Are Rising EV Inventories Proof Nobody Wants Them?

Matt Posky
by Matt Posky

are rising ev inventories proof nobody wants them

Those who follow the automotive industry will have undoubtedly noticed that dealer inventories are slowly approaching levels that would have been considered normal before the pandemic. While this is presumably good news for people who have absolutely had it with dealerships marking up their products, some are growing concerned by how much electric vehicle inventories are outpacing their gasoline-reliant counterparts.

Despite elevated fuel prices, aggressive marketing, and most companies vowing to transition toward building electrified automobiles exclusively, America has an EV supply of more than 100 days on dealer lots. That’s about double the average for gasoline vehicles. While it would seem that people are losing interest in battery-driven automobiles, industry experts are claiming that all is not as it seems.

While alleged experts have certainly proven their fallibility in recent years, there are reasons to buy into the claim. Things are often less simple than they appear on their face and EVs certainly qualify. For starters, the market share of electrified autos has continued to increase.

The Department of Energy has reported that the U.S. share of battery electric vehicles has grown from a negligible fraction of a percent to over 6 percent between 2018 and 2023. Take rates for plug-in hybrids have also increased, albeit at a much slower rate. It’s definitely not happening at the pace that the Biden administration wanted, as the White House set a goal of making half of new-vehicle sales electric by 2030. But we’re still moving gradually in that direction.

There’s also a large disparity in what’s popular among EVs. Some models aren’t very competitive and effectively exist as compliance vehicles. Others are global models that are poorly suited to the North American market (too small, bad range). Then there are the premium luxury models that trade on offering more features, larger batteries, and cultural cachet. The point is that the segment hasn’t fully matured and currently caters to wealthier consumers who see these as status vehicles.

However, government incentives (EV tax credits) have made them more attractive in the general sense. The Tesla Model Y may still be on the pricier side of affordable EVs, lack the fit-and-finish of other models, and be a little too barren inside for some tastes. But it’s no more expensive than the average automobile sold today after tax credits are accounted for, wears a desirable badge, and stresses the fundamentals of what makes EVs desirable in the first place. That’s been enough to make it one of the top ten best-selling automobiles in North America.

Tesla is still mopping the floors with other EV providers and it seems to stem from a mix of product design, careful pricing, and offering consumers a sense of exclusivity. The latter item is something that’s been bolstered by the way Tesla products are sold. While rival brands now have electric cars sitting around the lot, Tesla forces its customers to wait until the vehicle can be delivered.

Surplus inventories aren’t a great way to make something appear desirable. But Tyson Jominy, vice president of data and analytics at J.D. Power, recently told Automotive News this is the result of supply chain improvements. Due to how the world handled the pandemic, supply chains were left in shambles and everyone claimed to be unable to meet demand for years. That appears to be changing now, with Jominy suggesting it has contributed to rising EV inventories.

"The story that demand for EVs is slowing is patently false," he said.

Cox Automotive inventory data showed 103 days' supply of EVs through June. But that doesn’t include Tesla models due to the fact that they’re not solid using the dealership model.

It’s not the only big disparity in the data. As previously noted, there’s a pretty big gap between which electric models are popular and that gap is reflected in terms of supply.

From Automotive News:

Days' supply tallies vary by model. For example, Cox's averages by model ranged from 23 days, for the Chevrolet Bolt EUV, to 181 days for the Nissan Ariya. Most EV models had more than 100 days' supply, Cox said.
GM spokesman Jim Cain said the typical days' supply calculation looks backward and can obscure what's really going on in the market for a specific vehicle. For example, to calculate the days' supply at the start of August, July's month-end inventory would be divided by July's sales, then multiplied by the number of selling days in July. J.D. Power’s calculation is slightly different, always multiplying by 30 days, rather than the number of selling days in a given month.
"If you have low sales, which is common for vehicles that are launching, and rising inventory, which is also expected for launch vehicles, you get a high days' supply number," Cain said. "The reading can be further misleading if a significant amount of that inventory is in transit to dealers and not available for sale."
Days' supply figures tell the inventory story best when the product is in a steady state, said Chris Harto, senior policy analyst at Consumer Reports. With EVs, some automakers are shutting down plants and struggling with production hiccups, while others have increased U.S. production beyond the level of demand.
"There are some issues ... driving really significant conclusions from one point in time," Harto said.

There are also broad disparities in terms of where interest is coming from. Coastal metropolitan hubs tend to see greater demand for all-electric vehicles than anywhere else in the United States. Rural areas are less interested due to there being lackluster charging infrastructure and lower-income households. Regions with particularly cold winters also seem hesitant to embrace electrification, as driving ranges tend to vary widely at extreme temperatures.

Though there are certainly exceptions. Your author currently lives in the woods where you’d expect to see a lot of gasoline-powered pickups and SUVs. They’re certainly prevalent. But there are enough wealthy neighbors and nearby cities to guarantee above-average EV sales.

Even in California, where emission standards are higher than the rest of the nation and electric cars are vastly more popular, there’s a noteworthy decline in volume among dealerships located away from urban areas. Regional demand is something the industry needs to figure out as it likewise attempts to gauge overall demand for battery-powered cars.

"We are trying to balance having enough inventory and enough demand," said Sam Fiorani, vice president of vehicle forecasting at AutoForecast Solutions. "There will be points where one is ahead of the other."

But some of the optimism seems unwarranted. EV sales may be progressing steadily in places like California, which has set a firm timeline for when all automobiles sold within the state have to be electric. But other parts of the country aren’t following suit.

While this may become irrelevant as federal emissions standards reach a point that they effectively become EV mandates or fuel prices continue breaking records, there’s a subset of today’s buyers who clearly are not interested.

Their reasons span the gamut. Many don’t believe they’ll suit their lifestyle, others are concerned about serviceability, and some are skeptical about the environmental claims as new information comes out about the perils of cobalt and lithium mining. There are even people who claim they simply don’t like the feeling that EVs are being foisted upon them via regulatory pressure.

Your author is in regular contact with several people that spend their days selling automobiles. All of them have expressed difficulties selling all-electric vehicles this year. While a few attributed this to pricing disparities, every one of them noted that there is a group of shoppers that are inherently disinterested in owning a vehicle that’s wholly reliant on battery power.

But anecdotal evidence doesn’t necessarily explain why EV inventories are outpacing liquid-fueled models. It seems far more plausible that it’s a combination of everything we’ve covered thus far. But it’s certain that legacy manufacturers haven’t yet cracked the code in terms of widespread EV acceptance and may have gotten ahead of themselves here.

[Images: Nissan; General Motors; Tesla]

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13 of 178 comments
    • See 8 previous
    • Art_Vandelay Art_Vandelay on Aug 17, 2023

      No what @Ih…Don’t really care if you can’t afford one. Not my problem

  • Tassos Tassos on Aug 13, 2023

    "nobody wants" most of the 100s of LOSER EV models made, at huge losses per vehicle, by the LEGACY makers.

    But ALMIGHTY TESLA still has excellent demand, and has the profitability to even still lower its prices to make it even greater and dominate the BEV industry even more than it does already.

    TESLAS are the APPLE of BEVs

    Every other BEVs are just Androids.

    • See 1 previous
    • Mike Bradley Mike Bradley on Sep 01, 2023

      Apple has a tiny fraction of the global computer market and a large share of the gadget market. If Tesla were to inherit the same success, it would have a tiny share of the global car market and a large share of hubcaps.

  • SCE to AUX A question nobody asks is how Tesla sells so many EVs without charge-at-home incentives.Here are some options for you:[list][*]Tesla drivers don't charge at home; they just squat at Superchargers.[/*][*]Tesla drivers are rich, so they just pay for a $2000 charger installation with the loose change in their pocket.[/*][*]Tesla drivers don't actually drive their cars much; they plug into 110V and only manage about 32 miles/day.[/*][/list]
  • SCE to AUX "Despite the EV segment having enjoyed steady growth over the past several years, sales volumes have remained flatter through 2023."Not so. How can EV sales be increasing and flatter at the same time? and H/K/G are all up for EV sales, as are several other brands.
  • ToolGuy Here is an interesting graphic, if you're into that sort of thing.
  • ToolGuy Nice website you got there (even the glitches have glitches)
  • Namesakeone Actually, per the IIHS ratings, "Acceptable" is second best, not second worst. The ratings are "Good," "Acceptable," "Marginal" and "Poor."