Jul 10, 2023 - Economy

Unsold electric cars are piling up on dealer lots

Illustration of a stack of green cars.

Illustration: Maura Losch/Axios

The auto industry is beginning to crank out more electric vehicles (EVs) to challenge Tesla, but there's one big problem: not enough buyers.

Why it matters: The growing mismatch between EV supply and demand is a sign that even though consumers are showing more interest in EVs, they're still wary about purchasing one because of price or charging concerns.

  • It's a "Field of Dreams" moment for automakers making big bets on electrification — they've built the cars, and now they're waiting for buyers to come, says Jonathan Gregory, senior manager of economic and industry insights at Cox Automotive.

Driving the news: Cox Automotive experts highlighted the swelling EV inventories during a recent midyear industry review for journalists and industry stakeholders.

  • EV sales, which account for about 6.5% of the U.S. auto market so far this year, are expected to surpass 1 million units for the first time in 2023, Cox forecasts.
  • A Cox survey found that 51% of consumers are now considering either a new or used EV, up from 38% in 2021.
  • Tesla’s rapid expansion, plus new EVs from other brands, are fueling the interest — 33 new models are arriving this year, and more than 50 new or updated models are coming in 2024, Cox estimates.

Yes, but: Sales aren't keeping up with that increased output.

Details: The nationwide supply of EVs in stock has swelled nearly 350% this year, to more than 92,000 units.

  • That's a 92-day supply — roughly three months' worth of EVs, and nearly twice the industry average.
  • For comparison, dealers have a relatively low 54 days' worth of gasoline-powered vehicles in inventory as they rebound from pandemic-related supply chain interruptions.
  • In normal times, there's usually a 70-day supply.
  • Notably, Cox's inventory data doesn't include Tesla, which sells direct to consumers.

Zoom in: Some brands are seeing higher EV inventories than others.

  • 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.
  • Tesla's price-cutting strategy could be taking a toll, too: The once-hot Ford Mustang Mach-E now has a 117-day supply. Ford says that's the result of ramped-up production in anticipation of stronger third-quarter sales.

The intrigue: Hybrid vehicles have much lower inventory levels, supporting Toyota's argument that consumers want a stepping stone to fully electric cars.

  • There's a relatively tight 44-day supply of hybrids industrywide, according to Cox.
  • Toyotas are in particularly short supply — under 30 days each for Prius and RAV4 hybrids and plug-in hybrids.

Of note: Toyota's only fully electric model, the Bz4X, has a 101-day supply.

What to watch: More charging infrastructure is coming, and EV prices should reach parity with gasoline vehicles around 2025, according to Bank of America Securities auto analyst John Murphy.

  • Until then, automakers will be left waiting for EV buyers to show up.

Disclaimer: Cox Automotive's parent company, Cox Enterprises, also owns Axios.

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