The state of US EV sales: A temporary dip amidst growth opportunities

The first quarter of 2024 presented mixed performances for the US electric vehicle (EV) market, with a noticeable slowdown for some key players but robust growth for others. Despite a sluggish start to the year, marked by a flat sales trajectory, reduced expansion plans from Ford, and significant layoffs at Tesla, the broader EV landscape remains promising, particularly for those outside Tesla's shadow.
This image is a bar chart titled "EV Slowdown May Be Just a Blip for the US." It displays the historical and forecasted sales of fully electric cars in the US from late 2015 to late 2025. The chart uses green bars to represent trailing 12-month sales from 2015 to 2023, a black bar for the BNEF forecast for 2024, and a grey bar for the IEA forecast for 2025. The vertical axis shows sales volume, indicating a growth trend in electric vehicle sales, despite a noted slowdown, with future projections suggesting continued growth. The data sources are Bloomberg Green, IEA (STEPS), and BloombergNEF.
Source: Bloomberg

While Tesla and General Motors (GM) faced significant hurdles, with Tesla grappling with a lack of new models and GM discontinuing its popular Chevy Bolt, other automakers have thrived. Hyundai-Kia and Ford reported impressive year-on-year sales growth of 56% and 86%, respectively. This divergence underscores a broader industry trend: consumers are flocking to brands offering superior battery range, faster charging capabilities, and competitive pricing, leaving behind those that fall short.

Stephanie Valdez-Streaty, Director of Industry Insights at Cox Automotive, emphasised that the EV market is still in a growth phase, albeit at varying paces across different brands. “We’re still seeing growth in demand, just not at the same pace for every brand,” she noted, highlighting the active roles of Hyundai, BMW, Kia, and Cadillac in pushing the market forward.

Looking ahead, GM appears poised to drive substantial growth in the US EV market. Following delays in their Ultium battery rollout, GM is now set to introduce a suite of new models, including the $35,000 Equinox SUV, the Blazer, and the electric Silverado and GMC Sierra pickups, which promise up to 450 miles of range. GM CEO Mary Barra remains optimistic, forecasting the production of 200,000 to 300,000 Ultium-based EVs this year, a significant increase from the 5,800 Cadillac Lyrics sold in Q1.

In contrast, Tesla’s prospects remain uncertain. The company, which accounts for half of the US EV market, is heavily reliant on its Model 3 and Model Y for 95% of sales. Despite significant price cuts last year, Tesla’s growth stalled in the first quarter, with no new models on the immediate horizon apart from the high-end Cybertruck and a speculative Roadster supercar. The introduction of a self-driving “Cybercab” later this year adds to the intrigue, though questions about the readiness of the underlying technology persist.

Adding to Tesla’s challenges is the transition of its high-speed Supercharger network to accommodate non-Tesla vehicles. The move, coupled with layoffs within the Supercharger team, has created uncertainty about the future expansion and maintenance of this critical infrastructure.

Corey Cantor, an EV analyst at BloombergNEF, suggests that while Tesla’s difficulties might signal caution, other automakers should seize this moment to scale up production. “If they want to start taking market share, or even just perform at a high level, they need to start producing EVs at mass volume,” Cantor said.

Encouragingly, several automakers are rising to this challenge. Hyundai, GM, and Ford are on track to each sell over 100,000 EVs in the US this year, a significant milestone indicating that mass production is within reach. Moreover, new entrants like Stellantis, with its electric Jeeps and Ram pickups, and Honda, with its recently launched Acura ZDX and upcoming Ohio-based production hub, are set to diversify and strengthen the market further.

Despite the mixed signals from early 2024, long-term forecasts remain bullish. The International Energy Agency projects US sales of fully electric vehicles to reach 2.5 million by 2025, up from 1.1 million last year. Global EV sales are also expected to grow by 20% this year, reinforcing the sector’s sustained expansion.

The current slowdown in certain segments of the US EV market is more a temporary blip than an indicator of long-term stagnation. The industry continues to evolve, driven by innovation, new model launches, and increasing consumer acceptance, setting the stage for a dynamic and competitive future.

Source: Bloomberg

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