Is the US EV Market Shorting Out?

Is the US EV market shorting out? That question may seem counter to recently reported sales volume of 300,000 new electric vehicles sold in the U.S. in the second quarter of this year, an impressive increase of 48% from the same quarter in 2022. Also, the number of EV models offered in the U.S. market by different manufacturers as of March 3, 2023, has reached an all-time high of 40, with 12 manufacturers offering at least two EV models in their brand offering.  But the increase in models available and higher sales volume doesn’t tell the entire story.

The increase in sales has been “charged” by significant incentives and sizable price cuts. These have resulted in an EV average transaction price that is 20% lower year-over-year. According to Cox Automotive,  U.S. dealers have more than 92,000 EVs in stock, more than three times the number on their lots a year ago.  Additionally, Cox reports that GM, Ford, and Toyota have more than 90 days’ worth of unsold EVs at their stores at current sales rates.

What does this mean for the average repairer and insurer? Lower retail prices always signal an increase in total loss rates for heavier hit vehicles, which means fewer jobs for the collision repairer.

Also, settling a total loss for an insured vehicle owner who bought at the height of the market may be more difficult as lower new transaction prices accelerate depreciation. Many vehicle owners may be shocked that their vehicles are worth so much less than what they paid only a short time ago.

What does the future hold?  The buildup of unsold inventory may signal that it’s harder to convince buyers who haven’t already bought an EV to make the switch from a traditional gas-powered vehicle.

For those “fence straddlers” who like the idea of traveling on battery power but have range anxiety, several new plug-in hybrid models are hitting the market and offer the best of both gas and battery travel.  Those car makers who have invested heavily in producing plug-in battery electric hybrids over full EV’s may have placed a very wise bet.