The End of the Road for EV Sales in North America?
It appears that the Electric Vehicle (EV) revolution has finally come to an end. North American consumers are abandoning their EVs and turning back to Internal Combustion Engine (ICE) vehicles. At least, that’s the impression you’ll have from all news and social media headlines throughout this year, claiming that EV sales are falling off a cliff and consumers no longer want EVs.
But is it actually over for EVs in North America? Contrary to those headlines, the actual sales data clearly tells the opposite. Let’s take a look at the facts.
The Rise of EVs: Market Share Growth
Since the introduction of the first mass-produced battery-electric vehicles (BEV) in 2010, vehicles like the Nissan Leaf, Tesla Model S, and BMW i3 barely registered a single percentage point of the North American car market. EVs were seen as experimental, and not ready for mass adoption.
About 10 years later, in 2020, newer EVs like the Tesla Model 3, Model Y, and Chevrolet Bolt offered more range and features. They appealed to a slightly wider audience, helping to increase the market share of BEVs, but still represented less than 2 percent of U.S. total light-duty vehicle sales.
By 2021, electric cars started to approach 4 percent of American and Canadian light duty automotive markets. According to Kelly Blue Book, battery-electric vehicles reached over 488,000 sales, or 3.2 percent of the market in 2021 – an increase of 89 percent from the previous year. In Canada, EV adoption was a bit better, with BEV sales representing 3.6 percent of the auto market.
Exponential growth continued in 2022. Nearly 810,000 BEVs were sold in the U.S., representing a 66 percent increase from 2021’s record sales. In 2023, American consumers bought a record 1.2 million battery-electric vehicles – a 47 percent increase from the previous year, and representing about 7.6 percent of the US light duty automotive market. In Canada, Statistics Canada reported that BEVs represented 8.1 percent of the Canadian auto market in 2023 versus 6.5 percent in 2022. North American consumers were finally embracing EVs in large numbers.
Steady EV Sales Growth in 2024
Following the staggering growth of EVs between 2021 and 2023, the first three months of 2024 showed a slight dip in quarterly EV sales. Although sales were slightly up year-over-year (an increase of 2.9 percent), it was the first quarterly decline (15 percent down) seen in recent years. This led to a wave of speculation that electric cars were starting a free fall, with waning consumer demand.
However, EV sales in the U.S. jumped back up for the first half of 2024. Year-to-date EV sales have increased by 9.0 percent versus the previous year. In fact, EV sales in Q3 2024 represented 8.9 percent of US auto sales – the highest level recorded in history. In Canada, EVs increased from 9.2 percent of the market in 2024 Q1 to 9.9 percent in Q2.
While it’s true that current EV sales growth is much slower than observed in the last few years, EV sales in the U.S. are currently outpacing last year’s record. 2024 is showing steady sales growth for EVs – even among economic concerns like higher inflation and interest rates.
Strong Demand for New EV Models
Looking at the individual brands and models in the recent Q3 2024 sales data, it’s also pretty clear that consumer interest for new EV models is still strong.
Despite recent sales challenges from increased competition, Tesla rebounded in 2024 Q3, growing by 6.6 percent year-over-year, and in turn capturing 48 percent of the U.S. EV market. The brand’s high-volume Model Y and newly-refreshed Model 3 continue to be the top selling EVs in America. The new Cybertruck was the third best-selling EV in Q3 – and the best selling EV pickup truck in the U.S.
Legacy automakers enjoyed record demand for their EVs, as well. Honda’s first battery-electric crossover, the Prologue, joined other top 10 best-sellers like the Ford Mustang Mach-E and Hyundai Ioniq 5.
In the third quarter, General Motors’ EV sales soared by nearly 60 percent, making it the second best-selling automaker behind Tesla. The company’s all-new Chevrolet Equinox EV is now the company’s best-selling EV model. Cadillac continues to sell more premium EVs than other luxury brands like Mercedes-Benz, Audi, BMW, and Lexus; its popular Lyriq grew by 281 percent in year-to-date sales compared to last year. Other EV models also experienced significant YTD sales increases, like the Ford F-150 Lightning (up 86 percent year-over-year), Lexus RZ (up 233.8 percent), Toyota BZ4X (up 109.3 percent), and Genesis GV70 (up 144.3 percent).
What is Fueling EV Sales?
Between 2021 and 2023, a combination of factors led to the high growth rates we saw for electric vehicles. A wave of new EV models were introduced, like the popular Ford Mustang Mach-E, Ford F-150 Lightning, Volkswagen ID.4, and Hyundai Ioniq 5. U.S. and Canadian governments mandated zero-emission vehicle (ZEV) sales by specified dates. Gasoline prices soared.
Perhaps most importantly, the U.S. government introduced the EV tax credit as part of the Inflation Reduction Act, helping make EV ownership more affordable. Since the Biden administration’s Bipartisan Infrastructure Law announcement in 2021, the number of charging stations also grew exponentially, helping to ease concerns around charging and range anxiety.
In addition to those factors, 2024 brings more new EV models than ever. Legacy automakers have not only introduced more EV models, but also new body styles that weren’t previously available. General Motors, for example, has transformed from a one-EV-model company to one that offers 10 EV models from its different brands, including the Chevrolet Blazer EV crossover, GMC Sierra Denali EV pickup, and Cadillac Lyriq crossover. Kia introduced its EV9 – the most affordable large three-row crossover EV in North America. The Chevrolet Equinox EV is the first of many affordable long-range EVs entering the market.
While not entirely back to pre-pandemic levels, dealers’ inventory of new EVs has increased due to recovering supply chains. For the consumer, this means the return of choice, availability, and sales incentives. Incentives for new EVs in September, for example, were 12 percent of the average transaction price (ATP) versus 7.3 percent for the rest of the market.
Leasing a new EV in the U.S. is allowing more vehicles to qualify for the federal EV tax incentive, and is also making higher purchase prices more manageable. In many cases, automakers are offering lease deals that are better than those of ICE vehicles. In fact, according to Cox Automotive, 42.7 percent of EVs were leased in July 2024 versus 22.2 percent for all other types of vehicles.
Shifting Interest in Electrified Powertrains
Over the last year, there has also been increasing consumer interest in both hybrid-electric vehicles (HEV) and plug-in hybrid electric vehicles (PHEV). While BEV market share increased by about 11 percent from 2023 Q2 to 2024 Q2, hybrid market share grew by 16 percent – led by models from Toyota, Honda, Ford, Lexus, and Hyundai. Demand for plug-in hybrids increased by 14 percent during the same period, led by models from Jeep, Toyota, Volvo, Chrysler, and Mazda.
All of which have contributed to the decreased interest in pure ICE vehicles since 2018. According to Cox Automotive, in 2021 ICE vehicle sales represented over 90 percent of the US auto market. By 2024 Q2, they had dropped to 81.6 percent of the market – an 11 percent decline. Consumers are clearly not reverting back to ICE vehicles.
Conclusion: What’s Next for EVs?
It’s clear that EVs in North America are still growing and in demand, even in a mixed economy. In fact, Cox Automotive expects 2024 EV sales to exceed the 1.2 million unit record set in 2023. In the near future, things will only get better, especially as the economy improves.
Tesla will soon introduce a refreshed version of its Model Y – the best-selling car in the world. This will likely not only increase sales for Tesla but also bump up the entire North American EV market.
More affordable new EVs, such as the new Chevrolet Bolt, Volvo EX30, and Kia EV3, will be entering the North American market – even without Chinese brands joining them. More EVs coming off-lease will help increase the already growing used EV market, presenting another affordable option for consumers. In the U.S., used EVs priced under $25,000 are eligible for up to $4,000 in federal rebates.
With more automakers obtaining access to the large Tesla Supercharger network, consumers will also be able to buy an EV from their favorite non-Tesla brand without anxiety over range and charging.
So are EVs dead in North America? Far from it. While the current steady growth of EVs may be slower than seen in recent years, consumers are still very interested and realizing the benefits of going electric.
