The US EV market achieved a major milestone in the electric transition in 2023: Nearly 1 million battery-electric vehicles were sold in a 12-month period for the first time ever, according to BloombergNEF, and sales grew at a robust clip.
But it’s not all up and to the right: Sales didn’t climb quite as much as some automakers had expected, prompting re-evaluations of the timing and scope of investments, EVs piling up on dealer lots, and headline after headline about slumping demand.
Tesla might delay a $1 billion manufacturing investment in Mexico; GM pumped the brakes on some of its planned EV truck production; and Ford paused $12 billion in EV factory investments, including one of its EV battery plants, and slashed production of its electric F-150 Lightning, among other signals that manufacturers are re-evaluating their EV plans.
“There were some real hopeful assumptions that the market was just gonna go in a real nice straight line and there would be no bumps along the path,” Kevin Roberts, director of industry insights and analytics at CarGurus, told Tech Brew. “What we’re seeing now is that early adopters have adopted, but trying to get to that mainstream consumer is gonna be difficult in a higher-interest-rate environment with the price premium that currently exists out there.”
To that point: An EV selling at the average listing price would cost a buyer $277 more per month compared to an internal combustion engine (ICE) vehicle, assuming they took out a 60-month loan at an 8% interest rate, CarGurus recently calculated.
And as demand started to ebb, inventories began stacking up. EVs are sitting on dealer lots, on average, nine days longer than ICE vehicles, according to CarGurus, and EV inventory levels climbed more than 500% year over year in October.
Keep up with the innovative tech transforming business
Tech Brew keeps business leaders up-to-date on the latest innovations, automation advances, policy shifts, and more, so they can make informed decisions about tech.
It’s likely to be a similar story in 2024, though with some notable wild cards in the mix, namely, the presidential election and the Fed’s moves on interest rates.
CarGurus forecasts YoY EV sales growth of 42% in 2024—lower than 2023’s rate (about 50%) but still a significant number. And Edmunds analysts expect EV market share to rise to 8% of total new vehicle sales, up from 6.9% through November 2023.
“It’s still coming, it’s just maybe at a slower pace, a more conservative pace” Jessica Caldwell, head of insights at Edmunds, told Tech Brew.
Enter hybrids, an increasingly popular option for consumers looking for a greener vehicle, minus the range concerns and steep price premium.
Hybrid market share grew 99% from 2022 to November 2023, per Edmunds data, compared to a 25% increase for EVs. Edmunds data also suggests that hybrids are selling faster and with fewer discounts than their gas and electric counterparts.
Industry experts told Tech Brew they expect hybrids to become an even more attractive choice for buyers in 2024.
“Most of the industry’s focus remains on EVs. But hybrids are potentially a good Goldilocks scenario to get us toward a cleaner tech future,” Roberts said. And Caldwell mentioned a 2023 survey Edmunds conducted that found respondents were excited about EVs, but more comfortable buying a hybrid for their next car purchase, before going fully electric.
“That seems to be a nice compromise for most people,” Scott Kunes, COO of Kunes Auto and RV Group, told Tech Brew. “It still gives some EV range, especially the plug-in hybrids. But also they have the fallback of the gas-powered motor.”