US Data Suggests EV Demand Slowdown Could Be Shortlived

The recent drop in electric vehicle demand that has left many automakers rethinking their electrification plans may be short-lived. New data shows that while the drop in EV sales may have forced major carmakers such as General Motors (GM) and Ford to scale down their plans amid mounting losses in their electric car divisions, the slowdown may not be as bad and won’t last as long as previously predicted.

To help cut emissions from the transportation segment, the Biden administration invested tens of billions of dollars into developing America’s nascent electric-vehicle sector and building a network of public charging infrastructure via the 2022 Inflation Reduction Act. However, EV sales in most major markets started to fall in late 2023 and continued falling through 2024 due to high electric vehicle prices, high interest rates and rising living costs.

With major companies such as Tesla, GM and Ford struggling to sell their EVs, many experts predicted the slowdown would last through the year and possibly into the next, especially if prices and interest rates remained at current levels. A Bloomberg report now says that sales data from Q1 2024 indicates that the ongoing sales slowdown is a minor bump in a journey that will see rising electric vehicle sales every year.

The report suggests that consumer purchases don’t seem to be affected by demand issues and Tesla is still the only mass EV producer in the U.S. despite its somewhat disappointing delivery numbers. Cox Automotive director of industry insights Stephanie Valdez-Streaty says the nascent EV sector is still experiencing demand growth but noted that the pace isn’t standard industry-wide.

She adds that although Ford and Tesla may not have any new models on the way, BMW, Cadillac, Kia and Hyundai are pushing forward. Even so, Tesla still holds a majority of the U.S. EV market, with the Model Y accounting for 34.5% of the country’s total market share and more than 30% of Q1 EV sales.

The Model 3, Rivian R1S and Ford F-150 Lightning made up 3.5%, 2.9% and 2.8% of total market share. Analysts say established automakers will have to reach mass levels of EV production to even dream of shaking Tesla’s dominance in the U.S. market. Bloomberg forecasts a surge in electric vehicle sales growth through the year, with Ford, General Motors and Hyundai selling more than 100,000 electric cars this year, a threshold that only Tesla has reached in the nation so far.

This is good news for ElectraMeccanica Vehicles Corp. Ltd. (NASDAQ: SOLO) and the overall industry as concerns were beginning to arise regarding the future viability of strategic plans that these companies had made for the future.

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