The transition from early adopters to mainstream consumers presents the next significant challenge for expansion.
The saturation point for rapid EV growth seems to be around 7% of the overall market.
After a period of rapid expansion, the electric vehicle market is now approaching a phase of stability.
Initially, plug-in vehicles held a mere 1% of the market due to limited options and gradual adoption. However, since 2020, this growth has accelerated significantly, thanks to an influx of new electric models, enhancements in charging infrastructure, and increased industry efforts to educate consumers about EV purchases.
In the United States, EV sales achieved a record of nearly 6% of total vehicle sales last year and are projected to surpass that figure this year. Notably, they constituted almost 9% of individual customer sales in June alone, as reported by JD Power.
Amidst this growth, ambitious targets have emerged. Tesla aims to produce 2 million vehicles for the first time this year, Ford initially planned to manufacture 600,000 EVs, and GM has intentions to produce approximately 150,000 EVs in the same timeframe.
Nonetheless, some analysts predict that the industry will soon reach a plateau, as the pool of enthusiastic early adopters diminishes. Early indications of this were evident last month when Ford dealers revealed that they had to decline Mustang Mach-E allocations. (Ford later adjusted its EV production goals to align with the altered demand growth.)
Sam Fiorani, Vice President of Global Vehicle Forecasting at AutoForecast Solutions, commented, "The remarkable growth witnessed in recent years is not sustainable. It's simply unfeasible. As we ascend the growth curve, the challenges in reaching the next level become progressively tougher."
Navigating the New Terrain of the EV Market
Experts suggest that the transition from early adopters, who tolerate initial ownership challenges and quality concerns, to more typical and pragmatic car buyers will pose the next major hurdle for the industry. Projecting demand over the coming years will prove challenging as this fresh cohort of EV purchasers enters the market.
Fiorani remarked, "This situation is reminiscent of the 'Wild West' and is the closest the industry has been to such a scenario since the 1920s."
With lower barriers for entry into the EV market and numerous new contenders, the influx of plug-in vehicles has led to an abundance of inventory at dealerships. In June, the number of EVs on dealer lots was double that of gasoline-powered cars.
Interestingly, states with the highest proportion of electric vehicle sales are currently experiencing slower growth, according to a recent study by iSeeCars. The analysis found that California, Oregon, and Washington – where EV sales constitute between 7% and 10% of the market – are currently among the states with the most gradual adoption rates.
Karl Brauer, an analyst at iSeeCars, observed, "There seems to be a natural resistance somewhere between 7% and 10% of market share in a given state. Beyond this range, further growth becomes considerably more challenging."
Let's net this out in Auto Spies terms.
1. Large market growth in EVs is over for a few years because most of the adopters who WANT them already OWN them.
2. Tesla is the only one that will survive this business test in the USA. The legacy company EV is dying in MURICA. ESPECIALLY, the sedans. Who knew people hated sedans in the USA whether ICE OR EV?! ;)
3. The ONLY EV coming with ANY potential juice is CyberTruck