Lang Aftermarket iReport: Electric Vehicle (EV) sales boom on hold
“Electric vehicles (Plug-In Hybrids and Battery Electric Vehicles) are feeling the impact of Covid-19, with 2020 annual sales down significantly. This will mark the second consecutive annual decline in Electric Vehicle (EV) volume across the U.S.
“But don’t worry, this is the lull before the exponential growth of new EV models over the next few years, which will drive Electric Vehicle sales through the roof. At least that is the prevailing opinion. A closer look at the EV market, however, indicates that this expected surge in EV sales might not come so soon.”
— Jim Lang, publisher, Lang Aftermarket iReport
EV Sales Hit by Covid-19
The sales of Electric Vehicles (Plug-In Hybrids and Battery Electric Vehicles) are being hit hard by Covid-19, as their 2020 volume dove proportionately more than the sales reduction suffered by ICE vehicles last year.
This follows an EV sales decline of nearly 10% during 2019. That sales slump was concentrated in the last six months of the year and was blamed largely on the reduction of purchase incentives.
2019 EV Sales Decline
Electric Vehicle sales fell to 329,000 in 2019, down over 30,000 from 2018, when a record 361,000 EVs were sold in the U.S. EV 2018 sales had surged dramatically over the previous year, topping the unit gains achieved by EVs over the previous four years.
2020 EV Sales
Lang Marketing estimates that 2020 EV sales dropped to approximately 264,000, down about 20% from 2019 and nearly a one-third plunge from 2018.
EV 2020 sales fell at a greater rate than total light vehicle volume, down substantially from their record share of the 2018 market.
Optimistic Sales Projections
The expectations of rocketing EV sales over the next several years are based on the profusion of new EV models that will be offered to U.S. buyers.
Virtually all carmakers will release a wave of new EVs, with over 100 new EV models filling Dealer showrooms in the next three years.
Four Barriers to Greater EV Sales
EVs must overcome at least four major barriers if they are to significantly expand their new vehicle sales share in the U.S.
First, a substantial gap in operating range still exists between internal combustion engine (ICE) vehicles and EVs. This creates “range anxiety” among many potential EV buyers.
Second, the limited life of EV battery systems and their high replacement costs are important issues. In some cases, the estimated battery replacement costs are so high that the operating life of some Electric Vehicles (especially BEV models) might not be much longer than the life of their original battery systems.
Third, the purchase price differences between EVs and ICE vehicles remain high. Without generous rebates or government incentives (which are being phased out) BEVs can cost up to 20% more than comparable ICE models.
Finally, there is not an adequate nationwide vehicle charging infrastructure that can effectively and conveniently enable Electric Vehicle owners to charge their vehicles.
Current State of the EV Market
EV sales in the U.S., so far, represent an enthusiast market rather than a mass market phenomenon.
Tesla accounts for an overwhelming share of EV sales in the U.S. Additionally, EV sales are heavily concentrated in a few metro markets, with California representing a dominant share of EV sales last year.
More ICE Vehicles on U.S. Roads
Lang Marketing projects that the growth of EVs will not reach an annual sales level before 2030 that will be high enough to eliminate the annual increase of ICE vehicles on U.S. roads.
2021 and Beyond
EV sales will recover this year, but a number of factors (low gasoline prices, relatively high prices of EVs, etc.) will keep their 2021 sales recovery weaker than the sales rebound of ICE cars and light trucks.
In the longer view, the flood of new EV models into the U.S. market will not address all of the barriers that have kept EVs from becoming a nationwide sales phenomenon.
Six Major Takeaways
- Electric Vehicles (Plug-In Hybrid and Battery Electric Vehicles) suffered an approximate 20% sales reduction during 2020, more than the percentage decline of ICE vehicles during the year. Electric Vehicle 2020 sales were down nearly one-third from two years earlier, when a record 361,000 EVs were sold in the U.S.
- Expectations of soaring EV sales over the next several years are based largely on the explosion of EV models that will be flooding Dealer showrooms.
- There are at least four major barriers to higher EV sales in the U.S. new vehicle market: operating range, battery life, higher purchase price, and the lack of an adequate charging infrastructure across the country.
- EV sales, so far, reflect an enthusiast market rather than a mass market phenomenon that expands over a large mix of vehicles and geographic areas of the country.
- EV sales during 2021 will record a lower recovery rate than the sales rebound of ICE cars and light trucks.
- EVs will not reach an annual sales level before 2030 that will be high enough to eliminate the annual increase in the population of ICE vehicles on U.S. roads.
Copyright 2021 by Lang Marketing Resources, Inc.
NOTE: Special thanks to publisher Jim Lang for granting us permission to publish the Lang Aftermarket iReport.