According to Barron’s, US EV sales rose 47% in the first half of 2023 compared to the same period last year. Both the first and second quarter of 2023 saw record EV sales in the US, and in the single largest auto market in the US, California, EVs already account for 22% of all new car sales. But just one company accounts for about 60% of all new EV sales in the US: Tesla. GM is in second place by comparison, and it only has about 6% market share, while Ford has about 5%. Despite all of Ford and GM’s proclamations about beating Tesla by 2025 or so, it now seems absolutely clear that they won’t (barring any unforeseen catastrophe). But as I have suggested in a previous piece, both companies are relying (and will continue to rely on) the sale of gas powered vehicles to fund their development of EV product lines. Of course that only makes sense, they are businesses and they have to sell things to stay in business and what they mostly have to sell right now is gas powered cars (note I am lumping non plug-in hybrids (HEVs) into that gas powered lineup too). But the problem is, if EV sales scale at the pace they have been for the next 3-4 calendar years, increasing between roughly 50% to 100% year over year in total, there is going to be precious little market share left for gas powered vehicles. If that rate were sustained, it would mean that at least 30% or so of the US auto market will belong to EVs by the end of 2026, if not double that, or more.
Of course there is absolutely no guarantee that will happen, and I frankly expect the pace to begin slowing at least somewhat by the end of next year, possibly. The economy, supply chain issues, geopolitical situations, another global catastrophe (or just lots of local or regional ones) are some examples of what could slow down the growth of EV sales. Interestingly, another point made in the Barron’s piece, is that according to the Pew Research Center, about 43% of American car shoppers are willing to shop for an EV. But about ¾ of those shoppers lean left (i.e. Democrat). Not to digress into partisan political commentary, the reason I mention it is because if those statistics are true, EV sales growth may slow down relatively soon (in the next year or two) as the customer base remains static and the market for EVs begins to stagnate. But I suspect it will not. There are various reasons why only about ¼ of car shoppers that are willing to consider an EV may lean right (Republican or conservative). The Barron’s piece suggests it could come down to the focus of carmaker’s advertising (EVs tend to be advertised for their ecological or technological qualities), and if car makers shift to focusing on other qualities like safety, cost or power, they may resonate with more right leaning customers. I would suggest that people from all political persuasions care more or less about the same things in their vehicles if we go to a high enough level. People care about their capabilities (of which efficiency/ecological quality are just one instance of capability, towing capacity, acceleration, safety features, and interior capacity being others), their cost (all costs, not just sticker price or fuel cost), and their meaning. “Meaning” is what they allow us to do and what role they play in our identities or goals; think of how off-road SUV and pick-up drivers, sports car drivers, or van drivers (mini or otherwise) might attach importance or aspects of their identity to their vehicles and say things like I need/want an EV that can hold all my tools/haul my boat/haul my entire family. Certainly, EV product choice is finally starting to grow, but if automakers don’t make EVs that appeal to all high level customer requirements, the ramp of EV sales will slow correspondingly because there won’t be enough product variety.
This is where I see the most hope for companies like GM, Ford, VW, and the groups like Hyundai-Kia-Genesis; they are much more experienced in making cars that broadly meet customer’s requirements than the startup automakers (that tend to focus on capability first and foremost). GM has been the leader in the US when it comes to affordable EVs, so far (though as of late they have started going in the opposite direction, which will hopefully only be a temporary trend). The only way companies like these are going to gain much market share is by focusing on the masses and their cost requirements, and the only way they are going to do that is by making much larger volumes of EVs. Finally, that means GM, Ford, and the others are going to have to invest massive amounts of money into their EV production lines (many billions at every company, and that’s just the start). That is why Barron’s points out in its headline that the UAW Strike is not the biggest problem Ford and GM are facing; giving their workers better wages and benefits will be costly, but not as costly in the medium-term as transitioning their companies into more competitive EV manufacturers.
What do you think, readers? Will GM and Ford start making a lot more of the more affordably priced EVs and plug-in vehicles that the large majority of people want, or need? Or will they continue their recent focus on the $50k and up models? Leave your comments and questions below.
Images courtesy of Ford and Chevrolet.
Justin Hart has owned and driven electric vehicles for over 15 years, including a first generation Nissan LEAF, second generation Chevy Volt, Tesla Model 3, an electric bicycle and most recently a Kia Sorento PHEV. He is also an avid SUP rider, poet, photographer and wine lover. He enjoys taking long EV and PHEV road trips to beautiful and serene places with the people he loves. Follow Justin on Torque News Kia or X for regular electric and hybrid news coverage.