Electric vehicle (EV) sales in the US reached a new milestone in the third quarter, signaling the ongoing transformation of the automotive industry. However, the road to mainstream adoption remains challenging, as Tesla's dominance faces increasing competition.
According to automotive research firm Kelley Blue Book (KBB), Q3 US EV sales surpassed 313,000 units, marking an impressive 50% increase compared to the previous year and a notable uptick from the 298,000 EVs sold in the second quarter. Cox Automotive, the parent company of KBB, reported that the EV market share climbed to 7.9%, a record high, compared to 6.1% a year ago.
Jonathan Smoke, Chief Economist at Cox Automotive, attributed this sustained growth in EV sales to factors like increased inventory, improved product availability, and competitive pricing pressures. Notably, three years ago, annual EV sales in the US had surpassed 250,000 units, and KBB predicts that this year's figures could breach the 1 million mark. Furthermore, KBB highlighted the introduction of 14 new EV models from automakers such as Volvo, Nissan, Mercedes, and Hyundai, with some of these manufacturers witnessing a remarkable 200% increase in EV sales, albeit at limited quantities.
Tesla, a dominant force in the EV market, accounted for over 150,000 EV sales in the US, comprising 50% of the total sales volume. Although this figure is substantial, Tesla's market share has been dwindling, dropping from 62% a year ago. Nevertheless, Tesla's overall sales volume increased by 19.5% year-over-year, surpassing the industry's overall growth rate of 16.3%. This growth coincided with Tesla's aggressive price reductions over the past year. KBB reported that Tesla cut prices by approximately 25% compared to the previous year, which contributed to its growing sales figures.
Notably, other automakers like Ford also slashed prices on their EV models, such as the Mustang Mach-E SUV and the Ford Lightning EV pickup. Despite these price reductions, EVs in the US remain relatively expensive, posing a significant concern for consumers. KBB noted that the average transaction price (ATP) for an EV was $50,683, a significant decrease from $65,000 a year ago but still higher than the price of gas-powered vehicles, which can be obtained for under $30,000.
This affordability issue was highlighted in a survey conducted by Yahoo Finance in collaboration with Ipsos, which found that 70% of respondents expressed concerns about the overall cost of EVs, among other considerations.
Tesla has been actively working to make EVs more affordable, with CEO Elon Musk emphasizing the importance of gaining market share over preserving high profit margins, which once exceeded 20%. However, without a more extensive selection of sub-$40,000 EVs, similar to Tesla's Model 3 and the Chevrolet Bolt, the industry may struggle to achieve a 10% EV market share, let alone the national target of 20%.