The year began with high hopes for the transition from fossil fuel-burning vehicles to battery-powered ones.
Nine months later, the electric vehicle market is in a much different position.
“The expectation going into this year was that this might be the year EVs really hit that next evolutionary level. And it hasn’t happened,” Kevin Roberts, director of industry insights and analytics at CarGurus, told Tech Brew. “This year, sales are still up. They’re just not up as much as had been anticipated, and that’s where the narrative around EVs has shifted.”
Instead of being the year EVs went mainstream, 2024 is shaping up to be the year of the EV retreat.
Hype meets reality
A record 1.2 million EVs were sold in the US last year, and battery-powered vehicles captured 7.6% of the new-vehicle market, per Kelley Blue Book (KBB).
Back in January, Tech Brew reported that EV sales were expected to grow this year, but at a slower pace than in 2023. But the tempo has turned out to be much slower than expected.
CarGurus previously estimated that EV sales would grow 42% in 2024. But when we checked back in with Roberts this month, he told us his team is now forecasting 11% YoY growth.
Indeed, US EV sales rose 11.3% YoY in Q2, according to KBB. And in Q2, Tesla’s US market share fell below 50% for the first time.
So, what’s changed? Roberts pointed to overall sales volumes being lower than expected, as well as an anticipated “significant jump in EV demand” not materializing. Amid high interest rates and continued inflation, and as consumers remain concerned about EVs’ higher price tags and about battery range and charging, EV adoption simply hasn’t taken off this year the way many thought it would.
Instead, a new trend has emerged: a surge in hybrid vehicle sales, which are up more than 30% YoY.
“What you’re seeing with the large increase in adoption of hybrids this year is there’s mainstream interest in more fuel economy,” Roberts said.
Policy plays a role
Speaking of fuel economy: 2024 has brought several major federal policy developments on the EV front.
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The Biden administration this year introduced new tailpipe emissions rules that would have EVs make up as much as 56% of new light-duty vehicle sales by 2032. And in June, the administration unveiled stricter vehicle fuel mileage standards.
The fate of the current administration’s transportation and climate policies remains an open—and closely watched—question ahead of the presidential election, as EVs have become a major talking point on the campaign trail.
The administration also has been releasing funding from the Bipartisan Infrastructure Law to support the buildout of EV charging infrastructure across the country. There are now over 192,000 publicly available charge points, according to the Department of Energy. The administration’s goal is to install 500,000 by 2030.
That’s an important effort, as charging-related concerns remain one of the biggest barriers to EV adoption.
Automakers pivot
In the meantime, many automakers have been walking back their once ambitious electrification plans.
Ford, for example, recently announced plans to retreat on some of its EV plans as it leans heavily into hybrids. Some experts have told Tech Brew that the delays are happening because automakers overestimated demand and now, as they struggle to make profits on electric models, they’re adjusting their plans.
“It was a lot of planning for years and a lot of pledges that we’re going to be all-electric by 2030, 2035, fill in the date for different brands and different automakers,” Roberts said. “How quickly they were able to pivot away from that was really interesting and shows that it’s not a short-term pivot. They clearly understand that consumers just aren’t ready for that mainstream adoption, and maybe the infrastructure’s not ready as well.”
It’s not all doom and gloom: A slew of new EV models are hitting the market, and tightening regulations will necessitate more EV and hybrid sales in the coming years.
“We remain bullish on electric vehicle sales in the long term,” Stephanie Valdez Streaty, Cox Automotive’s industry insights director, said in a statement. “The growth will, at times, be very slow, as all-time horizons in the automobile business are vast, but the long-term trajectory suggests that higher EV volumes will continue over time.”