(Bloomberg) — Electric vehicle sales soared by two-thirds in 2022, despite a contraction in the overall U.S. auto market, according to a new report released by market research firm Motor Intelligence. At the same time, traditional automakers are launching a slew of hybrid models, which has helped narrow the lead of electric car giant Tesla.
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Automakers sold 807,180 electric vehicles in the U.S. last year, accounting for 5.8 percent of total vehicle sales, up from 3.2 percent in 2021, according to Motor Intelligence. This compares with an 8 percent year-over-year decline in total U.S. vehicle sales in 2022.
Motor Intelligence estimates that Tesla continues to dominate the U.S. electric vehicle market, accounting for 65 percent of total sales last year. But that share is down from 72 percent in 2021 as traditional automakers introduce more electric models.
Ford Motor Co. also jumped to second place in electric vehicle sales, accounting for 7.6 percent of the U.S. electric vehicle market, according to Motor Intelligence. Hyundai and its subsidiary Kia came in third with a 7.1 percent market share following the launch of its popular new electric SUV.
General Motors lost ground in the electric vehicle market after the company halted sales of its best-selling Chevrolet Bolt electric vehicle to fix a battery failure that could have led to a fire. Since returning to the market, Chevrolet Bolt sales have rebounded, and Motor Intelligence found that Volkswagen AG and Nissan Motor Co. have also lost share of the U.S. electric vehicle market.
The changing landscape of the electric vehicle market reflects trends across the auto industry: While electric vehicles still represent only a small portion of the overall auto market, they are already seen as a huge growth opportunity by industry executives. Companies that can bring a large number of attractive electric vehicles to market will have a chance to attract early adopters of electric vehicles, who have shown a willingness to move to new brands, executives and analysts said.
Ford Motor Co. CEO Jim Farley said in an interview last year that he sees an opportunity to make the F-150 Lightning pickup a well-known brand in the minds of early adopters of electric vehicles. the F-150 Lightning pickup launches in May 2022. People’s preference for electric pickup brands has not yet been formed,” Farley said of the emerging electric pickup market. If we can be successful, it will mean gaining a first-mover advantage.”
Ford is currently the only car company selling electric pickups in significant numbers, competing with startup Riyan Automotive. Riyan’s R1T pickup, R1S SUV and commercial vehicles accounted for 2.6 percent of U.S. electric vehicle sales last year, with 20,332 units delivered, according to the data.
Despite strong sales growth in recent years, the electric vehicle industry experienced a number of challenges last year. Rising prices for lithium and other battery materials have prompted automakers to raise prices, which could hurt demand. The average price of an electric car in the U.S. last summer was about $66,000, up from about $51,000 in 2021, according to market research and consulting firm JD Power.
Tesla offered a rare high ($7,500) subsidy to some U.S. buyers last month, but that has fueled investor concerns about slowing demand, and analysts at Bernstein Research believe the shortening wait times for deliveries of Tesla cars in the U.S. and China could be a sign of slowing demand. Tesla did not respond to a request for comment.
On Jan. 2, Tesla reported that global vehicle deliveries in 2022 were below the company’s and Wall Street’s expectations. Tesla failed to meet its expected delivery target for 2022, increasing deliveries by only 40 percent last year instead of the 50 percent expected. Tesla delivered 1.31 million vehicles in 2022, below the 1.4 million needed to meet its 50 percent growth target.
Meanwhile, analysts say new clean energy regulations passed last year and phased in could shake up the competitive landscape for electric vehicles. For example, U.S. federal guidelines released this week could benefit Hyundai Motor Group by allowing leased vehicles to also qualify for a $7,500 commercial vehicle tax credit, even if they are assembled outside North America. The provision could allow consumers who lease Hyundai vehicles imported from South Korea to qualify for the subsidy, analysts said.
Some aspects of the proposed policy could hurt Ford and Tesla, analysts said. However, the U.S. government will finalize a final version of the rule this spring that would classify the Mustang Mach-E and some Model Y models as sedans rather than SUVs, meaning small cars starting at less than $55,000 and SUVs starting at less than $80,000 would continue to be eligible for the tax credit.
Automakers are currently spending hundreds of billions of dollars building battery plants and making factory upgrades to produce more electric vehicles, and they’re aiming to meet growing consumer demand for electric vehicles that far exceed even their previous expectations.
According to JD Power, 53 electric vehicles will be available or planned for this year, a fraction of the 625 different models that will be sold in the U.S. by 2022. a survey of more than 2,000 car buyers conducted by JD Power at the end of 2022 found that only 30 percent of respondents were able to find the right electric vehicle for them based on price, model and other factors. Stewart Stropp, senior director of automotive retailing, who helped conduct the survey, said, “Bringing electric vehicles to market is a top priority right now.”
Not long ago, Rivian announced that the company barely met its production goal of 25,000 vehicles last year, with constraints including a lack of parts availability. Last October, GM also announced that it had delayed its goal of reaching 400,000 electric vehicle sales by the end of 2023 and extended that goal to mid-2024.
A few years ago, GM was one of the first major automakers to announce a major push for electric vehicles. But so far, that effort hasn’t helped it gain a higher market share, with the company selling just 854 GMC Hummer electric pickups last year. GM’s other recent electric entry into the U.S. market is the Cadillac Lyriq SUV, which has sold 122 units since it went into production last March.
GM executives cited battery sourcing problems and a slower-than-expected start-up of a new battery plant in Ohio, which will operate jointly with South Korea’s LG Energy Solution, as reasons for its poor electric vehicle sales. GM President Mark Reuss said the upcoming electric car will be faster because the company has learned enough lessons.
Reuss told investors last November, “We’re going to get to full production at a much faster launch rate than Hummer and Lyriq.”
