2023 was the year of resurgence for car manufacturers and the adoption of electric vehicles in the United States. About 15.5 million new vehicles were purchased throughout the year, a whopping 12.4% increase from 2022. Of that 15.5 million, nearly 1.2 million were EVs, bringing the total adoption rate to 7.6%, with Cox Automotive projecting 10% market share by the end of 2024. It’s notable progress, but still far behind other countries like Norway and Iceland.
At the same time, the rapid growth of EVs in the last few years is starting to lose its charge. Ford CFO John Lawler said in October that “the narrative has taken over that EVs aren’t growing. They’re growing. It’s just growing at a slower pace than the industry and quite frankly, we, expected.” And in Tesla’s most recent earnings call on Jan. 24, CEO Elon Musk warned of “notably lower” growth for the EV market, sending the stock tumbling downward.
Industry experts attribute this stymied growth to a few factors: stubbornly high interest rates on auto loans, EV prices remaining higher than ICE cars (avg. new EV price is nearly $51k vs. $48k for ICE vehicles), and waning confidence in charging infrastructure.
But coming into 2024, there are a few changes that current and potential EV owners should consider. Here’s what you need to know.
Stacking metal, not paper
Despite 2023 being an outstanding year for new EV sales, recent headlines make the current EV market seem grim. Here are a few notable ones:
- G.M. Profits Hurt by Electric Car Business and Strike
- GM Went All In on EVs. Dealers Say Buyers Want Hybrids.
- Industry pain abounds as electric car demand hits slowdown
So, what happened in the last few months to slow things down? Possibly, an imbalance in the unbeatable law of supply and demand.
First, consumers aren’t demanding new cars like they once were. Car prices are up 20% in the last three years, according to the Federal Reserve. And with interest rates hovering between six and seven percent and average car payments over $700, Americans are simply not buying cars in what a Cox senior economist labeled a “weak buying climate.”
This had led to a glut of EVs without buyers. Many are currently collecting dust on car lots, an estimated 71 days’ worth of supply,according to Cox Auto. This means that there’s enough new vehicles to be purchased for over two months without building any more new vehicles.
In April 2023, the Environmental Protection Agency issued new tailpipe emissions standards [PDF] in an effort to fight climate change and reduce Americans’ exposure to unhealthy air pollution. Although the proposal did not mandate that car dealerships reduce the number of ICE cars they sell, the agency projected that the market share of battery-powered light-duty cars, SUVs, and pickup trucks would need to reach 70% by 2032 to meet the new standards. This prompted an outcry from thousands of car dealerships to “tap the breaks” on the EPA’s emissions goals, saying in a signed letter that “even with deep price cuts, manufacturer incentives, and generous government incentives” EVs aren’t flying off the lots.
Still, while these concerns should be taken seriously, one wonders if the signatories would have more luck selling EVs if they chose to sell them in the first place. In a May survey of over 800 car dealerships, nearly half said they refuse to even stock EVs.
Charged up with no plugs
Many EV-skeptical shoppers are also worried about “range anxiety,” the fear of running out of battery on your commute. But with a fully charged battery, the average commute of 37 miles per day likely isn’t the issue for many (the average EV range hovers around 300 miles). It’s the ability to charge when you need it. This concern has shifted from anxiety to a headache, and it’s now the primary reason vehicle shoppers reject buying an EV, according to J.D. Power.
There are currently 170,000 charging stations available to drivers, according to the Biden administration. With approximately 4.5 million EVs registered in the U.S., that means there is roughly one charger for every 26 EVs. The ratio of EVs to chargers is much more favorable than that between ICE cars and gas stations, as it’s estimated there is one pump for every 153 to 307 vehicles. Though it doesn’t take as long to fill up a car with gas versus charging, this suggests that EV drivers shouldn’t struggle to find a charger, especially with many EV owners (83%) charging at home. But the issue lies in not the number of charges, but the reliability of chargers being functional.
A 2022 study from Cornell University found that EV charging stations could only charge 73% of the time. The study cited issues like cable length, nonfunctioning infrastructure, and payment errors, among other reasons. And a recent WSJ report visited 30 charging stations in Los Angeles (the #1 city for EV adoption) and found issues at 13 of them — a 43% failure rate.
Now imagine if this kind of instability applied at traditional gas stations where you have at least a 25% chance (if not more) that it wouldn’t work: it would be a disaster. While numbers aren’t readily available about broken pumps, gas stations deal with their own set of issues, including: gas station closures, bad gas, inaccurate dispensing, card skimmers and even fires.
The government and automakers both recognize this issue and are working to address this problem. In January, the Biden administration announced $623 million in grants to build out the EV charging network – with a goal of hitting 500,000 EV chargers by 2030. However, skeptics have called this goal a stretch.
Still, business seems to be following the government’s lead. BMW, GM, Honda, Hyundai, Kia, Mercedes, and Stellantis announced a $1 billion investment last year to build 30,000 new fast-charging stations across the U.S. and Canada.
The takeaways for current and prospective EV owners
A Cox Automotive forecast summarizes this year best: “2024 will be the Year of More – more models, more incentives, more discounting, more advertising, and more sales muscle.” With fewer cars qualifying for the EV tax credit incentives, stacking inventory and weary buyers, manufacturers and dealers could potentially come with deep incentives for car buyers.
However, as someone who has been heavily considering a used Tesla Model 3 or Y for over a year now, it’s vital to run the numbers and have a plan before taking the jump. Here are a few factors I’ve found helpful in my own analysis:
- Have a charger at home or your place of work. This will solve for 90% of the potential headaches.
- Live in a place with high gas prices, and have a moderate to large amount of mileage to realize the savings on gas
- Compare the insurance premiums as that EV you’re looking at may cost you more. Florida has higher-than-average car insurance prices (#8 in the country), which unfortunately keeps me from taking the jump.
Just like any purchase or investment, do your due diligence before you get behind the wheel.