Elon Musk’s company appears to have abandoned its passenger car division in favor of robotaxis and artificial intelligence. Yes, the manufacture of Cybertrucks is starting to pick up speed, and InsideEVs can attest to the superb quality of the recently updated Model 3. But upgrades are needed for the remainder of the lineup. The Model X and Model S are well past their prime, and the facelifted Model Y won’t be out until next year. Analysts undoubtedly agree, but it won’t be simple. They predict that for the remainder of this decade, Tesla’s EV market share will decline by a few percentage points annually. Thus, it is a great time for Ford, General Motors, Hyundai, Kia, and other automakers to step forward. However, there are a number of significant obstacles, such as high interest rates, a number of concerns about owning an EV, the possibility that a new US president would reverse EV policy, and the difficulty of marketing new, reasonably priced models.
It appears that fewer than half of present EV owners are repurchasing EVs, according to Edmunds’ sales statistics (which does not include direct-to-consumer sales from Tesla, Rivian, etc.).
“If you have an EV and you trade it into a dealership, you’re still under 50% of the time buying another EV,” said Ivan Drury, the director of insights at Edmunds. About 30% of those customers are going back to gas cars whereas others are opting for hybrids and plug-in hybrids. “Everybody is hurting because of interest rates, range anxiety, charging anxiety, all those anxieties,” Drury said.
EV range has increased over the past few years as battery manufacturers continuously improve the energy density. The charging infrastructure is growing, but probably not at the rate it needs to. Moreover, Tesla’s firing of its Supercharging team was a major blow to the overall charging landscape in the U.S. At the same time, the pool of potential new EV buyers has also increased. That means the limited number of models with over 300 miles of EPA range isn’t enough to drive mass adoption.
“Four or five years ago people were buying EVs as additional cars, not replacement cars,” Drury said. Now buyers are considering EVs as their only cars. But they’re hesitant due concerns like high costs and inadequate charging infrastructure. “The dynamics have changed to where now we’re talking about mainstream buyers with mainstream concerns. That is a very different segment of the population than the early adopter.”
Despite the decline in new Tesla sales, the market is headed in the correct direction because there are clear signs of others stepping up.
General Motors increased its EV sales by 40% year-over-year thanks to models like the Cadillac Lyriq and Chevy Blazer EV. Ford’s EV sales were up 61% thanks to the Mustang Mach-E and F-150 Lightning. Hyundai, Kia, Toyota and many others witnessed record EV sales in the U.S. this quarter.