The first hints were when deals and discounts started to appear. Tesla was among the first, dramatically chopping the prices of its hugely popular Model 3 and Model Y electric saloon and SUV models. Back in March, when these cuts were made, Tesla’s oft-controversial boss, Elon Musk, said that the price cuts were about passing on efficiencies in production to customers.
A Tesla spokesperson at the time said: “Our focus on continuous product improvement through original engineering and manufacturing processes have further optimised our ability to make the best product for an industry-leading cost. We have observed a normalisation of some of the cost inflation, giving us the confidence to pass these through to our customers. As local vehicle production continues to increase and we gain further economies of scale globally, we are making [our cars] even more accessible.”
However, it was soon said that Tesla was chopping prices in order to keep its cars popular and its sales buoyant, especially in China were competition from rapidly-improving home-grown brands – notably BYD and Nio – has been eating into Tesla’s early EV sales lead. Clearly, the cuts worked as the Tesla Model Y became the world’s best-selling car in the first quarter of this year.
It also seems to have helped in keeping Tesla’s sales accelerating – the first six months of 2023 saw a 30 per cent increase in total sales for Tesla. However, that is notably less of an increase than was seen in 2022. Does a slowing in Tesla’s expansion mean that the global demand for electric vehicles (EVs) is cooling?
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July registrations set a new record for EV sales in Ireland, with 4,161
It seems that the answer is yes. According to market analysis in the US by Cox’s Automotive, electric cars are starting to stick to dealer forecourts. Up till now, a strangled supply of EVs has meant that everything with a battery that arrived at a dealership was getting sent out to a waiting customers. Now, as supply seemingly overtakes demand, Cox’s says that there’s a 92-day supply of electric cars, sitting on dealer forecourts, waiting for customers. That’s compared to a 54-day supply of cars with internal combustion engines.
For some car makers, that average 92 day figure is a pipe-dream. Models such as the Hummer EV and Audi Q8 e-Tron are seeing more than 100 days between arrival and departure, while it’s reported that Hyundai’s luxury brand, Genesis, has a 350 day supply of its G80 electric saloon.
Ford is experiencing something similar with its Mustang Mach-E. In 2022, all but a tiny proportion of Mach-Es were in and out of dealerships within 30 days. Now, only 59 per cent of electric Mustangs manage to do that, and there are an estimated 9,000 such cars in the US, sitting and waiting for a buyer to show up. Half of those have been sitting for more than a month.
The car makers’ response to all this? Something close to panic, it seems. Toyota has been offering as much as a $7,000 discount on its BZ4X electric SUV, while Ford has been knocking as much as $3,000 off a Mach-E.
In Europe, the slackening of demand for electric cars has caused Volkswagen’s chief executive, Thomas Schäfer, to warn that “the roof is on fire” as he rolls out a €10 billion cost-saving plan for the company.
Schäfer, who lives in Wicklow, and commutes to work in Europe, went on to say that things would be “very tough” for VW in the coming weeks and months. Production of electric cars at VW’s plant in Emden, northern Germany, has been cut by 30 per cent as Manfred Wulff, head of the works council for the Emden plant, told the German press agency DPA that VW’s electric woes are down to “strong customer reluctance”.
In an Irish context, that might seem a little strange. VW’s own ID. 4 electric SUV is currently the best-selling electric car in the country, and the fifth-best selling car overall, having seen its sales rise by 34 per cent so far this year. A spokesperson for VW Ireland told The Irish Times that while other markets may be seeing a flattening of EV demand, that’s certainly not the case here.
“Volkswagen Ireland has had an excellent first half of 2023 with total registrations up 38 per cent on the same period last year. We are heading into the second half of the year with a healthy order bank, very good levels of supply and sustained demand for electric vehicles. Two years after it launched, the Volkswagen ID. 4 is the country’s best-selling electric vehicle – and the fifth best-selling vehicle of any type. Sales of the ID. 5 have tripled year – to-date while ID. 3 registrations are up 12 per cent with an upgraded ID. 3 model arriving in showrooms this month” said the spokesperson.
Another VW insider told The Irish Times that while Schäfer’s comments about fires and roofs was more to do with reducing the overall costs of VW’s production, rather than necessarily panic over EV sales.
Electric car sales have increased in Ireland again so far this year. July registrations set a new record for EV sales here, with 4,161 registrations. EVs are quickly catching up with diesels, now making up 18 per cent of the new car market in July, compared to 22 per cent for diesel.
Hyundai has become a major player in the electric car market in Ireland, with its Ioniq 5 wrestling with VW for the top EV sales slot.
Hyundai Ireland’s managing director, Stephen Gleeson, told The Irish Times that there may be some early signs of the global cooling in EV desire: “The world car of the year awards for Ioniq 5 and Ioniq 6 have perhaps insulated us from this a bit. Additionally, our only other EV, the Kona, doesn’t launch until October for 2024. I am aware of a slackening of footfall in the market, but it remains to be seen if this is a function of Customers who couldn’t get the model they want due to lack of supply calling to every brand showroom in the past where now stock is available, and people are booking their first or second choice.”
There are a number of reasons that the public demand for electric cars may be cooling. Many governments – Ireland’s included – have defied the advice of experts and begun to reduce tax breaks and grants for buying an EV, which has almost certainly killed off some of the enthusiasm. Equally, in many countries, again including Ireland, EV owners are starting to bump up against a charging network which has not expanded quickly enough, in terms of reliability nor availability, to keep pace with the growing EV fleet.
On top of which, spiking electricity prices have dramatically reduced the gap in running costs between an electric car and a car with a hybrid, petrol, or diesel engine – in some specific cases, that gap has actually been reversed. Any or all of this could be enough to quell some of the desire for electric motoring, in spite of the surrounding evidence of a world suffering the worst effects of climate change.
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Or, there could be something more fundamental at play. Geoffrey A. Moore, a famed business theorist and consultant, has postulated the existence of a “chasm” in the sales of any new technology. In Moore’s theory, sales of new tech – whether it be computers, smartphones, or electric cars – rise swiftly from a zero base as buyers known as “innovators” and “early adopters” buy into the idea. Then, though, there’s a gap – a chasm, as Moore puts it – between the first of the early adopters and the point where the graph of sales hits its peak, as the “early majority” takes over.
That early majority will, in time, likely be the making of the electric car as a global concept. These are the people who are, for now, waiting. Waiting for the charging infrastructure to mature. Waiting for the breakthroughs in battery technology, whether it be Toyota’s promised 1,000km battery or CATL’s lighter, smaller, denser chemistries, which will make EVs, hopefully, as usable and versatile as combustion-engined cars.
Until then, though, the bulk of car buyers will wait, and EV sales will see a lull, or slowing down of their initial acceleration, maybe even a precipitous drop.
