It's getting harder for dealers to sell EVs. That's a bad sign for the industry.
- Electric car shoppers are increasingly fickle, dealers told Insider.
- The slowdown in EV demand might be worse than car companies think.
Car dealers have a warning for their manufacturers: the days of early-adopter electric vehicle sales are all but over.
For years, early EV adopters were generally an easy sale, three car dealers told Insider. These buyers arrived on car lots determined to drive off in a specific plug-in make and model.
Now, electric car shoppers are more fickle. More and more often, they are comparison shopping EVs against hybrid and gas-powered vehicles, dealers said.
That's leading dealers to use more aggressive sales tactics on plug-ins. They warn this could make EV demand appear more robust than reality, and make it harder for car manufacturers to predict demand.
"Most dealers now are really pushing EVs off their lot, which probably distorts the reporting manufacturers are looking at," Vince Sheehy, a car dealer in the Washington, D.C. area, told Insider. "I think EV sales are even slower than they actually understand them to be."
This warning bell from dealers is the latest sign that after years of exponential growth, the electric car segment is facing a looming plateau. Already, car companies seem to be reacting to changes in demand, after overshooting their EV predictions for this year.
After hovering for years around 1% of the total US car market, EV sales have been on a tear since 2019. Last year, the segment hit a record of 300,000 units sold and EVs accounted for 9% of all sales through September of this year.
Dealers like Sheehy say that pace is likely to slow as more sure-fire EV sales are harder to find. When compared to other segments, electric cars still have too many strikes against them, he said.
"No matter what claim somebody can make about the long-term ownership cost of a vehicle, if the entry point is $45,000-plus, that's still steep," Sheehy said. "EVs are limited in the segments they play in, too, so if you want something like a three-row you're looking at $60,000 plus before you really have any options."
EV prices fell, but they're still too high
Led by Tesla's many price cuts this year, the average price paid for a plug-in car has taken a nosedive in 2023.
Last month the average electric car sold for $58,683, down more than $7,000 from the peak last summer, according to Kelley Blue Book. A new cadre of federal incentives is also easing some of the financial pain, but dealers say their shoppers still can't quite make the math work as a perfect storm of macroeconomic changes have made buying a car more difficult.
Cameron Johnson, CEO of Magic City Auto Group, a Virginia dealership group selling mostly domestic brands, said affordability issues hit the electric F-150 Lighting before Ford could really react. He sees the latest production cuts as a delayed reaction to canceled reservations for the truck.
"We had a hundred-plus reservations, and ultimately those were people that only committed a hundred dollar reservation," Johnson told Insider. "By the time it was their turn to order interest rates had moved quite substantially. The price on the vehicle had moved quite substantially and not as many people ultimately ordered the Lightning."
Alexa St. John contributed reporting