The Charge Toward EVs Falters

Many dealers likely won’t be surprised to learn U.S. sales of electric vehicles continue to slow, according to Cox Automotive.

Although some headlines ballyhoo the annual EV sales growth in the U.S. market, that rate has slowed considerably. Yes, Q1 sales rose 2.6% year-over-year but fell 15.2% compared to Q4 2023, reports Cox.

“Look at these EVs,” one salesperson at a Tucson-area Kia store, who asked to remain anonymous, tells WardsAuto as he waves at a lineup of electric models. “We can’t move them, even with zero percent financing.”

Industry analysts say falling prices, increased incentives and, yes, financing breaks have kept EV sales volume afloat. Cox reports a 9% decrease in average new EV transaction prices during Q1. That $55,167 price was down roughly 13.5% year-over-year. It’s sobering to read that the lower price didn't translate into higher sales volumes.

Dealers struggling to move the EV metal are stymied by slashed prices, higher incentives and increased leasing, reports Cox. One reason leasing has increased – Cox reports more than a quarter of EVs were leased during Q1, more than double the 2023 level – is the lure of the $7,500 Inflation Reduction Act incentive.

“Electric-vehicle sales in the U.S. declined during Q1 2024 – the first quarter-over-quarter downturn since Q2 2020,” says Stephanie Valdez Streaty, Cox’s director of Industry Insights. “As anticipated, Tesla’s sales took a hit, influencing the overall market dynamics.”

According to Kelley Blue Book estimates, Tesla sales in the U.S. in Q1 were down 13.3% year-over-year –  well below the typical double-digit growth that had become routine with the Tesla brand. Tesla’s share of the electric-vehicle market in Q1 2024 was 51.3%, down from 61.7% one year earlier.

But the news about EV sales is not all dire. Valdez Streaty adds that some brands – BMW, Cadillac, Ford, Hyundai, Kia, Lexus, Mercedes, Rivian and VinFast – saw more than 50% year-over-year sales increases.

“As noted in January, we are calling 2024 ‘The Year of More,’” says Valdez Streaty. “More new products, more incentives, more inventory, more leasing and more infrastructure will drive EV sales higher this year. Even so, we’ll continue to see ups and downs as the industry moves towards electrification.”