The evolution of the electric vehicle will take longer than we thought

Let's get one thing straight: Contrary to what you may have heard, electric vehicle sales are on the rise.

I know, recent headlines suggest otherwise. Tesla sales are down. Ford is cutting back on electric vehicle launches. General Motors is delaying an electric truck and Containing in investments in mining batteries for electric vehicles. And Hertz is divesting itself of electric vehicles as its stock price struggles. Automakers across the board are losing millions, some are losing billions, as customer demand appears to have stalled after an initial burst of enthusiasm. The mood, as they say, is grim.

And yet, sales continue to grow. JD Power is projecting There are expected to be 1.2 million electric vehicles sold in the United States by the end of 2024, up from 1 million sold last year. That's 9 percent of all vehicles sold, a figure that has been revised down from the previous forecast of 12 percent.

So obviously we've gone a bit overboard with the whole “the future is electric” thing. And it still could be! In fact, it probably will be, just not as quickly as we originally thought.

“Welcome to the complicated middle ground of EV evolution,” JD Power says in its EV retail market share forecast, released Friday.

So what's going on? As automakers continue to refine their strategies, offering a more varied mix of vehicles, including hybrids and plug-in hybrids (PHEVs), things are becoming a lot less predictable. A massive increase in leasing could Meanwhile, charging remains a major sticking point for many consumers, who are unwilling to spend so much money on a new car if they are not comfortable with its ability to be kept properly charged.

In total, 35,000 more battery-electric vehicles were sold in the first seven months of 2024 than last year, according to JD Power. That includes hybrids and PHEVs, which I believe are the root of the problem. Those hoping for a more balanced shift (battery electrics to internal combustion engines) didn’t anticipate the popularity of hybrids in the market. If anything, hybrids are cannibalizing EV sales, giving pure battery-electric vehicles more competition than anticipated. But in retrospect, it makes sense. What better answer to “range anxiety” than a vehicle that, in a sense, operates like an EV until the battery runs out, then switches to gasoline?

Environmentalists and pure EV enthusiasts will criticize the “false promise” of hybrids, but that misses the psychology of most car buyers. Most people don’t have the luxury of considering only the environmental impact when they buy what is often the first or second most expensive item they will ever purchase. They also have to worry about price and where they are going to charge it.

Electric vehicles are still too expensive, which surprises potential buyers. According to data from Kelley Blue BookIn July 2024, the average transaction price of an electric car was $56,520, while the average sale price of a gasoline-powered vehicle was $48,401.

There is also a problem of depreciation. New research from George Washington University finds that older electric vehicles depreciate faster than conventional gasoline cars. Some even lost 50 percent of its resale value In just one yearThe advantage is that newer models with longer ranges hold their value better and approach the retention rates of many gasoline cars.

The charging experience is still very dated for most people. It's either the most satisfying thing about owning an EV or the worst. And the distinction is often between those who live in houses and can install a home charger in their garage and those who live in an apartment building or multi-family housing complex and have to rely on unreliable public chargers. The former are living it up, while the latter should probably just buy an e-bike.

But JD Power is optimistic about where this is headed, especially since public satisfaction is growing on both Level 2 and DC fast charging for two consecutive quarters. The Biden administration is also continuing to make massive investments in public charging, which should slowly ease the public charging experience from “absurd” to “honestly whatever.”

The overarching problem when discussing EV trends is Tesla’s continued dominance. For years, it was impossible to talk about sales or charging or anything EV-related without talking about Tesla, given the company’s overwhelming market share. When overall sales slowed, it was largely because Tesla was selling fewer cars. Tesla’s outsized role is distorting the way we talk about EVs and will likely continue to do so for a while.

That could be changing, too, as more and more models from different companies are being added to the mix. Mainstream models, like the Chevy Blazer and Equinox EVs, are starting to ship. Hyundai and Kia are promising more affordable models. Even premium pure-EV brands like Rivian are expected to offer something more affordable than their current lineup.

The situation remains volatile. A Trump victory in November could mark the end of generous tax breaks for manufacturers and consumers, potentially slowing things down further. More automakers could chicken out and scale back more plans. Promising new electric vehicles could turn out to be pure fiction.

It won’t be a walk in the park, or even a quiet drive through the countryside, punctuated by fake engine sounds. The industry needs to slow down the six-figure luxury pickups and SUVs and start offering more low-cost compact cars and sedans. And automakers need to react to this moment of profound historical change with a greater sense of flexibility and patience. Anything less will delay the inevitable.