As the U.S. auto market rapidly and steadily shifts to electric vehicles, the Volkswagen ID.4 stays on the forefront of an increasingly crowded market. Americans bought nearly 6,200 of them in the primary three months of this 12 months.
The ID.4 is not any outlier either. Let's consider the Nissan Ariya, one other popular newcomer to the electrical automotive market. Nebraska and West Virginia each have one Ariya on offer, while Wyoming has two.
There has been much discuss a slowdown in electric vehicle adoption within the U.S. According to the International Energy Agency, electric vehicle sales are expected to grow 20% this 12 months, well below the 40% sales growth in 2023. Quite a few auto firms, from Ford to Mercedes to Volkswagen, have announced plans to chop production of electrical models, citing waning consumer interest and an oversupply of battery-powered inventory.
But much of that inventory results in the identical few places: the coasts and the country's busiest auto markets, leaving potential EV buyers in other regions with few options. This dynamic reflects a sort of chicken-and-egg situation for automakers: Their ability to spread EVs beyond early adopters will depend on second-wave buyers in a wider range of states. But drivers in rural states could also be slower to purchase EVs because they don't see many available options.
“To get this going, we'll probably need to see more inventory on individual dealer lots,” says Kevin Roberts, director of industry insights at CarGurus. “Not being able to see the vehicles in person could hinder that.”
Nearly a 3rd of latest electric vehicles are shipped to one among three states, California, Florida or Texas, in accordance with data from CarGurus. To some extent, that is sensible, as they’re essentially the most populous states. If a 3rd of drivers are fascinated by buying an electrical vehicle, that third represents more potential buyers in California than in Montana.
But the byproduct is a scarcity of options for drivers elsewhere. At the top of the primary quarter, about 23 states had fewer than 1,000 electric cars on the market, not including brands like Tesla that bypass traditional dealerships. Nine states had fewer than 400.
Those numbers make buying an electrical vehicle daunting for people like Vincent Rossano, a carpenter from near Montpelier, Vermont. Rossano really desired to buy a Chevrolet Bolt, however the closest model he could find was 360 miles away in upstate New York. (His mother was kind enough to drive him to the dealer.)
“I called about 60 dealers across New England,” Rossano says. “It was ridiculous — no one in Vermont, no one in Massachusetts, no one in New Hampshire. We even called somewhere in Delaware.”
CarGurus doesn't collect data on firms that sell cars on to consumers, namely Tesla, Rivian and Polestar. And unlike those firms, the established automakers will need to supply each battery-powered and internal combustion engine powertrains concurrently, at the least within the short term.
Yet in much of the U.S., the electrical vehicle inventory at incumbents is well below local adoption rates. In Colorado, for instance, nearly one in five cars purchased in latest automotive sales within the fourth quarter was battery-powered, but electric vehicles made up just 10% of the brand new automotive inventory in the primary quarter. In Nevada, the gap is analogous: 12% of cars purchased at the top of 2023 were electric, but only 6% of cars on the lot were.
“There's this whole narrative that demand for electric vehicles is declining,” says Joel Levine, executive director of electrical vehicle advocacy group Plug In America. “This year, electric vehicle sales are expected to increase 20 to 25 percent. The curve has shifted, but it's not that people aren't asking for the cars.”
In a recent BCG survey of U.S. consumers, 38% of respondents said their next automotive would definitely be an electrical automotive, and one other 27% said they were considering an electrical vehicle.
Auto executives have long had good reasons to maintain electric vehicles away from the country's vast open spaces: charging infrastructure, or lack thereof. The US has traditionally been a patchwork of vast electric deserts. As recently as 2020, China had almost ten times more public charging stations.
But the deserts have all but disappeared. A construction drive has seen 1000’s of charging stations come online across the US, even in a number of the most desolate corners. At the top of the primary quarter, there have been nearly 8,200 public fast-charging stations for electric cars within the country – one for each 15 gas stations.
An even bigger problem may very well be the auto industry's franchise dealer model. Volkswagen, for instance, says its ID.4 is selling well within the Sun Belt – the so-called Smile States – and in places like Chicago and Minneapolis, where the brand has long had a big following.
“If places like West Virginia or North Dakota have a very small share of ID.4 sales, that reflects the fact that our dealers are not ordering them because nobody is asking for them,” says VW spokesman Mark Gillies.
But dealers themselves is probably not one of the best stewards of the electrical automotive transition, with many reluctant to deviate from what has been a lucrative approach to selling gasoline-powered trucks and SUVs.
“I don't think there's an evil conspiracy,” says Levine of Plug In America, which has a curriculum to show automotive dealers the way to switch to electric cars. “It's the nature of car dealers to sell cars they know people want to buy. If you're in West Texas, you're going to specialize in pickup trucks.”
According to a survey by CarGurus, only about half of all Americans currently say they know someone who owns an electrical automotive.
“If you live in Idaho, you've probably never experienced an electric car,” says Elaine Buckberg, a former economist at General Motors. “Plus, dealers have to order the stuff or be willing to accept it, and dealers aren't necessarily the most technologically advanced and trend-conscious people.”
The excellent news for electric vehicle advocates is that adoption is going on slowly after which suddenly. Buckberg says there's a network effect at play. The more electric cars there are in stock, the more people will notice them; and the more people notice them, the more people will try them.
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