No one could have expected that the sales of EVs, the wave of the future of the auto industry, would ever drop. European sales data shattered the idea that EVs are the car industry’s next act, at least in the short term. If the trends from the EU are a sign, sales could, on a year-over-year basis, fall in the US as well.
In the EU, EV sales in December were 193,371 in 2022, dropping to 160,700 in 2023. In Germany, the largest EV market in Europe by far, December EV sales were 54,654, down from 104,325 in December 2022.
EU’s Original Challenge
On March 28, 2023, the EC voted to ban the sale of gas-powered cars beginning in 2035. EU environment commissioner Frans Timmermans said, “The direction is clear: in 2035, new cars and vans must have zero emissions.” If the December trend continues into this year, the odds of achieving that goal will not be achieved.
The EU and the US share something in common. Both have recently cut tax credits. Manufacturers will now discover the extent to which the equivalent of a price cut from the government was a major reason behind brink sales. The EV industry has offset the government actions with discounts. GM has even offered a $7,500 discount on some of its EVs to replace the $7,500 tax credit the federal government eliminated on many models at the end of 2023.
EV US Profits
The chance that EVs can produce large profits for legacy manufacturers anytime soon has certainly disappeared. Companies like Ford and GM are now losing money on their EV businesses after making billions of investments. The planned payoff has been pushed well into the future.
The industry has long said that demand would solve its profit problems. If only millions of people in the US would buy EVs, there would be room for Tesla and several legacy auto giants to prosper. The unexpected enemies of EV adoption have been slow charging times, limited charging stations, and range problems, which are worse in cold weather.
A year ago, large car companies spoke regularly about their willingness to put billions of dollars into EV businesses with surefire returns. Europe has just learned the lesson that this gamble was dangerous. There is no reason to believe the US will be different.