Sales of electric vehicles (EVs) have literally exploded in the last few weeks. Now there’s a lot of excitement building around the new Lucid Gravity and the original Air sedan. The federal tax credit for EV purchases expires on September 30. As a result, consumers are experiencing FOMO to purchase an electric vehicle before the incentive goes away. The demand for electric vehicles has never been higher, leading to record sales figures. In July, more than 130,000 EVs raced off the shelves, the second-highest volume of all time.
When it comes to sales trends in the burgeoning EV market, no one is watching more closely than Ivan Drury, director of insights for Edmunds. For instance, he notes that 79% of would-be EV buyers are already aware of the federal tax credit. This credit can lower the cost of an EV by up to $7,500. With the expiration date of this incentive looming ever closer, many consumers are motivated to make their move sooner rather than later. The initial result has been skyrocketing sales.
Drury remarked, “There are killer deals out there, to say the least.” So, if you’re thinking about an EV, just do it before the tax credit goes away!
Even with this increase in sales, the market is still struggling with issues of affordability. Even as electric vehicles go mainstream, a majority of Americans continue to see EVs as a luxury buy. Luxury buyers, 90% of whom say they’ll buy their next car electric, are well served in their own niche. On the whole, EV adoption has lagged behind expectations.
Almost all of that changed with the advent of the Inflation Reduction Act of 2022. It currently narrows the electric models that are eligible for the federal EV tax credit. Leasing an EV is still a great option for consumers who want to take advantage of the full $7,500 credit.
“People are rushing out to dealerships to take advantage of these deals.” The automakers have countered with extreme pricing measures, and automakers today are still putting big discounts and incentives on the cars to clear the lots. “Some manufacturers are throwing money on the hood to get rid of these vehicles,” he added.
This made it so across dealerships nationwide, last year on average electric vehicles sat on dealership lots for 98 days. All of that is about to change, as consumers search for deals and next-generation tech. Nonetheless, options for affordable EVs remain limited. Robby Degraff highlights that “the options are relatively thin for affordable EVs,” indicating a significant gap in the market.
Stephanie Valdez Streaty commented on the performance of automakers like Cadillac and Volkswagen during this period: “Cadillac did so well, Volkswagen was up hugely.” Overall, this is a very good sign for legacy automotive brands as they make their transition to electric offerings.
Despite this growth, challenges persist. Degraff cautions that “affordability is a real challenge and will continue to be the next two to three years.” Related consumer demand for EVs is accelerating. Despite these advances, many people still face significant financial hurdles when making the switch from internal combustion engines.
The production timeline for some models adds to the confusion for prospective buyers. For example, Marc Winterhoff stated regarding the Lucid Gravity, “Some Gravitys will only ship in Q4 and we don’t want to frustrate customers.” This story demonstrates the need for swift and final delivery to keep consumers excited.
Sales are through the roof with the expiration of the federal tax credit coming to a close. The landscape of the electric vehicle market is still nuanced and complicated. As manufacturers continue to innovate and consumers weigh their options, the future of EV sales will depend on how these challenges are addressed in the coming months.
