Incentives and Reduced Pricing Driving Growth
Much has been said about the struggles that auto manufacturers have experienced in selling electric vehicles, and there has been no shortage of insights in our Cloud Theory Horizon data to support that notion. Our comprehensive report entitled “Charging Ahead: Hybrids Come Into Sharper Focus as EV Aspirations Meet Reality” pointed to cost and range anxieties as some of the key reasons for consumers’ reluctance to purchase an EV. The easing of EPA regulatory requirements has acted as a catalyst for investment and consumer messaging shifts that provide alternative paths—most notably, in the form of hybrids—for OEMs to walk down in pursuit of greener outcomes.
But while we still foresee a longer-and-windier road to a dominant EV future, there are shorter-term signs that these vehicles have appeal—especially at the right price.
In the last 30 days, Cloud Theory’s vehicle movement numbers saw a 39% increase for EVs, a gain of almost 16,000 units compared to the prior period. This contrasts with gains for gas-powered and hybrid vehicles of 13% and 10%, respectively.
Despite this recent growth, the industry remains in an oversupply situation, with (non-Tesla/Rivian/Polestar) EVs accounting for 6.5% of inventory but only 4.8% of vehicle movement.
Out of the 50 EV models on the market, more than three-quarters enjoyed movement gains in the current period, with five of them accounting for more than half of the overall sector growth.
A recent Cox Automotive news release pointed to the rise in EV incentives, which now stand at an average of 12% of transaction price. Cloud Theory’s Market Adjustment metric—which measures the marketed discounts and incentives visible to consumers—has seen a 26% jump in offer value since the beginning of the year.
Increase in Market Adjustment levels since January 2024
+26%
While the long-term outlook for EVs remains under pressure—with supply expected to exceed demand for the foreseeable future--sales are out there in the nearer-term when prices can be brought closer in line with ICE or hybrid vehicles. The trick will continue to be doing so in a profitable manner—or at least at an acceptable loss—going forward.
