Analysts are confused. Why did the sale of electric vehicles arise, production is increasing, people want regular cars

Electric cars have been the main trend in the automotive industry in recent years. Every new car from major manufacturers is now complete without an electric version, and sometimes this is the only option.

We’ve figured out how to win the ICE game with electric motors as quickly as possible, but the market doesn’t seem ready for dramatic changes. The manufacturer has to do the customization.

Tesla has once again reduced prices for electric vehicles. Ford has lowered the price of the Mustang Mach-E and also increased production of the F-150 Lightning pickup truck. General Motors is considering resuming production of hybrids, and even Apple has abandoned plans to create electric vehicles.

At the same time, the US Environmental Protection Agency is considering reducing emissions requirements so that auto companies can produce cars with internal combustion engines longer. Against this background, Mercedes-Benz recently announced that it would continue producing gasoline cars after 2030, although their production was originally supposed to continue into this decade.

The electric vehicle market is not collapsing, but sales rates are clearly falling short of expectations.

Bloomberg predicted that U.S. electric vehicle sales would hit 1.7 million in 2023, but only 1.46 million (including plug-in hybrids) were sold at the end of the year. The result is certainly good, but not as good as expected, so manufacturers are beginning to adjust their plans, and not downward.

CNN experts name several reasons that led to this situation. All of them are typical not only for the USA.

Electric cars are too expensive

Kia EV9

Most electric vehicles currently sold in America fall outside the budget segment. These are often expensive cars.

Now having $50-60 thousand we choose between Kia [EV9] and Cadillac [Lyriq]. Usually these two cars do not cause problems with each other.

Tyson Jominy, JD Power Analyst

Initially, electric cars were subordinated to premium cars, then prices began to gradually decrease, but they are still developing at a low level.

We realized that as you increase production of electric vehicles to 5,000-7,000 units per month and move to a core group of buyers, they are not willing to overpay for electric vehicles. This is an important moment for us.

Jim Farley, head of Ford

Despite this, prices in the electric vehicle market are highly limited by body type. Electric vehicles are often crossovers and SUVs. There are far fewer sedans, not to mention hatchbacks, coupes, station wagons and convertibles. That leaves little choice for customers who don’t want a crossover.

At the same time, manufacturers are gradually abandoning inexpensive cars. They either remove them from sale or raise prices. According to Motor1 forecasts, not a single new car under $20,000 will disappear in the United States soon.

Car prices have increased significantly since Covid. Before the pandemic, 47% of new cars sold in the US cost less than $30,000. Now only 17% of all cars sold cost less than $30 thousand.

For example, the Honda Accord, which in the USA has always been considered a budget sedan, has risen in price by $4 thousand over 5 years. In 2019, it cost from $24 thousand, now the cheapest version will cost $28 thousand, the hybrid version will cost $33 thousand.

A similar situation occurred with the Honda Civic, the company’s cheapest sedan in the United States. In 2019, it could be bought for $20 thousand; in 2024, prices start at $24 thousand.

There are still not enough chargers for electric vehicles

The United States has a large network of charging stations for electric vehicles, but it is sorely lacking.

According to US energy data, by 2030 the country will need 182 thousand fast chargers. Now there are less than 40 thousand of them, with 25% located in one state – in the state.

Customers living in a private home with a garage do not rely heavily on traditional chargers. They are much more necessary for those who live in an apartment and buy an inexpensive electric car.

To this end, BMW, General Motors, Honda, Hyundai, Kia, Mercedes-Benz and Stellantis are the largest joint venture that plans to install 30,000 chargers in the US and by phone.

Also last year, all major automakers in the US switched to standard Tesla charging, so that all cars have the same connector and so that as many chargers as possible are available to people.

The head of Stellantis (owner of Alfa Romeo, Chrysler, Citroën, Dodge, Jeep, Maserati, Opel, Peugeot, RAM and other brands) believes that public charging should catch your eye before you even buy an electric car.

This means that when you go to the mall, supermarket, restaurant, gym or just park your car, you should wait for the chargers. You don’t have to look for them.

Carlos Tavares, CEO of Stellantis

So far, charging stations in the US and other countries are further from this level.

Credits and benefits are not available for all electric vehicles

There are many options available for purchasing an electric vehicle in the United States. There are tax incentives, low loan rates, and other discounts that can help you save on purchasing an electric vehicle.

But all these rules are very complex, because they often apply not to all electric vehicles, but to specific models. Moreover, sometimes the manufacturer of some cars has benefits, but not others.

The criteria for granting benefits are also confusing. In some important cases where the car was made in the USA, in others the battery, price and sometimes the buyer’s income come into play.

In parallel with this, manufacturers also apply for incentives that stimulate this sale, because they go through a very difficult verification stage.

In Russia, electric cars are sold in very small quantities.

Electric cars are not widely used in Russia. In 2023, 14 thousand cars with an electric motor were sold in Russia. Currently, electric vehicles account for 0.07% of all registered vehicles in Russia.

The reasons for such low sales are exactly the same as in the USA, only even more serious. Officially, only three manufacturers sell electric cars in Russia: Evolute, Moskvich and Voyah.

At the same time, the most modern electric car in terms of sales was the Chinese Zeekr 001, which is not officially used in Russia. Moreover, three of the five best-selling brands of electric vehicles do not have a representative office in Russia.

All this leads to the fact that The electric vehicle market in Russia is very dependent on parallel imports and serious suppliesin which it is very difficult to control prices.

As a result, electric cars are on the roads of Russia, both from official dealers and from gray sellers.

What bonuses are available to buyers of electric vehicles in Russia

▪️ Subsidy for the purchase of electric vehicles up to 925 thousand rubles for cars traveling to Russia (Moskvich and Evolute)

▪️ No transport tax

▪️ Free parking in many cities, including Moscow.

▪️ Free travel on highways -1 “Belarus”, M-3 “Ukraine”, M-4 “Don”, M-11 “Neva”, M-12 (Moscow – Nizhny Novgorod – Kazan) and the Central Ring Road.

▪️ Free charging at all metal charging stations in Moscow.

There are also few chargers in Russia, especially in small towns and on highways. This fact directly affects the sale of electric vehicles.

If a person lives in an apartment, then he has no other opportunity to charge the car other than public catering. And if she is not nearby, he would rather buy a gasoline car. Therefore, many people buy an electric car if they have a private home or a second car.

Budget electric cars can save the situation

The problem of availability of electric vehicles is typical throughout the world, and many manufacturers want to make a budget car, but not everyone can do this.

For example, the Chinese BYD, which is a world leader in the production of electric vehicles, specializes in low-cost cars. But it has a major advantage: it produces its own batteries for electric vehicles. Most auto companies rely on supplier suppliers.

However, even if there are inexpensive cars, few will still buy them due to how busy they are, so the smooth functioning of business and the state is important here.