A report has just come out indicating that “electric cars are piling up” on auto dealer lots. It’s an interesting scenario, especially when you consider that lack of electric vehicle supply compared to consumer demand led to large electric vehicle markups on dealer lots not that long ago. So, what is going on? Let’s look into the details a little more and try to see what’s actually going on right now.
The news comes from Cox Automotive, via Axios, a sister company under the Cox Enterprises parent company. Despite the fact that EV sales are expected to pass 1 million units in 2023 and are approaching 7% market share, EVs in stock on auto dealer lots have grown 350% in 2023. That may be fine and dandy if it’s just because there are a lot more EVs for sales and sales are popping. However, that’s not really the case — or not entirely the case. They’ve reached a 92-day supply, far more than the 54-day supply of gas-powered cars. Yikes. That said … gas-powered cars are getting a boost because supplies are just finally coming back from COVID-19, Russian invasion, and other supply chain. “In normal times, there’s usually a 70-day supply,” Axios writes. So, 92 days does not look as bad in that context, but still not great. But let’s dig in further.
This is where it gets extra interesting.
The first big point is that the US EV tax credit is not for everyone. We already knew this, but we’re seeing some of the effects now. Most of the electric car models for sale in the US do not qualify for the federal EV tax credit. Ford, GM, Tesla, Rivian, and Volkswagen have vehicles that qualify. Any automaker not mentioned there — their electric cars don’t offer buyers even a $1 tax credit. Why would someone buy an EV from another automaker when they can get a $7,500 or at least $3,750 tax credit after buying one from the brands above? And if automakers didn’t plan for this well, you can imagine their EVs piling up on lots. Here’s what Axios shares:
- Genesis, the Korean luxury brand, sold only 18 of its nearly $82,000 Electrified G80 sedans in the 30 days leading up to June 29, and had 210 in stock nationwide — a 350-day supply, per Cox research.
- Other luxury models, like Audi’s Q4 e-tron and Q8 e-tron and the GMC Hummer EV SUV, also have bloated inventories well above 100 days. All come with hefty price tags that make them ineligible for federal tax credits.
- Imported models like the Kia EV6, Hyundai Ioniq 5 and Nissan Ariya are also stacking up — likely because they’re not eligible for tax credits either.
So, yes, lack of tax credit availability is hurting some automakers, a lot.
However, those are not the only electric cars sitting on lots a bit too long. They add that, “The once-hot Ford Mustang Mach-E now has a 117-day supply.” Yikes! The first idea put forth was that Tesla’s price cuts and strong sales killed demand for the Mustang Mach-E. However, Ford has a different point of view. Ford says that Mustang Mach-E production has simply ramped up and that third quarter sales will be big. Well, we’ll see.
In any case, it’s not a great situation for many automakers who should find a way to produce their electric cars and their electric cars’ batteries in the USA ASAP. However, it does highlight that the US policy to onshore more manufacturing and to reward companies that produce big electric cars (and other tech) here makes an impact.
Naturally, Tesla doesn’t seem to be having much trouble selling electric cars, setting new records and exceeding Wall Street expectations.
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