The most recent data from Kelley Blue Book indicates that the growth in electric vehicle (EV) sales in the United States is beginning to decelerate. In the first quarter of 2024, Americans purchased 267,808 new electric vehicles, which accounted for 7.3% of total new-vehicle sales. Although this reflects a year-over-year increase of 4.2%, it signifies a significant decline from the previous quarter, in which sales dropped by 13.9%. This deceleration marks a notable departure from the swift growth observed in the previous two years.
Stephanie Valdez Streaty, the director of Industry Insights at Cox Automotive, expressed that the decrease in EV sales during Q1 2024 was the first quarter-over-quarter downturn since Q2 2020. Notably, Tesla experienced a reduction in sales, which had a substantial impact on the overall market dynamics. Nonetheless, Streaty also highlighted that several other brands achieved over 50% year-over-year growth in EV sales. This year is anticipated to be ‘the Year of More’, with an increase in new products, incentives, inventory, leasing, and infrastructure driving EV sales.
It is unsurprising that the growth in EV sales is starting to slow down as the market becomes more saturated. Even Tesla, a front runner in the EV industry, reported lower global deliveries in Q1 2024. In fact, Tesla’s sales in the U.S. saw a decline of 13.3% year over year, signifying a significant departure from the previous double-digit growth. Additionally, Tesla’s share of the electric vehicle market in Q1 2024 decreased from 61.7% to 51.3%.
Despite the overall deceleration, several manufacturers have experienced substantial growth in EV sales. Luxury brands such as Cadillac, Mercedes, and BMW saw significant year-over-year increases, indicating that the EV market continues to be driven by luxury vehicles. Cadillac, in particular, achieved an impressive 499.2% year-over-year increase in electric vehicle sales due to strong sales of its Lyriq model. On the other end of the spectrum, Ford also saw an 86.1% year-over-year increase in Q1 EV sales, positioning itself as the manufacturer with the second-highest EV sales volume behind Tesla.
Although there has been a decline in the average transaction price for new EVs, particularly for Tesla models, this has not resulted in higher sales volume. Incentive spending on EVs has increased, coupled with a rise in leasing. Approximately 27% of all EVs were leased in Q1, more than double from the previous year. Despite these efforts to stimulate demand, the trend indicates that the market growth is beginning to plateau.
Looking towards the future, Cox Automotive forecasts that EV sales in the U.S. will continue to increase in 2024, with analysts anticipating that EVs will make up roughly 10% of the market by the end of the year. Despite the temporary halt in sales of the most affordable EV in the U.S., the Chevy Bolt, due to production stoppage, a new version of the Bolt is expected to launch in 2025.
In conclusion, the EV market is experiencing a slowdown, particularly with the market leader Tesla facing challenges in maintaining its previous growth rates. However, with a surge in new products, incentives, and infrastructure, the industry is poised to see an overall increase in EV sales, albeit at a slower pace than in previous years.