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Concerns about a significant decline in electric vehicle (EV) sales in the U.S. have surfaced, but evidence suggests that this downturn primarily impacts Tesla rather than the broader EV market. The dismal sales outlook for 2024 is largely linked to reduced demand and subsequent slumps in sales of Tesla’s market-leading vehicles, which have experienced a notable drop compared to the first quarter of 2023. In contrast, other manufacturers expanding their EV offerings have actually recorded healthy growth in pure-electric sales.
It appears the market is mistakenly associating Tesla’s struggles with a general decline in EV sales. However, data from Bloomberg and Cox Automotive indicates otherwise. Brands like Ford, Mercedes-Benz, BMW, Toyota, Rivian, Hyundai, and Kia have experienced surge in retail sales. Ford leads the way with substantial growth, particularly from its F-150 Lightning and Mustang Mach-E models, while Hyundai and Kia reported the lowest growth among top sellers with cars like the Ioniq 6 and EV6. Overall, automakers have enjoyed a significant uptick in quarterly EV sales this year.
According to Bloomberg’s data for major manufacturers, the growth in EV sales is as follows: Ford at 86.1%, Toyota at 85.9%, Mercedes-Benz at 66.9%, Rivian at 58.8%, BMW at 57.8%, and Hyundai/Kia at 56.1%.
Some discrepancies may be evident when comparing to the data in the table below, which can be attributed to Bloomberg grouping certain brands and their subsidiaries. Toyota, for instance, saw an overall growth of 86% over the year, largely because Lexus did not have any EVs available for sale in early 2023. However, Toyota’s individual brand sales rose by 11.7%, an impressive result considering they have only one EV and primarily focus on hybrids.
Even Nissan recorded a slight growth of 1.3% in EV sales with its lesser-known models like the Ariya and Leaf. While this figure rounds down to just one percent, any growth, regardless of size, is still positive. In stark contrast, Tesla faced a decline in sales growth of 13%.
While Tesla’s decline is notable, it is still a better outcome than General Motors’ nearly 21 percent drop. Even Volkswagen performed better than Tesla with a smaller decrease in EV sales growth of 12 percent. It’s important to note that despite the slowing growth, Tesla still outpaces its competitors, selling 140,187 vehicles in Q1. Ford, the leader in sales growth, still fell short of Tesla by nearly 120,000 EVs sold. As Cox Auto highlights, Tesla maintains a commanding 51 percent share of the EV market in the U.S.
Given this substantial market presence, what accounts for the pessimism surrounding Tesla and overall EV sales in 2024? This sentiment largely stems from the misinterpretation that Tesla’s growth stagnation reflects a broader trend among all EV manufacturers. The market often looks to Tesla as an indicator for the EV sector, but according to Bloomberg, many consumers are shifting their attention to competitors as they increasingly explore alternative brands. Additionally, production challenges pose significant barriers to sales growth; several of this quarter’s major losses were tied to production issues or a reduced lineup of EVs.
Tesla temporarily halted production of its popular Model 3 to implement essential updates on the vehicle. General Motors faced the most significant drop in EV sales growth across its brands in Q1, partially due to the discontinuation of the Chevy Bolt, its leading EV. Issues with the Ultium battery from GM and LG also caused delays in the automaker’s EV plans for 2024. Research from Bloomberg indicates that the declines in sales growth tied to the temporary disruptions of the Model 3 and Chevy Bolt significantly impacted EV sales overall. If we exclude these two models, the growth in EV sales across America actually surged by 23 percent.
In summary, EV sales aren’t halting; rather, the explosive growth of previous years is undergoing a natural contraction. Analysts from Cox Auto indicate that the EV market is experiencing slowdowns as it reaches maturation, a typical phase in growth where rapid increases begin to stabilize. Cox emphasizes that “segment growth typically slows as volume increases,” a phenomenon related to the so-called “chasm” discussed previously. This suggests that we are far from a bust in the EV market. For a broader perspective, analysts anticipate that EV sales will constitute 10% of total car sales in the U.S. by the end of 2024, up from their gradual beginnings at 7.3% at the start of the year.
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