How plug-in vehicles saved the US car market in 2018

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2018 was a great year for Plug-in Electric Vehicles (PEVs), but overall light-duty vehicle sales in the United States didn’t shine. There has been a lot of discussion about people shifting from cars to trucks and SUVs, which is a clear trend, but the overall market was pretty flat. In the US, light-duty vehicle sales grew a measly 0.3 percent and, for the first time, electric vehicles had a measurable impact on the market. The writing is on the wall: a shift to electric vehicles is starting to happen and 2018 shines a light on how this will happen. I crunched some numbers and found them illuminating. Here are my big takeaways:

  • Electric cars were a greater percentage of all new car sales in 2018, comprising over two percent of all light-duty vehicle sales in the United States, and nearly six percent share of the passenger car market.  These sales propped up last year’s  overall light-duty vehicle market, which would have had negative growth without increased electric vehicle sales.
  • In 2019, electric vehicles may make up  four to five percent of light-duty vehicle sales and over ten percent for passenger cars. To support this growth across the country, however, auto dealers must be able to stock more electric vehicles so there can be enough availability to reach true market penetration.

As anyone working in the auto industry knows, the focus is on market share because it indicates the strength of the product in the marketplace. Based on my calculations, here are the latest market share numbers in the United States:

Plug-in electric vehicle market share of new vehicle sales in the US

2017 2018 Dec 2017 Dec 2018
Passenger cars 2.6 % 5.7 % 4.0 % 9.5 %
Light-duty vehicles 1.2 % 2.1 % 1.6 % 3.1 %

To me these numbers are a clear indication of the speed at which the electric vehicle market segment is growing. With record sales of over 360,000 vehicles in 2018, electric vehicles already have a 2.1 percent market share of light-duty vehicle sales, and a 5.7 percent share of the passenger car market. And if we look at the monthly numbers for December, electric vehicle market share was an amazing 9.5 percent! December is historically a big electric vehicle sales month and 2018 was no different, but it also indicates where market could be moving next year. In December 2017, electric vehicle market share was 4 percent in the passenger car segment while the 2018 annual share was 5.7 percent. If we take some liberty and use these trends to predict the future, we can estimate that in 2019 market share for electric vehicles will be around 4-5 percent for light-duty vehicles and over 10 percent for passenger cars.

Okay, but what was that talk about electric vehicle sales saving the US vehicle market in 2018?

I already mentioned that the overall market was pretty flat with only 0.3 percent growth compared to 2017. Well, without electric vehicle sales the total light-duty vehicle market would have been down 1.8 percent in 2018. This is something that I hope is not lost on manufacturers and auto dealers. The electric vehicle segment is poised to grow so it is time to embrace them. Presently, their sales are considerably dampened by a lack of vehicle availability. Outside of California and other zero-emission vehicles states, it is hard for most dealers to get electric vehicles. I will give you a real-life example. The Toyota Prius Prime was the second most sold electric vehicle in the United States in 2018 with average monthly sales numbers around 2,300 units. Generally, dealers are said to have a healthy stock of a certain model if they have enough to fulfill 30-60 days of sales with vehicles on the lot. That means that there should be at least 2,300-4,600 Prius Primes at Toyota dealers right now. Based on Cars.com there are presently only 813 Primes at US dealers. Even more concerning to me is the situation in the Twin Cities metro area, which is the 15th largest metropolitan area when measured by economic output. Right now, there is not a single new Toyota Prius Prime available at area dealers. We are bone dry.

As you can imagine this definitely slows down the electric vehicle market. Unfortunately, this is not limited to Toyota, as most other manufacturers approach the market the same way. Allocations are low, which means that dealers might have just a couple of units coming in each month. If dealers don’t have enough units they can’t do any local marketing. Low sales volumes also mean that salespeople don’t get used to selling electric and it produces a negative self-fulfilling cycle. You don’t feel confident in selling them because you don’t do it often, and since you don’t get experience you don’t get more confident in doing it. This leads to salespeople gravitating toward traditional cars, since it is easier for them.

If electric vehicles were stocked like traditional cars, my estimate is that sales numbers would already be double what they are right now, so manufacturers and auto dealers have a lot of good opportunities in this segment. In addition to having a strong impact on 2018, we also saw clear signs of the market potential of electric vehicles. The good news is that electric utility companies around the country are making electric vehicles their focus area, too, and are starting to help auto dealers sell more of them. Let’s work together to build on this momentum for stronger sales growth in 2019.

Jukka Kukkonen contracts with Fresh Energy to provide expertise on electric vehicle market and technologies, charging infrastructure, and electric vehicle-related products and business strategies. He is the founder of EV market and technology consulting company PlugInConnect. He works with utility companies, auto dealers and other stakeholders to advance transportation electrification in the US and Europe. Sign up for our newsletter to get all the latest news on electric vehicles from Jukka. 

Data sources: www.InsideEVs.com, www.Marklines.com, www.Cars.com.

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