Drive by car lots, and you will see rows of unsold electric vehicles. How could this be? I thought everyone was transitioning to EVs.
Let’s start with rental car companies. They were supposed to help people get comfortable with electric cars. Now, Hertz is selling off over 30,000 EVs due to high depreciation, customer frustration, and massive repair bills. Other rental car companies are following their lead.
Recently, Ford CEO Jim Farley stood by an F-150 Lightning while it took 40 minutes to charge from 0 to 40%; he admitted that higher charging speeds would be necessary to win over gas-powered truck buyers
Life in the slow lane
Car shoppers aren’t biting either, with vehicles sitting unsold on dealer lots an average of 1.5 times longer than hybrids or gas vehicles.
Take the Jaguar iPace, a sleek electric SUV meant to entice first-time EV buyers. Thanks in part to grumblings about the iPace’s poor range — and hefty $72,000 price — dealers are sitting on 400 unsold units, the equivalent to nearly two years’ worth of inventory.
EV adoption and EV sales growth have slowed. Market leader Tesla is feeling the slump. In the first quarter of this year, sales fell by 15.2% compared to Q4 last year; sales have gone down almost 10% versus just a year ago.
Tesla recently responded by laying off more than 10% of its workforce globally. Meanwhile, it’s feeling the pressure from its biggest rival, BYD. The Chinese automaker — which offers more choices in EVs under $30,000 as well as a pickup truck — is coming to the United States soon.
Early EV exuberance
It seems like yesterday when every automaker was jumping on the EV bandwagon.
Jaguar pledged to be all electric by 2025; Alfa Romeo by 2027; Chrysler by 2028; Volvo, Lotus, Aston Martin, General Motors, and the rest by 2030.
The mood was giddy, with speculations that one day, we’d have electric boats and airplanes — even electric spaceships flying to the moon.
Today, the EV euphoria is dead. Manufacturers are scaling back or delaying their electric vehicle plans.
Car catfished
This is what I call getting car catfished.
Start with the bait. There is no question that all the new technology and design is impressive. The early adopters who are tech savvy bought in right away. Even though their enthusiasm jump-started sales for all brands, it looks like every tech lover bought in is on their second or third electric car.
Now, we’re at the stage where the rest of us need to be convinced that we need an EV in our driveway too. EVs, especially when you factor in their higher insurance rates, don’t come cheap. Your average EV will run you $65,000, while old-fashioned gas guzzlers have been holding steady at under $50,000 on average.
Then there’s the charging. When it comes to powering up, these gorgeous vehicles tend to be a little high-maintenance. Forget taking them to the good old corner gas station for a quick tank of unleaded and maybe a bag of chips.
Yes, the charging network may be improving, but it’s still a wasteland out there for many people. Range anxiety can leave you a nervous wreck. As can unreliable performance in cold weather. As can limited towing capability. Looks aren’t everything; dependability counts too.
EVs are even more prone to depreciation than regular cars. Had you bought a new iPace in 2019 its resale value would have plunged by over 54% by now!
Lot layabouts
The Porsche Taycan is another example. While it delivered on its promise to be the four-door, electrified version of the Porsche 911, it TayCAN’T seem to attract buyers. It sits on lots for an average of 239 days; the MSRP starting at around $90,000 probably doesn’t help. The Tesla Model S and the Lucid Dream Performance offer longer range at lower prices.
The Mercedes Benz EQS sedan and SUV are even more expensive. They feature complex technologies such as the MBux wide screens, which are impressive but may be overwhelming for some users. Mercedes Benz is the definition of opulence; nonetheless, these cars are sitting on lots for a staggering 221 days on average.
The Ford Mach-E initially captivated the market with its iconic brand appeal, impressive performance, and Innovative features. An EV Mustang — what’s not to love? A lot apparently, starting with the fact that Tesla’s Model Y has better range. The Mach-E sits on lots for an average of 204 days; had you bought one of the first ones in 2021, you would have seen just a horse’s hair under 50% depreciation
Newer to the market is the Genesis electric vehicles. The GV60 is fun, with a tech-forward interior. But it’s starting MSRP of $52,000 is just a bit too expensive to sway consumers leaning toward Tesla for its robust supercharging network. Along with its siblings, the G80 and GV70, it tends to linger on the lot for an average of 190 days.
Ford’s F-150 Lightning is the best-selling electric pickup truck, although it will soon face formidable competition from the EV version of the Chevrolet Silverado.
Ford recently announced that it would be lowering F-150 Lightning production by half from 3200 to 1,600 per week. When it first debuted, Ford promised the F-150 Lightning could do everything its gas counterpart could do, including featuring a Pro Power onboard system, which offers built-in electrical outlets to power tools and other equipment.
Since then, Ford has walked back such big talk.
Recently, Ford CEO Jim Farley stood by an F-150 Lightning while it took 40 minutes to charge from 0 to 40%; he admitted that higher charging speeds would be necessary to win over gas-powered truck buyers. It should come as no surprise that F-150 Lightnings sit in lots for 182 days, and that early adopters have already lost 61% of the their initial investment in two short years.
The Nissan Leaf is reasonably priced but can’t seem to keep up with its more enticing rivals. It is competitive in average lot time, however, clocking an impressive 161 days.
The Cadillac Lyric doesn’t do much better, with an average of 151 days. This in spite of its smooth driving dynamics and a quiet, luxurious cabin. Blame various technical and software issues as well as complaints of subpar interactions with dealerships.
Hybrid vigor
Many consumers are switching from all-electric to hybrid. It makes sense people interested in EVs would cross shop a hybrid; specifically plug-in hybrids, which can run on electric power for short trips and switch to to gasoline for longer distances.
The Toyota Prius has offered this for almost 30 years and has proven to be an extremely reliable, fuel efficient vehicle. That technology is finding its way into other brands like the Lexus RX Hybrid, Ford’s Escape Hybrid, and even super luxury SUVs like the Mercedes-Benz GLS 450 4Matic SUV. It’s a mild hybrid and is offered at a lower price point compared to a fully EV model.
The all-EV plan may have seemed good on paper, but consumers have started voting with their wallets. General Motors has decided to allow customers to choose whether they want to go electric or stay with gas.
Let the buyer decide, as I’ve been saying for decades. You pick what works best for you! Let’s see how many other car companies learn this lesson.