‘We Have Turned Away Inventory’: US EV Market Slumping as Cars Pile Up on Lots

Ford CEO Jim Farley poses with the all-electric Ford F-150 Lightning pickup truck during the unveiling at the company's world headquarters in Dearborn, Mich., on May 19, 2021. (Rebecca Cook/Reuters)

A handful of dealerships around the United States say that demand for electric vehicles appears to be slumping, while dealerships are struggling to sell them.

Speaking to Business Insider, the dealers said that electric vehicles are piling up on dealership lots this year even as companies have started to ramp up production. Several also told the outlet that they don’t want any more of the cars until they can sell what’s on their lots.

“We have turned away EV inventory,” said Scott Kunes, the chief operating officer of Kunes Auto and RV Group, which owns dealerships in the Midwest, according to the outlet. “We need to ensure that we have a good turn on it.”

Mr. Kunes added that Detroit-based auto manufacturers have asked him and others “to make a large investment” in electric vehicles. However, he added, “We’re just wanting to see some return on that investment.”

An industry official made note of the key problems with electric vehicles, noting the relatively expensive price, charging times, and other issues that consumers face.

“It’s not just that these vehicles are expensive—which they are. We’re talking about a much more nuanced lifestyle change,” Sam Fiorani, the vice president of vehicle forecasting at AutoForecast Solutions, told Business Insider. He said that anxiety around charging and the vehicle’s range often stop many potential buyers.

“It’s hard for the average customer to make that leap while spending an extra $10,000,” Mr. Fiorani noted.

A report from Cox Automotive, released in July, found that the U.S. electric vehicle market isn’t growing fast enough during the last quarter to prevent unsold electric vehicles from stacking up at some auto dealerships. Dealers for established automakers such as General Motors, Ford, Hyundai, and Toyota have more than 90 days’ worth of unsold electric cars at their stores at current sales rates, the report found.

Meanwhile, U.S. dealers have more than 92,000 electric vehicles in stock, more than three times the number on their lots a year ago, according to the July Cox data. Overall, new vehicle inventories are up 74 percent from a year ago, Cox said.

Electric vehicles are charging at a charging station in Monterey Park, Calif., on April 12, 2023. (Frederic J. Brown/AFP via Getty Images)

There is a wide range in the availability of electric models. GM had 50 days’ worth of Cadillac Lyriqs available as of June 30, below the industry average of 52 days’ supply at current sales rates, Cox said.

However, GM said in a statement at the time it has “very low inventory—and high demand” for its electric vehicles. More than 80 percent of Lyriqs and GMC Hummer EVs built are still in transit to dealers, the automaker said.

Ford had 86 days worth of F-150 Lightnings and 113 days’ worth of Mustang Mach-E electric SUVs on hand, Cox said. Ford, meanwhile, said that Cox overstated the inventories of its electric vehicles, while a Ford executive said that “by no means are those inventories high.”

Volkswagen dealers had 131 days’ worth of ID.4 electric SUVs in inventory, according to Cox data. But in a statement, Volkswagen’s U.S. sales arm said that “we have seen some softening in EV sales in the U.S. recently” as supply chain bottlenecks have eased, allowing for increased production.

‘Warning Lights’

Adam Lee, the chairman at Lee Auto Malls in Maine, told Business Insider this week that he would take all the electric vehicles he can get. However, electric Toyota vehicles are the slowest models to sell, he said.

“The only Toyotas I have that aren’t presold are the electric ones, the bZ4X, and that’s a little bit of a challenge,” Mr. Lee said.

Karl Brauer, an automotive analyst for iSeeCars, added that dealers generally are the first to know market trends around vehicles, meaning that the apparent sales slump in recent days could be a sign of things to come.

“Dealers know in real time with real-time feedback what the market is doing,” he said. “They have always acted as the first warning lights on the dash for the automotive industry.”

While major automakers are increasing production for the vehicles, some analysts say demand has plateaued. By 2026, according to AutoForecast Solutions, the U.S. market is expected to have 90 new electric vehicle models.

“The spectacular growth we’ve seen over the last few years cannot be sustained. It’s just not possible,” Mr. Fiorani said in an August report. “The further up this growth curve we go, the harder it’s going to be to get to the next level.”

Kelly Blue Book, meanwhile, said that for July, the average price for a new electric vehicle was $53,469 in July 2023 versus $48,334 for a gas-powered vehicle. It noted that Telsa’s recent price-cutting initiative is likely a primary reason for the drop in electric car prices. That’s down about 20 percent from June 2022.

Responding to that report, Joseph Yoon, an analyst for car guide Edmunds, told CNBC several weeks ago that consumers shouldn’t rush to purchase one despite the year-over-year drop in prices. “It’s not a consumer-friendly market right now,” he warned.

Reuters contributed to this report.