In 2023, EVs continue to hold centerstage in the automotive world’s spotlight even as union strikes threaten to destabilize US auto industry giants. As Ford and GM work to pacify a workforce who feels increasingly alienated, they seem to be doubling down on their commitments to electric vehicles. But are they really?
Ford President Jim Farley told CBS, “It’s not the early adopters anymore on the coast; we’re getting into the meat, heart and soul of people saying ‘I’m interested in EV, but I’m skeptical.'” Yet, YahooFinance reports that Ford is pausing $12B of investment into its current EV buildout, citing that US EV buyers are unwilling to pay premiums for EVs over gas or hybrid vehicles, compressing EV prices and profitability.
Meanwhile, according to automotivedive.com, GM had a record quarter in Q1 of 2023, followed by similarly high volumes in Q3, but growth seems not to be tracking with expectations. GM’s EV production climbed 40% from Q2 to Q3, while EV sales grew only 28%. Therefore, the OEM has decided to reduce its EV production goals, citing lower than expected demand.
Amid confusion over EV production schedule slowdowns, sales figures, and large-scale strategic shifts for EV manufacturers, are there any clear data that point to what’s going on with EV inventory and sales?
Here at SBD Automotive, we’ve been watching this unfold with interest. Our VIN data, via our data product VehiclePlannerPro, can help us determine how long a vehicle is listed on dealership inventory and when it is sold. This data, sourced from hundreds of thousands of electric vehicles, has been thoroughly cleaned and quality tested through both machine and human expertise and is relied upon by many of our automaker partners.
We're going to be using three primary data points to tell the real story of EVs in America: total EV sales, how long EVs are sitting on dealer lots until being sold ("days on lot"), and dealership EV inventory supply. Today, we will be showcasing data by quarter starting in Q4 of 2020 through Q2 of 2023.
EV Sales in the USA Chase a Growth Trend
EV sales over the analysis period grew, but with several false starts before truly taking off in Q4 of 2022. To many, this trend heralds the much trumpeted “move to mainstream” for EVs.
While some brands like GM are noting a lack of growth in sales vs. their accelerating EV supply, this shouldn’t be considered indicative of the broader EV sales landscape.
However, recent news has noted that significant slowdowns in sales growth may show that the overall sales will not follow the growth trend that EV advocates would prefer to see.
Based on our data, we are certainly at an inflection point, but the outcome is uncertain. But more on that later.
Both Electric and Gas Vehicles Sit in Inventory for Weeks Before Selling
Today we hope to provide automakers with some clarity around EV sales velocity across a selection of brands sold in the USA. In this analysis, we analyze EV “days-on-lot” (DOL) as a variable which indicates the number of days when an electric vehicle was available on the dealership lot. Note that while we do have Tesla and other EV-only automaker sales data available, the sample sizes were not large enough to be statistically significant for this analysis. This is likely due to the frequent use of direct-to-customer sales for groups like Tesla, Rivian, Polestar, etc.
The above chart shows some interesting insights related to the general trend. For reference, the average EV days-on-lot generated from our data set was 51 days. As a comparison, new car sales took an average of 48.2 days in July of 2023, according to an iSeeCars.com study.
Between December of 2020 and June of 2021, there was an overall decrease in days-on-lot. As we moved into July, it seemed that days-on-lot overall continued to fall below the mean. This trend continued through October, 2021, after which most brands stayed below the mean through early 2022.
In May, June and July of 2022, most EVs had significantly reduced time-on-lot, but this trend would peak in July, before tapering off through September of 2022.
We can note as well that the IRA tax refund changes went into effect in August, 2022.
In October of 2022, the trend inverts with an influx of EVs available for sale, and DOL rockets upwards over the mean. This trend remained for the rest of the analysis window, though the overall increase in days-on-lot began to slowly soften until reaching a balance point close to the mean for most brands by June of 2023.
Let’s dig into the data by OEM. Note that you can select or unselect brands via the legend at the top of the graph:
Ford’s EV inventory didn’t follow the decreasing days-on-lot trend between December 2020 and June 2021, instead finally dipping below the mean in November, 2021.
Meanwhile, GM was among the few brands that remained above the 51 days-on-lot mean, while Kia and Hyundai led the pack in consistently lower days-on-lot, along with MINI and Jaguar.
During the October 2022 inversion, Ford days-on-lot remained lower for longer than other brands. Meanwhile, mainstream brands Kia and Hyundai went overnight from being some of the quickest-selling EVs to some of the slowest-selling. The IRA is likely one of the main culprits for the shift in brand trajectories, with the Hyundai Group being hit particularly hard.
During that same time period, premium imported brands like Porsche, Mercedes-Benz and BMW all found their vehicles sitting on lots for significantly longer.
NOTE: While this dataset reflects data up to June of 2023, our data does cover up-to-date vehicle sales data.
EV Inventory Climbs to Unprecedented Levels in Q2 of 2023
This graph provides our tracking of VINs on dealership lots over the same analysis period as before. Note that we’ve split this into premium vs. mainstream brands to provide some context between the higher-cost EVs and the more frugal, mainstream electric cars.
Based on our findings in the chart above, the number of electric vehicles for sale on dealership lots stayed fairly constant overall. While different brands and models entered the market in force at different moments along the timeline, overall supply was remarkably consistent.
Premium brands initially brought more cars to the market ahead of the mainstream brands. However, by March 2021 the expected shift in supply occurred, and mainstream brands began releasing more EVs to the US market. By June, premium EVs sitting on dealership inventory hit a low, where it would stay for a long while, only inflecting upwards to its prior level by mid-Q3 of 2022. However, this trend continued, reaching a high of nearly 30,000 premium EVs in supply during March of 2023. While the number of premium EVs sitting on lots has been slowly declining, we aren’t sure whether this is due to supply or demand.
Mainstream brands hit 10,000 EVs on dealership lots in Q2 of 2021, and maintained that level until Q2 of 2023, when a sudden increase of EVs in dealerships reached close to 20,000 vehicles in June. Several downturns and corrections occurred while a slight trend towards higher EV supply was maintained between June 2022 and March 2023. However, a new trend emerged as EV availability tripled from 20,000 units in April to more than 60,000 EVs sitting on dealership lots in June. While the trend seems to be decreasing, the story is clear: Either too many EVs are being supplied, or something has changed that affects the demand for these vehicles.
The EV Revolution Continues at a Slower Pace than Forecasted
Concerning EV sales, they continue to rise - but not for all brands. We think that some of the legacy automakers such as Ford and GM are going to struggle the most to efficiently scale into the EV market while having offerings that people want to buy. Currently, both Ford and GM are losing money on every EV they build, whereas Tesla is making money on each model it sells It’s also notable that GM has been forced to buy credits from Tesla since it cannot hit its CAFE targets.
There are still lingering worries that EVs will not break into mainstream adoption. An article from the Verge noted that, “early adopters have already adopted,” and that while there are incentives for buyers, these are not always easy to navigate and may not apply to every vehicle. Additionally, we would point out that the status of these incentives and tax rebates are subject to sudden changes due to government policymakers. Some may also point to the 51 days-on-lot for the average electric vehicle in Q2 of 2023 when compared to the much faster sales pace only a year prior. But we should note here that July sales of new cars (ICE and EV included) have also slowed to around 50 days, and so this problem may be more general to the US auto market, rather than a particular issue for EVs.
Additional factors likely to impact EV buyers are less credit availability, higher loan servicing rates, and a looming recession. Add to this that insurance for EVs is on average 26% more expensive than for gas-powered cars, alongside the relatively low resale value of EVs, and it’s easy to see why some people are bearish on the EV revolution.
However, the facts don’t lie – until this point, EVs have seen tremendous growth worldwide, and continue to receive significant government subsidies. Additionally, issues around North American charging infrastructure seem to be slowly resolving due to the $7.5B in funding offered by the federal government for the establishment of new high-speed charging stations.
While EV doomers and advocates alike will continue to argue the directionality of powertrain evolution, we believe that this market volatility is to be expected due to the nature of technological revolutions. The growth of EVs will continue into the coming years, with winners and losers along the way. Additionally, the general financial and economic situation will play a major role in that growth. When will mainstream Americans turn the corner on EV adoption? For the moment, that question is still being decided.
If you're interested in learning more about VehiclePlannerPro and the EV data used to support this analysis, reach out to firstname.lastname@example.org.