Where Exactly is the "EV Slowdown"?

Co-founder & CEO
November 1, 2023

Where Exactly is the "EV Slowdown"?

While high interest rates and limited entry-priced models are absolutely causing affordability issues for most American families, the “death of EVs” wave of media stories (for example: EV transition slows as inventory grows and industry hits hurdles, More alarm bells sound on slowing demand for electric vehicles) is just wrong.

Take a look at the following data, which compares sales volume from September 2022 to September 2023, and let us know where this slowdown is happening.

  • ICE
  • EV
New Sales
Used Sales
  • -2%
  • +40% (Recurrent data, Q3 YoY)

The truth is, demand is as high as ever, but there is a shortage of affordable electric models. In fact, EVs that have seen price cuts are leading the market.

Look at Tesla's entry-priced vehicles, both of which have seen prices cut around 25% in 2023. The Tesla Model Y is the best-selling SUV in the US year-to-date, with deliveries up 58%. It's ahead of the Toyota RAV4 and the Honda CR-V. Similary, the Model 3 was the second highest volume passenger car, just behind the Toyota Camry and ahead of the Honda Accord. Both of these industry-leading vehicles can now be had below the average national price for a new car. Plus, cuts to the new Tesla lineup have driven down used EV prices across the board (read more).

And look at the Ford Mustang Mach-E - which had moderate price cuts in Q2. It saw sales grow by 42% in Q3. All Ford had to do was increase production.

If people weren't interested in EVs, why would the sales of used electric car be second only to sales of new Teslas, as reported in our Q4 Market Report?

The growth in used EV volume speaks to the price sensitivity of electric car shoppers, many of whom are looking to save on operational expenses and avoid the cost fluctuations of the gas market.

What we're really seeing here is the headwinds that high-priced, luxury EVs face in an increasingly difficult economic situation. Consumer interest rates are soaring, lease terms are three times what they were a few years ago, and many shoppers are aware that just around the corner, there are better incentives and new affordable models to be had. As my colleague, Liz Najman, said:

When you're on the ground talking to shoppers, especially younger shoppers, you see a ton of interest in affordable EVs. But, this interest will never be reflected in the sales numbers for $50-$60K vehicles, and unfortunately, those are the vehicles that OEMs are investing in. At the same time as they decry a lack of demand, OEMs are scrapping or delaying plans for lower priced, budget EVs, making this effectively a self-fulfilling prophecy.

But, Q4 may still see a slow down of EV sales, for all the best reasons. We are just two months away from a major change in the market as clean vehicle tax credits become transferable to point of sale discounts on January 1st. This means that buyers can see major savings on new and used electric cars: up to $7500 on a new EV and up to $4000 on a used one, as a rebate or down payment.

We're expecting a surge in both categories in early 2024.