Americans are being bombarded by two conflicting messages about electric vehicles: They’re booming. But they’re also piling up on dealer lots because no one wants them.
Both things happen to be true, just as the next election is poised to be the first to spotlight EVs as a campaign issue.
The U.S. market for EVs is growing, just not at the blistering pace it was a few months ago. Americans shattered records in November by buying a million electric cars in a single year for the first time, according to the National Automobile Dealers Association.
At the same time, certain high-profile EVs are slow to sell, including Ford Motor’s Lightning F-150, whose production targets last week were slashed in half.
“The answer to every question is ‘yes,’ followed by the word ‘but,’” said Alan Baum, an independent auto analyst in Detroit about the current state of EVs.
Democrats say President Joe Biden’s aggressive support for EVs will be an economic and environmental boon, while some Republicans call it a heavy-handed government boondoggle that benefits the elite. The next few months may cement whether many voters make a direct connection between the new cars and the politics around them — with implications for Biden’s allies in the U.S. auto sector and the president’s broader climate goals.
“Here’s the problem with an electric car … they don’t go far, they cost a fortune,” former President Donald Trump told rallygoers in Ankeny, Iowa, earlier this month. “Unless you want to go to the local store or something, you’re not going to buy it.”
What is clear is that the EV, after a slow 15-year drive to mass-market adoption, has turned onto an unfamiliar road. The wealthier early adopters now have the EVs they want, while more modest buyers continue to tiptoe into the market. This legion of curious shoppers still has doubts about the availability of chargers, the range of vehicles within their budget and whether the models rolling out fit their needs.
Next year, U.S. drivers could get access to a bevy of more affordable new EVs, along with a rapidly growing number of charging stations. Some of those vehicles will be eligible for at least part of a new $7,500 tax credit.
They’ll also be choosing a president and a new Congress, including in many districts where hopes for economic growth rely on new battery and EV manufacturing plants. The market’s jitters raise doubts about whether EVs will grow as projected or meet Biden’s goals for cutting carbon pollution from the transportation sector.
If the White House were to flip political parties, there could be attempts to slow-walk EV incentives and reverse Biden’s emissions regulations that were designed to work with them hand-in-hand.
Trump’s message resonates with congressional Republicans and others who oppose the Biden administration’s transportation rules. Earlier this month, the House passed a bill with some Democratic support to block a proposed tailpipe rule by EPA that would in effect require 67 percent of new cars to be electric by 2032.
Meanwhile, the Biden administration has vigorously pushed back on the idea of an EV downturn.
The Energy Department issued a statement in November “correcting the record about electric vehicle sales,” while White House national climate adviser Ali Zaidi touted the year-over-year sales growth and high customer satisfaction with EVs on a recent call with reporters.
“No matter how you measure it, the trend here is secular. It’s sustained. Frankly, it’s accelerating, thanks to President Biden’s leadership,” Zaidi said.
Biden’s reelection campaign, too, is weighing in. Seth Schuster, a campaign spokesperson, said in a statement that Trump “doesn’t care about the facts or consequences” around EVs.
“President Biden is bringing auto manufacturing back to the United States in a way that Republicans could only dream of doing,” Schuster said. “Returning to Trump’s failed agenda would ship manufacturing jobs overseas and allow China to beat the U.S. in the EV race.”
Dueling data
Despite passing the million-EV mark this year, the strongest growth was seven months ago, when sales in May were almost 77 percent higher than May 2022, according to data from Argonne National Laboratory. By November, that monthly comparison had dropped to 27 percent.
“Most industries would be very happy with this kind of growth rate,” said Colin McKerracher, a transportation analyst at BloombergNEF, in a market update.
Much of the political debate ignited in August, when Cox Automotive, a conglomerate that collects car sales data, reported that EVs were spending 98 days on dealer lots, compared to 58 days for internal combustion engine vehicles. Although those figures don’t account for the best-selling EVs — Teslas — which bypass the dealers and sell directly to consumers, the gap for dealers has only widened since the summer. In November, traditional cars stayed for 70 days and EVs 117 days.
As the initial figures began to land, Republican presidential candidates were already expressing opposition to Biden’s efforts to push EVs. The cars-stacking-up-on-dealer-lots data quickly became a leading talking point.
“We’re going to mandate to [the auto industry] a product that they can’t sell,” GOP Rep. Lisa McClain, who represents a district outside Detroit, said in an interview. “You try and mandate to the auto companies to sell a product that nobody wants to buy, that takes fewer jobs … that’s not going to sell real well.”
McClain said she has spoken with Trump about how to leverage the federal rules in the presidential campaign.
“In my district, which is heavily auto manufacturing, this is not playing well,” she said. “And let’s be honest, Michigan is a very influential state for the upcoming election.”
Some of the most “American” of EVs — those produced and once highly publicized by U.S. automakers — are selling the worst. And analysts aren’t sure why.
According to data from industry analysis group WardsAuto and provided by the National Automobile Dealers Association, the Mustang Mach-E — Ford’s signature EV crossover — lingered on the dealer lot for 141 days over the period from the start of 2022 through November. The Cadillac Lyriq, a high-profile early EV by General Motors, spent 176 days.
Congressional Democrats say the recent slowdown in the growth rate is insignificant — a blip on a larger trend line that signals Americans are buying more and more EVs. With every passing year, the argument goes, the swelling electric fleet will lower the country’s carbon emissions and validate the industry’s investment in the EV supply chain while continuing to drive prices down.
“I just don’t think that the [negative] narrative and the data are aligned whatsoever,” Sen. Martin Heinrich (D-N.M.) said in an interview.
Many EV policy experts say they also aren’t alarmed.
Despite lagging EV sales from domestic heavyweights like Ford and GM, there are other vehicles — like those made by Hyundai Motor, Rivian Automotive, BMW and Mercedes Benz — that are selling well, according to data from global data analytics firm Experian. Hyundai’s Ioniq 5 has sped off the lot in 60 days, according to the WardsAuto data.
“I would not confuse the struggles of individual automakers with the status of the EV market in general,” said Tony Dutzik, a policy analyst at Frontier Group, a think tank focused on environmental issues.
Wrong assumptions
In a way, automakers have themselves to blame for sky-high expectations about what market miracles the EV could perform.
The reasons trace back to the Covid-19 pandemic and the ensuing supply chain chaos.
Consumers, aching to replace their aging cars after pandemic lockdowns, bought EVs in record numbers, making it difficult for automakers to keep up. Dealers sold the cars at significant markups, and demand for EVs seemed unlimited, prompting leading automakers like GM and Ford to set bold production schedules.
As recently as March, Ford said it would triple production of the electric F-150, aiming to make 3,200 of them a week. Two weeks ago, Ford slashed that plan in half, now aiming for 1,600 a week because of “changing market demand.”
“The assumptions they made during Covid is not what happened after Covid,” Arun Kumar, a managing director at the consultancy AlixPartners, said.
As inflation soared, the prices of EVs, already more expensive than traditional cars, became out of reach for most consumers. High interest rates made auto loans prohibitively expensive. The pandemic also exposed that there’s a limited number of car buyers who are ready to pay $50,000 or more for a new kind of car.
“As you move past the early adopters, you move into the early majority. The early majority are people still on the fence, are deciding whether they should buy or not, and if it’s cost-competitive or not,” Kumar said.
In 2021, 86 percent of surveyed consumers wanted to buy an EV, according to an S&P Global survey. That figure declined to 67 percent in May of this year. People cited price as the main turnoff, beating out anxieties about the limited range of the EVs battery and the availability of charging stations.
The White House portrays these wavering numbers as a squiggle in a longer arc.
“When you are in an early process, feeling out what the demand looks like, there’s going to be an occasional overshoot and undershoot as people figure out exactly how to calibrate to meet their customers where they are, but I do think there was a overtorque response to [the summer inventory data],” a senior White House official said on background to discuss the matter frankly.
The 2024 factor
A crucial question going into 2024 is what happens to EV demand?
A lot of vehicles expected to hit dealer lots next year will offer new choices and perhaps lower prices. For example, the Chevy Equinox EV, a small and strong-selling crossover, is coming out at a base price of $35,000. Meanwhile, bigger, three-row family movers like the Volkswagen ID. Buzz and the Kia EV9 are also on the way.
“That’s hitting a market niche that American drivers like,” Baum, the Detroit-based independent auto analyst, said.
The administration’s backers say Biden should stand by the billions of dollars in spending he has injected into building a domestic EV supply chain, while letting automakers contend with selling the vehicles.
“When you build these factories in places that want the jobs, that’s what people are gonna remember two, three, five years from now,” Heinrich said. “The EVs will sell themselves, so long as we’re doing our job as a nation to make sure that we’re not just buying EVs from someplace else.”
Reporter Kelsey Tamborrino contributed.
