Electric vehicle (EV) sales are set to moderate in 2024 after setting a blistering mark for growth in 2023, according to a report from market data and analytics provider J.D. Power.
Industry-wide, EV sales and leases in the U.S. rose 50% in 2023 even as gas-powered vehicles sputtered to just a 2% rise. That fast expansion accounted for 37% of total auto sales growth in the United States, J.D. Power said in its “E-Vision Intelligence Report February 2024.”
To be sure, most new cars still burn gas. Combined automobile sales and lease retail volumes for the U.S. rose 8% in 2023 from 2022, totaling approximately 13 million units, of which roughly one million were EVs.
Despite those hot 2023 growth numbers, 2024 will probably be cooler. J.D. Power revised its EV Market Share Forecast down for 2024, reducing it by 0.8 percentage points to reflect delayed vehicle launches, production issues, restrictions associated with the Clean Vehicle Credit, slowing adoption patterns in some states, and plateauing shopper interest driven largely by concerns about public charging.
The firm now forecasts 12.4% EV market share in 2024, with new EV market share not projected to top the 50% mark until 2031.
Another reason for the slowing sales is that mainstream EV availability continues to lag behind the premium sector. The J.D. Power EV Index availability score for premium market EVs has climbed to 75.1 (on a 100-point scale), which means that more than three-fourths of premium market buyers currently have a viable EV alternative to comparable gas-powered vehicles. In the mass market, however, the availability score is just 33, which means that only one-third of mass market buyers have a viable EV alternative. That number has declined from 37.5 in July 2023 as manufacturers have struggled with production delays.
By automaker, the biggest contributors to the overall EV growth rate in 2023 were Tesla (56%), BMW (8%), and Mercedes-Benz (7%). Meanwhile, the decline in mass market availability has been driven by a combination of manufacturing delays (affecting models like the GMC Sierra and Chevrolet Equinox EVs) and production cuts (such as those initiated by Ford with its F-150 Lightning).
Another factor slowing mass market EV sales is the tightening of eligibility requirements for the federal Clean Vehicle Credit starting in 2024, concerning where vehicle battery components are sourced and manufactured. According to J.D. Power, those restrictions will negatively affect overall EV availability, particularly in the price-sensitive mainstream marketplace where vehicles such as the Ford Mustang Mach-E, Nissan LEAF, and Chevrolet Blazer EV no longer qualify.
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