While government subsidies and mandates may result in more of a product, it doesn’t necessarily produce the demand needed to match the increased production.
Look no further than electric vehicles, where car manufacturers are beginning to experience a glut in inventory, according to Axios. Keep in mind that the Biden administration is forcing an estimated two-thirds of all new-car sales to be electric by the end of 2032, as a result of its new tailpipe emission regulation.
“The growing mismatch between EV supply and demand is a sign that even though consumers are showing more interest in EVs, they’re still wary about purchasing one because of price or charging concerns,” the media outlet reported.
“There were about 90,000 EVs on dealership lots or in transit at the end of June”
92 days of unsold EV inventory compared to 51 days across all vehicles
Dealers who need to move their inventory, check out @lectrium https://t.co/qeLeKBf3Cw pic.twitter.com/yuFwO4zd8V
— peter barba (@pbarba_22) July 7, 2023
EVs are more expensive than gas-powered cars and rising electrical rates are not helping matters because it made it more costly to fuel them by the end of 2022, according to a report published by the Anderson Economic Group.
“In Q4 2022, typical mid-priced ICE car drivers paid about $11.29 to fuel their vehicles for 100 miles of driving,” the January 2023 report said. “That cost was around $0.31 cheaper than the amount paid by mid-priced EV drivers charging mostly at home, and over $3 less than the cost borne by comparable EV drivers charging commercially.”
There are currently about 130,000 public charging stations in the U.S., according to the White House. Fuels Institute forecasts about 1.7 million charging stations will be needed by 2030 and it’s questionable whether manufacturing can keep pace.
A March survey by Consumer Reports showed a 350% increase in consumer demand for EVs from 2020 to 2022, with CR reporting that automakers “are ramping up supply” because demand was expected to be strong.
“Automakers that are too slow to move may find themselves struggling to find buyers for all of the conventional gasoline vehicles they currently plan to build as they simultaneously attempt to catch up with accelerating BEV demand,” CR reported.
On the other hand, Axios said the nationwide supply of EVs in stock has swelled nearly 350% this year. There are now more than 92,000 units on hand, which equates to a 92-day supply. That’s “roughly three months’ worth of EVs, and nearly twice the industry average,” the outlet reported, adding that dealers “have a relatively low 54 days’ worth of gasoline-powered vehicles in inventory as they rebound from pandemic-related supply chain interruptions.”
Here is a breakdown of inventory by manufacturer provided by Axios:
- Genesis, the Korean luxury brand, sold only 18 of its nearly $82,000 Electrified G80 sedans in the 30 days leading up to June 29, and had 210 in stock nationwide — a 350-day supply, per Cox research.
- Other luxury models, like Audi’s Q4 e-tron and Q8 e-tron and the GMC Hummer EV SUV, also have bloated inventories well above 100 days. All come with hefty price tags that make them ineligible for federal tax credits.
- Imported models like the Kia EV6, Hyundai Ioniq 5 and Nissan Ariya are also stacking up — likely because they’re not eligible for tax credits either.
- Tesla’s price-cutting strategy could be taking a toll, too: The once-hot Ford Mustang Mach-E now has a 117-day supply. Ford says that’s the result of ramped-up production in anticipation of stronger third-quarter sales.
Toyota Motor North America, Inc. has been critical of the Biden administration’s “unrealistic” tailpipe emission standards, saying they will create “challenges, including the scarcity of minerals to make batteries, the fact that these minerals are not mined or refined in the US, the inadequate infrastructure and the high cost of battery-electric vehicles.”
“The proposed standards are expected to result in a new vehicle sales mix of 67% BEV by 32MY. Achieving such a high penetration is almost entirely dependent on factors outside our control,” the company said in a statement, adding that “hundreds of new mines are needed globally to produce enough critical minerals to support so many BEVs.”
On that note:
The unethical truth of net zero. Around 40,000 child slaves in Congo work in hazardous conditions in cobalt mines, with inadequate safety equipment and for very little money. The cobalt is used in many products – including electric car batteries. pic.twitter.com/lL6E0ZA2rU
— James Melville (@JamesMelville) July 10, 2023
“The sources for those minerals are almost exclusively outside the US, as is most of the mineral processing to turn the ore into usable battery-grade material. And the charging infrastructure (both in-home and public) needed to support that level of electrification is far from where it needs to be,” the statement said. “Recent legislation and incentives are directionally supportive but appear far short of what is needed. EPA should adjust the standards in the proposed rule to account for these major uncertainties over which automakers have little control, but for which we face significant compliance and brand/reputation ramifications should they not come to bear. Compliance cannot be based on factors over which we have no control.”
At the same time, Toyota said it “shares the administration’s goal to decarbonize transportation and is committed to vehicle electrification to improve society and the lives of our customers.”
“Our environmental track record speaks for itself. We have sold over 20 million electrified vehicles globally since the introduction of the Prius in 1997,” the car manufacturer said.
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Tom Tillison grew up in Maryland before moving to Central Florida as a young teen. It is in the Sunshine State that he honed both his passion for politics and his writing skills. Tillison also contributes to BizPac Review.
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