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  • Writer's picturetony reardon

Supply of EVs may outstrip demand in 2023

As the automotive industry continues its rapid shift towards electrification, the United States finds itself in a peculiar situation. According to a recent report by AXIOS, the supply of electric vehicles (EVs) now significantly surpasses the current demand within the market. These emission-free cars, which were once hailed as the future of transportation, now find themselves languishing on showroom floors, while their internal combustion engine (ICE) counterparts fly off the lots. This oversupply issue has led to a mounting accumulation of EVs, posing a significant challenge for automakers who are grappling with how to address this imbalance.

Despite automakers launching an array of new and enticing EV models, and production levels being ramped up, American consumers have largely continued to overlook fully-electric cars. One major factor contributing to this trend is the prevailing concerns regarding EV charging infrastructure and pricing. Many potential buyers still perceive charging as a logistical hurdle, worried about range anxiety and the accessibility of charging stations. Additionally, the price of EVs remains a contentious issue, with some models carrying a higher upfront cost compared to their traditional ICE counterparts. These persistent concerns have acted as deterrents, impeding the widespread adoption of EVs in the United States.

However, amidst the apprehension surrounding EVs, there are signs of a shifting tide. Recent research conducted by Cox Automotive reveals an uptick in consumer interest in electric vehicles. The study indicates that a significant portion of car buyers, 51 percent to be precise, are now seriously considering purchasing a new or used EV, representing a notable increase from the 38 percent recorded in 2021. This shift in consumer sentiment suggests a growing awareness and acceptance of EVs as a viable option for personal transportation.

The Cox Automotive report also predicts a milestone achievement for EV sales in the United States. It forecasts that, for the first time in history, EV sales will surpass 1 million units this year, a notable milestone in the industry's journey towards mass adoption. Currently, EVs account for approximately 6.5 percent of the entire U.S. vehicle market. While this figure indicates progress, it also underscores the stark contrast between the increasing availability of EVs and the slower pace of consumer adoption.

The oversupply issue is glaringly apparent when considering the staggering number of EVs currently sitting idle. Cox Automotive's research reveals that there are over 92,000 fully-electric vehicles in inventory across the nation. This surplus translates to a daunting 92-day supply of EVs, almost twice the average for gasoline-powered cars. This surplus inventory represents a substantial investment of both cars and capital for automakers, prompting them to explore creative solutions to address this excess supply. Consequently, consumers can expect to see enticing bargains and incentives as automakers seek to offload their surplus EVs.

As the EV market continues to mature, it is essential for automakers, policymakers, and stakeholders to collaborate and address the existing challenges hindering the broader adoption of electric vehicles. The concerns surrounding charging infrastructure and pricing need to be tackled head-on, with continued investment in expanding the charging network and ensuring affordability for consumers. Education campaigns can play a vital role in dispelling misconceptions and highlighting the benefits of EV ownership, such as lower operational costs and reduced environmental impact.

The current situation in the U.S. automotive market paints a complex picture for electric vehicles. While there is growing interest among consumers and a positive trajectory in sales, the oversupply issue highlights the need for a more comprehensive approach to accelerate EV adoption. The industry must tackle barriers like charging infrastructure and pricing concerns, while automakers find innovative ways to manage their surplus inventory. As the market evolves, it is undoubtedly an exciting time for electric vehicles, and with concerted efforts, we can expect to see a more balanced demand and supply landscape in the near future.

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