A flurry of investment, incentives and mounting supply has led to cheaper prices for electric vehicles and more options for consumers, which automotive experts say is prompting more Americans to leave gas guzzlers behind.
Growing EV inventories are helping to reduce the overall costs of buying or leasing a plug-in vehicle. But it’s also a caution signal for automakers that are trying to balance supply with demand.
Roughly 6.5% of new vehicle sales during the first half of the year were EVs, a 25% increase from the same time last year, according to Cox Automotive Group’s analysts. At the same time, the cost of making the switch has only gotten cheaper, with the average EV retail price dropping to $55,436 during this year’s second quarter — a 15% decrease from the same period last year.
The Atlanta-based automobile services organization expects EV adoption will continue to increase this year, predicting that EV sales in the U.S. will reach a record 1 million vehicles.
“Affordability is improving for customers, which is very positive for the EV industry,” Jonathan Gregory, Cox Automotive senior manager of economic and industry insights, said this week during a mid-year media and industry briefing. Cox Automotive is a division of Cox Enterprises, which also owns The Atlanta Journal-Constitution.
Georgia has seen a surge in EV manufacturing investments, with two EV manufacturing plants and multiple battery makers building factories and promising thousands of jobs.
EVs, which do not produce tailpipe emissions once on the road, are widely viewed as a more climate-friendly than autos powered by fossil fuels. The Biden administration is pushing electrification through hefty incentives and programs aimed at establishing domestic EV manufacturing and creating ample supply to reduce sticker prices.
EVs are also generally cheaper to maintain and recharging is generally less expensive than refueling a gas-powered vehicle, meaning longer-term cost savings over the vehicle’s lifespan.
Demand for new vehicles, especially EVs, has outpaced supply since the onset of the COVID-19 pandemic when car sales plummeted. Addressing the supply issue has prompted new “growing pains,” Cox Automotive Chief Economist Jonathan Smoke said.
EV supply has climbed to 92 days in the second quarter, meaning that’s the average number of days a vehicle will stay in dealers’ inventory before selling. It was 36 days a year prior, according to Cox Automotive, and that figure is 51 days for all new vehicles.
It’s the first time that the days of supply for EVs has been greater than for conventional vehicles. This means consumers have more choice if they want a plug-in car, but EVs are remaining on dealer lots for longer periods of time.
“We’re basically seeing that adoption is not quite keeping up with the pace of new models becoming available and choices being available in the marketplace,” Smoke said.
Credit: Kia
Credit: Kia
A recent Cox Automotive survey revealed a gap in EV optimism between auto dealers and consumers. Less than a third of the 152 dealers surveyed said they think EVs will largely replace gasoline vehicles in the future, while more than half of the 1,024 consumers surveyed believe the opposite.
The top barriers for those pondering an EV include high vehicle prices, a lack of public charging stations and concerns over the cost of battery replacement, the survey found.
Smoke called it “a chicken and egg issue.”
“We don’t have enough chargers everywhere to give people confidence that they can travel and use their vehicle as they’re used to using a combustion engine,” he said. “But we can’t get chargers everywhere without the fact that EVs are not everywhere.”
Federal legislation is directing billions into EV charging infrastructure. Many states and cities are also investing in charging stations.
Since 2020, EV makers and their suppliers have announced more than 40 projects in Georgia totaling more than 28,400 announced jobs and $22.7 billion in anticipated investment, according to Gov. Brian Kemp’s office.
The headliners of that Georgia investment wave are assembly plants by Hyundai Motor Group and Rivian. Cox Enterprises owns about a 4% stake in Rivian.
