EV Reality Check. Sky Actually Not Falling.

I just finished a new column on the state of EVs in the US, so look out for that. In the meantime – needed perspective in this interview with Corey Cantor, a specialist at Bloomberg New Energy Finance. (BNEF)

Latitude Media:

A recent slew of negative headlines about U.S. EVs makes it feel like the sky is falling on the market. Yet the data show robust growth. Combined battery electric and plug-in hybrid sales in 2023 were up 50% from 2022, while EV market share reached 9.5% in 2023, up from 7.5% in 2022, according to BloombergNEF. 

Still, there have been notable signs of changing expectations. GM and Ford have downsized their EV ambitions. Hertz sold off 20,000 Teslas. And Elon Musk tried to temper expectations in last week’s disappointing Tesla earnings call. 

Shayle Kann: Thank you for helping me make sense of all the public noise going on about electric vehicle sales in the United States and the outlook for them. Let’s start with what all the headlines have said. Can you just run me through the litany of recent news that has come out that is delivering a bearish sentiment to people who are looking to the EV market here?

Corey Cantor: If you went back to really September of last year, you’d be having so many bad headlines that you could fill up a whole episode, just reading takes from the Wall Street Journal saying things like “The EV bubble is deflating,” “Dealers complaining about EVs piling up on lots.” Even USA Today, I think, had a piece which isn’t politically or anti-EV in any way saying that consumers are not buying EVs despite the fact that there are generous tax credits under the Inflation Reduction Act. We’ve also seen specific models sitting on lots for a while. So you run the gamut, you pick the paper, people are saying that EV’s adoption is on the decline, but we at BNEF have a lot of data, so we can dive into that. I think the big takeaway when reading through these headlines and the way I like to think about it is, are EV sales actually going down or is people’s expectations of EV growth changed from where maybe it was a couple of years ago? And it’s a more macro conversation on what is a successful US EV transition and how do we get there?

I feel personally that 2023, based on the data, was a pretty successful year for the market and a lot of the open questions around 2024, but if you’re just reading the headlines, you might think the sky is falling that EV sales are actually going down. By the end of 2023, according to our data, EV sales were up almost 50% year-on-year from 2022 to about 1.45 million in total up from about 971,000. Now we’re counting both BEV and PHEV in our EV metrics, but impressive nonetheless.

Shayle Kann: So we’ll dig into that more. But I think you’re hitting on a key point that I’ve noticed in that reporting too, which is that people are talking about the EV market slowing down. The data doesn’t really support the EV market having already slowed down, at least through 2023. But what the reporters were reacting to was announcements about the future. And in particular, I think what was happening a lot in the fall, you could tell me if you feel differently, was that some of the major auto EMs were announcing, and this happened repeatedly, that they were going to scale back on planned production expansion. And so that’s an indication as you said, not that EV sales have already slowed down necessarily, but that their prior expectations of demand growth might be lower, which is still notable and we should dig into that. But it is a different thing.

Corey Cantor: Right. And I think the other fair assessment that in some of the conversations with dealers, for example, if you see specific EV models piling up on lots for longer than average, say 150 days or so, or a hundred days or so when the average car is maybe sitting on lots for 70 days, that’s something to take note of. And not to downplay that specifically, but when you’re looking at the actual monthly sales data, it was really only October and November that we saw in our preliminary data where there was any type of dip. In fact, December was the highest month we had for all of 2023, again based on preliminary data, to show that a lot of those end of year push for EVs was working. So again, things are going to be noisy, I think annually is the best way to look at it, but even quarterly has its own rhythm and flow to it.

And then one other point on the, I guess, aspect around the dealer lot EV pile up that often doesn’t take Teslas and Rivians into account. So often you’ll have people saying, “Oh my goodness, the US EV market is in trouble.” But if you’re removing about 50% of sales, you take Tesla, Rivian, Lucid and the EV-only automakers out of the picture, then you’re left with an incomplete picture. So some of it wasn’t bad intent, but I think this sky is falling aspect was a little bit hyperbolic when sales were up by so much. I think any renewable energy market would take 50% year-on-year growth or the auto market would love to see 50% year-on-year growth as a whole.

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Inside EVs:

There’s one automaker that stands in stark contrast to all of the doom-filled headlines about uneven electric vehicle sales in 2023, and that is Korea’s Hyundai Motor Group. While last year saw record EV sales from just about every brand that bothers to sell them, it also saw uneven purchasing, questions over demand and continued issues with software and public charging. But the data from last year increasingly shows that Hyundai’s approach—building some of the world’s best EVs at fairly competitive price points—is paying off handsomely, and that trend seems only poised to accelerate in 2024.

A new report out today from BloombergNEF, the news wire’s energy research arm, indicates that based on preliminary sales data, Hyundai and Kia together made up more than 8% of the new EVs sold in the U.S. last year. (BloombergNEF lumped sales of the Genesis luxury models in with Hyundai.)

This means that not only did Hyundai Motor Group outpace General Motors and Ford at EV sales, but the Korean company is now the number two automaker in the U.S. behind Tesla. (As a single, standalone brand, however, Ford is still ahead of the Koreans.)