For auto dealers with electric vehicles sitting on their lots—which is nearly everybody— 2024 will be another year of confusion.
On average, auto dealers are sitting on nearly 120 days of electric vehicle (EV) inventory which is about double the number of gas-powered vehicles on lots.
Not to mention, the auto OEMs keeping pumping out new EVs. According to S&P Global Mobility, the number of EV models offered in U.S. will double this year from about 50 to 100.
This issue was front and center last year when a group of 3,900 auto dealers wrote an open letter to the Biden Administration. The letter demanded relief from regulatory mandates viewed as “onerous” and “unrealistic.”
Dealers are carrying a heavy burden indeed. Not only are they being pressured to take EV inventory they can’t always sell, auto makers are also pushing them to spend on onsite EV chargers.
So, what the heck happens this year? Here are some predictions.
EV Sales Will Continue to Grow
EV sales were up nearly 50% in the U.S. in 2023 compared to 2022, surpassing 1 million units sold in a year for the first time ever. That’s a lot of EVs. And J.D. Power is forecasting EV sales to grow again this year, although that blistering pace of 2023 may not be repeatable.
Much of the growth in EVs in 2024 will be driven by auto OEM push, rather than consumer pull. EV sales will happen, even if car companies lose a bundle on the sale. At the right discount, somebody will take those vehicles. Last year, the average price of an EV came down over 20% from $65,000 to $50,683.
Look for even bigger discounts this year.
More Mixed Messages from Auto Makers
Look for more mixed messages in 2024 from the auto manufacturers. The fact is, auto OEMs aren’t really sure what to do right now. General Motors recently bought out about half of its 2,000 Buick dealers because the dealerships didn’t want to sell EVs.
Depending on which brands offered, dealers face a confusing set of rules and deadlines about EVs and EV chargers. In 2022, Ford asked dealers to invest up to $1.2 million in store updates, including installing EV charging equipment. Then Ford back peddled and pushed deadlines, leaving some scratching their heads.
Sure, the big auto makers have been announcing EV strategy reversals recently, but so far there have been no announcements of a complete pullout from the EV market. EVs will continue to roll off the assembly lines, and they have to go somewhere.
Geography, Geography, Geography
When it comes to a lot of things these days, we are a nation divided. This now seems to include EVs which accounted for about a quarter of new vehicle sales in California last year (#1 state in the country for EV sales) and about 1% of new vehicles sold in North Dakota (ranked #50).
For now, EV demand is not consistent in every geography. Whether it’s the federal government imposing environmental regulations or the aspirations of the auto OEMs themselves, it hardly seems fair to enact national standards.
We should expect auto manufactures to evolve their EV and EV charging requirements to reflect regional differences.
Auto Rental Companies Will be Front and Center
Rental companies will be pressured by OEMs to buy more EVs and then they’ll have to find ways to actually rent those EVs.
Rental car fleets are often the beneficiaries of blow-out sales by auto manufacturers. The news that Hertz is dumping Teslas is just part of the complicated dance between auto manufacturers and rental companies. Since many rental car companies don’t have EV chargers and customers are pretty clueless on charging, expect more chaos on the roads.
Over time, rental car companies will become more accustomed to renting and charging EVs and will provide customers with charging information.
One unexpected outcome this year—some EV renters may actually like the EV experience and become buyers.
Customers Will Start Asking About Bi-Directional Charging
Everyone knows you can charge an EV from your home’s electrical service, but many don’t realize your EV can power your home.
Solar panel systems in homes today are often paired with batteries (such as Tesla’s PowerWall) to provide backup power in the event of a power outage. Several new EV models with heavy duty batteries (such as Ford’s F-150 Lighting) come with the ability to power many of your home electronics for hours.
Paired with bi-directional charging, EV owners could even sell their vehicle’s power to their local electrical provider (known as vehicle-to-grid). Customers will start hearing about and asking about this technology this year.
So, is 2024 the year the EV becomes extinct?
I wouldn’t count on it. Even if future administrations reverse or moderate the government directives, the auto OEMs continue their zigzag path toward an all-electric future. Gulp!
