EV share of the new-vehicle market flattened out at 7.1 percent across the first half of the year after growing steadily in 2021 and 2022, according to U.S. new-vehicle registration data from Experian.
Is the party over? Hardly.
But in the fast-growing U.S. market of the moment, as microchip supplies improve and the production of popular gasoline-engine autos returns in force this summer, EVs are no longer outpacing the rest of the car business — at least for now.
Tesla Inc., which sells about six of every 10 EVs, saw its red-hot growth cool in recent months despite deep price cuts this year and growing sales incentives, the data shows.
EVs’ share of the market reached 7.1 percent in January with 87,708 new registrations out of 1.24 million light vehicles, Experian said. Through the first half of the year, that share was still at 7.1 percent with 546,651 new registrations out of 7.66 million total. In 2022, EV market share was 5.6 percent for the full year and 3.1 percent in 2021.
The slowdown in market-share growth across the first half of 2023 suggests a cooling of EV demand, analysts said, although sales will continue to set records as EV adoption improves, albeit at a slower pace.
“It seems like early-adopter demand has nearly been met, and the EV market will have to start targeting a more mainstream consumer — which is challenging given the price points of the vehicles available and the lack of charging infrastructure,” said Jessica Caldwell, executive director of insights at Edmunds.
“Consumers are interested in EVs, and that will grow over time. But it seems like the next crop of in-market shoppers are more measured in their approach and not as easily convinced a battery electric is best for them in 2023,” Caldwell said.
To be sure, new EV registrations have been a market engine. They’re up 62 percent over the first half of 2022, and market share rose from 4.9 percent.
But the pause in electric market growth from January to June, along a growing EV inventory and sales incentives, could be a red flag amid lofty sales goals by automakers, analysts said.
“There are more car companies chasing potential EV buyers than ever before, and there aren’t enough buyers to clear the growing EV backlog at dealerships,” said Karl Brauer, executive analyst at iSeeCars. “At some point even low prices and crazy incentives won’t matter if the average person isn’t comfortable buying an EV.”
Brauer expects EV production cutbacks by automakers and downward adjustments to sales forecasts. He cited Ford Motor Co.’s earnings report in July saying the company will delay some production goals amid heavy losses for its EV unit.
In addition to flattening market share this summer, EV inventory is running about double the market average at 103 days’ supply, Cox Automotive said. And EV sales incentives, at an average $4,000, are about double the level for gasoline cars, according to J.D. Power.
Tesla CEO Elon Musk said on an earnings call in July that the EV leader remains willing to cut prices in order to stimulate demand and meet the automaker’s global sales goal of 1.8 million vehicles in 2023.
Because Tesla does not break out its sales data by region or country, U.S. new-vehicle registration data serves as a reliable proxy. Some automakers also don’t provide sales data on all their EV models, but those are captured in the Experian registration numbers.
Cox Automotive said in a July sales report that the rapid sales pace for electric vehicles in recent years will slow.
“EV sales records will continue to be set, and EV growth will continue to outpace overall industry growth, but the days of 75 percent year-over-year growth are in the rearview mirror,” Cox said. “The hard-growth days are ahead.”
In the short term, EVs remain more expensive than gasoline counterparts, and many buyers are still on the fence about the new technology.
“According to a recent Edmunds survey, the high cost of EVs is still the biggest deterrent for potential buyers,” Caldwell said. “So there is a serious need for product expansion at the lower end of the price spectrum.”
Kelley Blue Book estimated the average transaction price for an EV in June at $53,438 compared with $48,808 for all light vehicles. The average transaction price for a non-luxury vehicle was $45,291, Kelley Blue Book said.
The good news is that EV transaction prices fell from more than $61,000 in January, led by Tesla’s price cuts, Cox said.
According to Experian data, Tesla led the EV market in the first half with 329,608 new registrations, a 44 percent rise over the year-earlier period. That was for a 60.3 percent share of the EV market. From the first quarter to the second quarter, new Tesla registrations increased 12 percent, from 155,360 to 174,248, the data shows.
Tesla had the top two EVs in the six-month registration data, the Model Y crossover at 201,434 and the Model 3 sedan at 108,604. New Model Y registrations nearly doubled compared with the first quarter of 2022, and the Model 3 rose 12 percent.
Here’s how other brands fared.
- Chevrolet was the No. 2 brand for new EV registrations in the first half with 34,140 for a 6.2 percent share of the EV market. In January, Chevrolet had an 8.5 percent share, but new registrations of its Bolt EV and Bolt EUV trended lower afterward.
- Ford was in third place with 27,937 new registrations in the January-June period, for a 5.1 percent share. The brand started strong in January with a 7.7 share, but the Mustang Mach-E and F-150 Lightning lost some ground in following months.
- Hyundai had 20,964 registrations in the first half, Experian said, for a 3.8 percent EV share from its Ioniq 5 crossover, Ioniq 6 sedan and Kona small crossover. That was an improvement over its 3 percent share in January.
- BMW was in fifth place with 18,253 registrations in the first half, compared with 1,887 in the year-earlier period, Experian said. Its share rose from 2.9 percent in January to 3.3 percent for the first half. BMW’s numbers were led by the i4 sedan with 11,165 new registrations. The i4 competes with the Tesla Model 3.
- Mercedes-Benz was No. 6 in new EV registrations for the six-month period, with 17,773. Its EV share rose from 2.4 percent in January to 3.3 percent for the first half.
- Volkswagen was seventh with 16,619 new registrations. Its EV market share went from 4.6 percent in January to 3 percent in the January-June period as the sales pace of its ID4 slowed.
- EV startup Rivian was No. 8 with 15,576 new registrations for its consumer vehicles, the R1T pickup and the R1S crossover. Rivian ramped up production in the second quarter and saw its market share rise from 2.6 percent in January to 2.8 percent for the first half of the year.
- Kia was ninth from January to June with 13,771 new registrations. Its EV share went from 2.8 percent in January to 2.5 percent for the first half.
- In 10th place for new EV registrations was Audi with 10,075. Its market share went from 1.6 percent in January to 1.8 percent by the end of June, the Experian data showed.
