Reason Foundation: 2024 Update on the Decline of Electric Vehicles

Robert Poole's article titled The (Not So?) Surprising Decline of Electric Vehicles gives a useful update on the reduction of EV sales and manufacturing in the US.  All the text below is from Robert's newsletter.

First, let me add two updates.

1. AXIOS: "Ford is again shifting its electrification strategy — delaying a planned electric pickup truck by 18 months and killing plans for a three-row electric SUV ... Ford's EV unit lost $4.7 billion in 2023 (and is on track to lose even more this year.)"

2. ConsumerAffairs: Nearly one-fifth of sold EVs recalled over battery or charging issues.

Surface Transportation News, August 7, 2024: Recent headlines in business media report trouble with the electric vehicle market. Last month, (all-EV) Tesla reported a 45% profit decrease in the most recent quarter, due to lower sales and the lower prices it’s recently been charging due to increased EV competition. GM announced delays in two planned EV factories—one for electric Buicks and the other for electric trucks. And Ford CEO Jim Farley announced that the company would focus more on smaller, less-expensive EVs, since its large ones are selling poorly. Ford’s EV unit had a $1.1 billion loss for the second quarter of this year.

What accounts for EVs’ declining popularity? A survey of electric vehicle owners by J.D. Power found that their battery electric vehicles (BEVs) and plug-in hybrids went back to the dealer for repairs at three times the rate of gasoline-fueled cars. And despite early claims that EVs would be low-maintenance due to fewer moving parts, etc., repairs and maintenance average more labor hours (possibly because mechanics are still getting familiar with them).

Kelly Blue Book and Manheim found that the residual value of BEVs after two years is significantly lower than that of gasoline cars, while hybrids held slightly more value than gas cars after two years.

When an EV gets into a collision, it is significantly more likely to be declared a total loss, rather than being repaired.

My engineer friend in Sweden, Michael Sena, editor of The Dispatcher, reported in the Summer 2024 issue the results of a survey of EV buyers by McKinsey & Company’s Center for the Future of Mobility, released June 12. They found that 46% of BEV purchasers say they will go back to an internal combustion vehicle for their next purchase. Their main concerns were about charging, the high cost of ownership, and the complexity of long-distance travel. Respondents were also upset that the range of the BEVs they purchased is considerably less than what it says on the sticker. They were also surprised by poor performance in very cold and very hot weather. Sena also reports the result of a different survey of residual value, by Cox Automotive, whose results paralleled those reported above—a faster decline than for internal combustion vehicles.

These may be short-term problems, due to the technology being new and charging networks still being rudimentary. But these findings certainly put down a caution flag for an expected total EV replacement within the next several decades.