and
2030. We're building the future of
the electric vehicle. In 2022, consumers spent
nearly $400 billion on electric cars worldwide. The US is expected to add 1
million new EVs to its roads in 2023, and from 2023 to
2027. Automotive companies have
committed $616 billion in total investments. Mean
while, these efforts
have hit an unnerving speed bump. Ev sales are slowing. I was a little nervous about
going all EV because my husband has an EV as well,
and to have two EVs in the house, you know, it's
challenging. I think the main issue is
the long distance travel. We've been kind of in that
situation. You do have to plan. Yes. In August 2023, it took about
twice as long to sell an EV in the US as it did the
previous January. Gas burning vehicles were
still selling briskly. While slightly m
ore than half
of consumers say EVs are the future and will eventually
replace combustion engines, less than a third of dealers
say so. You have a product that
almost every automaker has hinged their future on. The government is really
saying, look, we got to go with electrification. But when the rubber meets
the road, when people have to make that decision and a lot
of money is involved, we're starting to see that that's
starting to take a bit of a hit. Tesla has slashed prices
dramatically. Sal
es at some EV startups
have disappointed, and companies like Ford have
ramped up hybrid production as demand for their EVs has
leveled off. So what is really going on
and why? And what does it mean for
the future? For those who are in
combustion, would you suggest taking the step as the
bridge, so to speak, to a p-hev, a plug in hybrid? Or do you think perhaps
going right over that to an electric vehicle? There is a oversupply of
electric vehicles in the industry today that is
greater than the d
emand. This is Jeff Aiosa. His shop is one of 383
Mercedes-Benz dealerships around the US. It pulls in about $40
million a year, employs about 50 people and at any given
time keeps about 70 cars on the lot. About a third are
EVs and hybrids. It's not that the customer is
not considering it or entertaining the purchase. It's the reticence to that
anxiety that exists relative to the range that the
battery can produce. And coupled with or
compounded by the lack of public charging
infrastructure. We
're perhaps moving a little bit too
fast. Cox automotive said in July
2023, on average, there's a 52 day supply of ICE
vehicles at dealerships. If they stopped making cars
today, a dealer would have enough to last 52 days. Pickup trucks went from 52
days to turn in January 2023 to just 57 by August. Meanwhile, the EV supply was
closer to 90 to 100 days. No segment has seen a rise
as substantial as EVs. There's definitely a rise in,
you know, how long a vehicle is going to sell a lot. It's just t
hat the EVs are
sitting even longer. And the fact that we're
seeing it reflected in the used car market as well,
that tells us this isn't just like an isolated incident. This is something that is
very targeted. Numbers elsewhere suggest
enthusiasm for EVs has dampened from a pandemic era
high in 2021. 86% of US buyers were
considering an EV. That number has since fallen
to 67% in 2023. In May 2021, Ford opened
reservations for its F-150 lightning, the fully
electric version of the most popular v
ehicle in America. It closed them by the end of
the year because the company said it had enough
reservations for three years worth of production. But by September 2023, Ford
said it was ramping up production of its hybrid
F-150 because sales of the lightning had slowed. We literally had people who
would follow car carriers to the store, hoping that when
it got here that the car on the carrier that they wanted
to buy was available, only to learn that it was already
sold. People are rushing to the
dealership. They're going bananas,
paying over mSRP. They're bidding. Wars are
going on. People are like, I hope that
guy doesn't buy it. If it falls off the truck,
I'll buy it kind of attitude. I mean, just completely by
the wayside. Now it's just been one year
and the market for EVs is upside down. The softening of sales isn't
just happening for legacy brands. The buzzed about
luxury EV brand lucid has seen two consecutive
quarters of weaker than expected demand. Most recently, it delivered
6
00 fewer of its high performance, 500 mile range
luxury air sedan than Wall Street had expected in the
second quarter of 2023. There are larger economic
challenges, interest rates are up and so borrowing
money is a lot more expensive. Inflation has
reduced purchasing power and supply chains are disrupted. The inflexible nature of the
EV supply chain is pressuring OEMs to make EVs despite
consumer pullbacks. Then there are the pressures
of meeting government mandates. Think of the lens of the
man
ufacturer, where it typically takes a cycle time
of upwards of 7 or 8 years, from inception to showroom
for and wheels rolling. Right. So that's a big ship
to turn. And then back to the
mandates, the regulatory pressures. When you have to
meet those, it's not like you can just throw a switch and
convert from combustion to electric. There is a specific pricing
challenge with EVs. They tend to be more
expensive than their gasoline counterparts. That may
explain why the luxury category hasn't slowe
d down
as much as EVs have. A luxury mid-size electric
crossover, say, will often have a higher transaction
price, or even a higher sticker price than a
comparable fuel burning one in the same class. The average transaction
price for a vehicle in the US was about $48,000 in
September 2023. The average transaction
price for an EV was somewhere between $53,000 and nearly
$60,000, depending on whose data you use. Meanwhile, the EV buyer is
changing. Drury says about 40% of EV
shoppers are trading i
n a vehicle they already own for
a new one. That is about twice what it
was a decade ago. That suggests that a lot of
those EVs purchased a decade ago were supplemental
vehicles. An extra car. Like if you had a two car
garage, you got a third. And part of that was because
those EVs, they qualified for lots of tax credits. You got HOV access lane. I know in Southern California
that was such a huge thing that vehicles with that
sticker they would sell at a premium. As a Mercedes dealer, Jeff
Iosa
still interacts with a lot of well-heeled
customers. Even he has seen evidence of this. The early adopters were very
techie and they were very, I want to say, more in the
space of luxury. Last year we had 30
something models in the marketplace to almost 90
plus models today. A more mainstream buyer. So these are the chargers for
fast charge charging and home charging. Aisa sells an EQB, a more
mainstream priced EV that retails somewhere in the
high $50,000 range. It's not cheap, but it's
only sl
ightly above the average vehicle transaction
price, and it's a lot less expensive than the EQE,
which can run above $90,000, and the EQS, which can run
up to 140,000. These vehicles won't be worth
nearly as much as, say, an ICE equivalent, which has
more certainty involved. You know, there's not going
to be leaps and bounds of technology and improvements
in ICE vehicles, but we know there will be with EVs. Batteries on average, are
warranted for ten years to give at least 80%
efficiency. That's
not the case with ICE
. ICE cars, everybody puts out
a good car today and they last well over 20 years. I think there's an evolving
sense of buyer remorse. You see this in televisions
where, you know, every 6 to 9 months, you feel like the
same 52 inch TV is cheaper at Best Buy or pick your
location for the same functionality. And, you
know, especially now that OEMs are lowering prices. At the end of the second
quarter 2023, several automakers announced that
they're moving to the Tesla charging
standard, also
known as the North American Charging Standard, or NACS. That means there are
vehicles stuck on factory floors with an obsolescent
charging outlet. Charging is a sore spot for
all types of buyers, whether current, past, or
prospective. This EV will allow you to
plot a course and determine and predetermine when you
arrive at different charging stations. Then there is the government. There's a fair amount of
feedback that we get from customers that say, you
know, we just don't like t
he government telling us what
we should buy. By 2032, 67.5% battery
electric is aggressive. I think by 2035, all
electric is aspirational. I don't think that that's
going to happen. EVs sitting on lots does not
necessarily equal waning demand. EVs made up a record
8% of US vehicle sales through early September
2023. If we looked at EVs as their
own segment, we took everything and put it
together. It'd be the number six segment in the industry. So it's not as if nobody
wants them. There's no dema
nd. However, there is a
tremendous degree of regional variation. While there have
always been regional stories in auto pickup trucks in
Texas, luxury cars in the northeast. EV adoption rates
pretty closely track to economic metrics: pump
prices, and home energy rates. If gas prices get up to close
to $6 like they are in most parts of California, we're
going to see a lot of consumers there shifting
toward toward EVs. Meanwhile, in Texas,
gasoline prices are almost $2 a gallon cheaper in Texas
tha
n they are in California. But there is another reason
why inventories have been building. Tesla, which
dominates the EV market, has been hacking away at its
prices. In August 2023, Cox
Automotive data showed the average price paid for an
electric vehicle was $53,376, down from $53,633 in July
2023, and down from more than $65,000 a year prior. Again, that decline is
driven almost entirely by Tesla. In August, model
three transaction prices were down 21% year over year,
while model S was down 17%
. Model Y dropped 16% and
model X was down 13%. At the beginning of 2023,
the model S was priced at $104,990, and the model X
was priced at $120,990. By September 15th, the price
was $79,990 for the X and $74,990 for the S. It's about two thirds of all
EVs sold are Tesla's because their prices are so
aggressive. So not only do we have fewer consumers looking
for an EV in Q2, we actually saw that those that were. It's very hard to get beyond
Tesla with their prices and certainly with their
superc
harger charger network to go buy an alternative. It's an unlevel playing field
when you have a manufacturer that sells in the space of
vertical integration direct to the consumer and not use
the franchise system, it gives some flexibility to
that direct seller to be able to adjust their pricing. And in the case of Tesla,
conveniently below the threshold so that you can
capture more of the incentive money from the government. Meanwhile, automakers are
releasing EVs that are often selling for abov
e $50,000. Ford hiked the starting
price on its F-150 Lightning in March of 2023 to $60,000,
a 50% increase over the original $40,000 starting
price. Ford has since cut that to
$49,000, but again, that is still $10,000 higher than
the automaker had originally planned. It's very expensive to bring
EVs to market, and a lot of cases, vehicles that were
announced at a certain price point a couple of years ago. The automaker has not been
able to hold those prices in this market, and so those
earlier
announced prices have have tended to creep higher. The picture that starts to
emerge. The EVs that are on the lots
don't match what consumers want and what dealers are
selling. Don't get rid of your
combustion car. I would like to see the
government reassess their regulatory pressures and
perhaps revisit the incentives through the IRA. Inventory is going to rise at
the same time that the auto industry continues to launch
more and more EVs at that $50,000 to $60,000 price
point, which is already
well saturated. There is demand
for EVs. It's just that their Teslas
and their a lot lower price than what we see. If perhaps we could hit the
rewind button and do things differently than we have. I would like to think that
maybe we would have slowed things down, maybe been more
in the space of hybrid as a bridge to a more perfected
battery technology. We have been in the space of
combustion ICE for over a century, so we have a lot of
experience with it. Battery electric is at
ground zero. We do
n't know. We don't
know, and we're still kind of cutting our teeth with it. Clearly, I believe that
we've moved a little bit too much and too fast. But there are reasons to be
optimistic. The S&P study showed that
people were willing to accept charging times of up to an
hour and less range on an EV than on an ICE vehicle. That's another shining light
for EVs. Is, again, this
understanding that they're not necessarily going to get
what they get with their typical ICE vehicle, but
they are actuall
y willing to accept something less than
what they're getting with their vehicle. And while the number of
buyers considering an EV did fall from 2021 to 2023, it
is still higher than it was in 2019. The analogy that I like to
use is we all have smartphones today, and most
of us had flip phones. And if I said to you, give
me your smartphone and I'm going to give you back a
flip phone, it would be like saying, give me your EV, I'm
going to give you back a combustion. And I would say
that 90 plus pe
rcent of the people, including myself,
would say, I'm good, I'm keeping my smartphone, I'm
keeping my electric car. You don't want to go
backwards.
Comments
A major obstacle to EV adoption that is always overlooked is the inability of apartment dwellers to charge at home.
According to AAA, EVs often lose 12% of their range in cold weather, but the loss leaps to 41% with the heater on full blast.
There's also a big disconnect between what these highly compensated CEOs think and what the average middle class buyer thinks when buying a vehicle. Even us upper-middle class folks don't want to spend $80k on a vehicle.
00:02 EV sales are slowing despite significant investments and government support. 01:58 There is an oversupply of electric vehicles in the industry today that is greater than the demand. 04:28 The market for EVs is facing slower sales and weaker demand 06:25 EVs tend to be more expensive than gasoline vehicles 08:23 EVs offer more certainty in technology and improvements compared to ICE vehicles 10:31 Regional variation and competitive pricing contribute to EV inventory buildup. 12:37 Tesla's aggressive pricing and supercharger network make it difficult for other EV manufacturers to compete. 14:43 EVs are piling up at U.S. dealerships due to lower prices and Tesla's dominance. You Can't Judge A Video By Its Cover. you can by its first few chapters and certainly by its last.
My neighbors Tesla gets horrible mileage during the deep freeze MN winter. Last winter when we had a couple weeks of single and low double digits, he said he was getting about 100 miles at most on a full charge.
The government isn’t fast enough to patch potholes on the roads. How could you expect to have enough charging stations.
Prices are too high, and dealerships keep adding more dealership fees. It's ridiculous. On top of that, interest rates don't help.
The problem is simple. When you are low on fuel,you stop and fill up. In your EV,serious planning is needed.
I recently graduated from university. When I moved, my parents gave me a 5-year-old gas car with 77k miles. I'm going to run that into the ground and hope that in that time battery and charging technology will have improved to where a bunch of these issues have been largely solved and made more affordable. Otherwise, I'll look for a hybrid of some sort.
I live in Texas and EV sales have never taken off. Most dealers don't even have EVs on their lots. Plus, until the price goes down there will be little to no demand in Texas. Texas isn't funding charging stations so if you have one your going to stay closed to home. Once you own one, you'll pay more to charge then buying fuel plus pulling over to charge is a lot longer then pulling over to fuel up.
What worries me Most about the EV is this longevity I want something I know I can depend on for 15 to 20 down the road when most EV only have a 10 year warranty on their batteries. That is a concern to me and the fact sometimes it’s very hard to find a charging station for EV for me. I live in an apartment building so there’s nowhere for me to charge it. I would love a hybrid that I would have the best of both worlds. I am not crazy about plug-in hybrid with Ford on a couple of their models. They only have a 25 mile driving range with a full charge to me. that’s just ridiculous. What’s the point of even doing it I want something that can do a lot better than that And the hybrid is where I look at.
I rented an EV. The biggest issue was anxiety about the range particularly if you’re traveling to a remote location. Lack of charging stations is still a real problem and obsolete ports is a real issue as well.
Im not fond of Tesla, but I do like the fact that they've been steadily slashing the prices of their vehicles, and that you can literally order one straight from your smartphone. No haggling, no excessive unnecessary markups, you don't have to stay there all day, etc... I think its time we allow all automakers to sell direct-to-consumer and cut the middle man.
The cost of battery degradation and replacement is a major issue. If you take care of a gas car, it will last you 250,000 miles or 20 years. The huge cost of battery replacement makes the owning of an old EV impractical, IMO.
They cost too much. New tech usually does not work that well and has a lot of issues. Why would a consumer buy the current EVs when Toyota is working on a solid-state battery that they say will have a 500-mile range and be able to recharge in about 10 minutes. Condos and apartment buildings are now banning lithium-ion E-Bikes due to fire risks. The insurance companies are demanding that E-Bikes be banned or they will not insure the building. How long before the insurance companies say the same about lithium-ion EVs?
We have the coldest winters in many years here in Scandinavia, some places they never have seen lower tempraturs in recorded history, and the EV's and yeah electric buses that we have struggles big time , the buses often take no charge at all. many EVs is also crazy expensive to repair.
An unknown factor for me is the potential COST OF REPAIRS and maintenence as well as LONGIVITY. Buyers if EV's are TAKING A BIG RISK.
A friend of mine pre ordered the lightning in Canada. 75k when he pre ordered, when they wanted to deliver 2 years later, it was 140k. That's why they are sitting at dealerships.
You cannot switch from Gas to EV. When I was in Washington state, I rented a car which was a Ford Fusion Hybrid. I was good on gas mileage, and I liked it. We stayed 7 days traveling up there and filled the tank once before we turned it in to the Avis rental.
We have an EV manufacturer just down the road from here in Casa Grande, AZ....they are piling up on the lots of the manufacturers as well. They have thousands of these things sitting in the AZ sun waiting for delivery...to someone...