When President Biden signed the Inflation Reduction Act into law last year, he set an ambitious goal of making half of all new cars sold in the U.S. fully electric by 2030. In real terms, that amounts to roughly 7 million electric vehicles a year, at least at today’s sales figures. These sales goals are linked directly to emissions targets, and — if met — would start to meaningfully electrify the fleet of 282 million vehicles registered in the U.S. For the past two years, it looked like that goal might be within reach. In 2021, EV sales doubled. The next year, they doubled again. The way things were going, Biden’s goals of halving combustion-engine-vehicle sales were starting to look modest — an easy win he could take credit for when the market did most of the work.
This year, 1 million of the cars were sold in the U.S., a new and significant milestone, but one that falls severely short of the kind of growth that the White House had been hoping to see. With 2023 nearly done, year-over-year sales growth has fallen from about 100 percent to 25 percent — good, but not the bonanza that the industry needed. For the auto industry, this augers more than just a down year: If automakers don’t sell more EVs, they can get hit with billions of dollars in fines for not meeting new emissions standards set by the Environmental Protection Agency. For EV sales to start approaching the goals set by the White House, the industry is going to have to figure out how to sell more cars that, seemingly, fewer new consumers even want to buy.
There are plenty of reasons to buy an electric vehicle. The federal government will subsidize $7,500 of the cost. Prices are falling. The environmental benefits — while they aren’t perfect — are obvious. Still, the drawbacks are real. They tend to be expensive, and high interest rates on auto loans have hiked monthly payments to unaffordable levels. And while the charging infrastructure is getting better, billions of dollars earmarked to build out charging infrastructure are stuck. According to a recent survey from S&P Global, the two most important reasons stopping people from buying cars is expense and anxiety over reliably being able to charge them. Put those two concerns together and it’s not unreasonable to ask yourself, Why would I pay more money to buy something I’m not sure that I’m always going to be able to use? After all, if you’ve seen the price of gas recently, you may have noticed that filling up a gas tank is cheaper than it’s been in a year.
It might also come down to taste. Tesla still makes up about half of the market, selling nearly half a million cars through September, according to Cox Automotive’s last quarterly report. The only other vehicle besides a Tesla to crack the top-five most-sold EVs was Ford’s electric Mustang. What isn’t popular are electric pickups. And yet, when you look at all the cars sold in the country, including those with internal-combustion engines, pickups and SUVs make up 80 percent of all new passenger vehicles sold, according to the National Automobile Dealers Association. Sales of the Ford F-150 Lightning fell by nearly half this year, even though the version with a traditional combustion engine has been the most popular truck in the U.S. for an unbelievable 46 years. On average, electric pickups and SUVs are sitting on dealer lots for nearly three months. GM, which hasn’t really brought an EV truck to market yet, is pushing back production on an electric Silverado pickup to 2025. (This may be why GM CEO Mary Barra backtracked on discontinuing the Chevy Bolt, which is still fairly popular.)
It’s not entirely obvious why electric pickups aren’t selling. Tesla has been able to appeal to car enthusiasts, in part, because it’s been in a category of its own for so long — a big part of the reason why its cars still make up half the market. Remaking an F-150 is a whole different challenge, and swapping in a lithium-ion battery won’t be enough. It’s entirely possible that this is all a blip — a soft year when the Fed kept rates high and the economy seemed precarious. It could also be the car-culture divide. Drivers tend to want their cars to say something about them, and there is a very real kind of tribalism that’s entrenched in how the industry makes and markets its vehicles.
The average family in the U.S. spends about $5,000 a year on gas, according to J.D. Power & Associates. That amount goes up the bigger the vehicle, and there aren’t many that are bigger than the F150. The 2023 version of the Ford truck, the one with an internal-combustion engine, gets 17 miles per gallon in city driving. During the first nine months of this year, it outsold the fully electric version 53 times over. It’s entirely possible that these drivers are willing to pay a premium to get something familiar that they know will work. After all, Consumer Reports gives the fully electric and hybrid versions of the Ford truck low marks for reliability. Even if you’re buying the pickup as a status symbol — rather than, say, hauling farm equipment — is it worth buying an experimental beta version of the same car a little further down the lot?
For Ford or GM, these blips might mean a down quarter or a shuttered plant. But for the Biden administration, it could mean softening its goals to cut emissions. The White House probably shouldn’t get into the business of telling automakers what kinds of models they should produce, nor does it seem interested in actually doing so. But if sales don’t start doubling again soon, it will fall far short of one of its biggest climate goals.
