The EV plateau is coming. It’s bad news for companies like Ford and Tesla.
The electric car Nissan Leaf, at an electric vehicle charging station at Balboa Park.Dünzl\ullstein bild via Getty ImagesCurrent EV market growth “cannot be sustained,” an analyst says.The shift from early adopters to regular customers is the next big growing pain.The cap for rapid EV growth appears to be around 7% of the market.After years of rapid growth, the electric vehicle market is heading for a plateau.For years, plug-ins only accounted for a bit more than 1% of the market as options were limited and adoption was slow.
But since 2020, that growth has accelerated with help from a flood of new electric models, improvements to charging infrastructure, and a bigger push by the industry to educate customers on EV purchases.EV sales in the US hit a record of nearly 6% of all vehicle sales last year, and are on track to surpass that this year, accounting for nearly 9% of sales to individual customers in June alone, according to JD Power.Along with that growth has come a slew of ambitious goals.
Tesla is aiming to produce 2 million vehicles for the first time this year, Ford originally said it was going to build 600,000 EVs this year, and GM is planning to produce roughly 150,000 EVs this year.But as the industry runs out of enthusiastic early adopters, a plateau for the segment is on the horizon, some analysts say.
The first signs of that came last month when Ford dealers told Insider they had to turn away Mustang Mach-E allocations.
(Ford later adjusted its EV production goals to reflect the change in demand growth).”The spectacular growth we’ve seen over the last few years cannot be sustained.
It’s just not possible,” said Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions.
“The further up this growth curve we go, the harder it’s going to be to get to the next level.”The new ‘Wild West’ of the EV marketShifting from early adopters, who will endure more quirks of ownership and quality issues, to more average and practical car-buyers will be the next big growing pain for the industry, analysts say.
It will be nearly impossible for companies to anticipate demand over the next several years as this new cohort of EV buyers enters the market.”This is the closest to the Wild West this industry has seen since the 20s,” Fiorani said.With a lower barrier to entry for EVs and a slew of new competitors in the segment, the avalanche of new plug-in cars has led to a pileup at dealerships.
In June, there were double the amount of EVs compared to gas cars on dealer lots.The states with the biggest share of electric vehicle sales are also the slowest to grow sales at the moment, according to a recent study from iSeeCars.
California, Oregon, and Washington – where EV sales account for between about 7% and 10% of the market – are currently among the slowest-adopting states, the study found.”There seems to be this natural resistance somewhere between 7% and 10% of market share in a given state,” said iSeeCars analyst Karl Brauer.
“That seems to be the cap, and then it gets much harder to grow it further.”Read the original article on Business Insider View comments