We explore the latest Cox Automotive data, which unveils a widening disparity between EV production and buyer demand for legacy automakers.
New data from Cox Automotive reveals that legacy automakers, particularly those selling through dealerships, face a significant challenge in the growing production of electric vehicles without sufficient buyers. Cox Automotive reports that electric vehicles have surpassed the average inventory of gasoline vehicles at dealerships, reaching a significant threshold.
Despite increasing consumer interest, concerns about pricing and charging infrastructure cause hesitation in purchasing EVs. Legacy automakers have amassed a substantial supply of EVs and have been facing issues with regulators. Currently, they await buyers to come forward, causing a mismatch between supply and demand. Maybe some dealerships significantly mark up the price of electric vehicles, or perhaps the available EVs for purchase on lots have poor range.
According to the newly published data, EV sales are expected to exceed 1 million units for the first time in 2023, accounting for approximately 6.5% of the U.S. auto market. This surge in interest is fueled by Tesla’s rapid expansion and the introduction of new EV models from various brands. However, sales figures are not keeping pace with increased output, leading to a significant inventory buildup. The latest data reveals that the nationwide supply of EVs has surged by nearly 350% this year, totaling over 92,000 units.
Brands Grappling with Oversupply Issues
Axios reports that the Ford Mustang Mach-E, previously in high demand, now faces an oversupply issue with a 117-day inventory. This could be attributed to Tesla’s strategy of price reduction, which may have impacted the market for other electric vehicles. Ford, however, claims that the increased inventory is a result of ramping up production in anticipation of stronger sales in the upcoming third quarter.
Legacy luxury brands like Genesis, Audi, and GMC are experiencing bloated inventories, with supply far exceeding demand. Additionally, the data shows imported models from legacy automakers like the Kia EV6, Hyundai Ioniq 5, and Nissan Ariya are piling up due to ineligibility for federal tax credits. On the other hand, hybrid vehicles, seen as a stepping stone to fully electric cars, have lower inventory levels. This supports Toyota’s argument about consumers desiring vehicles with greater range. The industrywide supply of hybrids is relatively tight, with Toyotas experiencing even shorter supply periods.
Direct-to-Consumer Sales Model Benefits Customers
It’s worth noting that Cox’s inventory data excludes Tesla and pure EV automakers, companies that sell directly to consumers. Nevertheless, companies that directly sell electric vehicles to consumers do not seem to face the same issues as legacy automakers with dealerships. Both Tesla and Rivian released record production and delivery numbers earlier this month, providing evidence of this. Tesla, Lucid, Rivian, and Fisker primarily manufacture their electric vehicles based on customer specifications in a made-to-order fashion. Furthermore, these electric vehicles bypass car dealerships and have straight forward pricing.
Promising Outlook for EVs and Customer-Focused Automakers
Regardless, the future of electric vehicles looks promising. This is especially true for automakers that do not rely on dealerships to sell their vehicles. With the expected expansion of charging infrastructure and projected price parity between EVs and gasoline vehicles by 2025, legacy automakers will need to remain patient. In addition, they must strategize to address concerns regarding EV pricing and consumer range anxiety. One way to do this is by offering vehicles with larger batteries and encouraging the use of home EV chargers. For the time being, automakers that are customer-centric will continue to have the edge.
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