There’s been a lot of conflicting news lately about the American electric car market. On the one hand, some new EVs are collecting dust for weeks on end on dealer lots, while others are selling like hotcakes.
While contrasting, both are true. But why? Well, J.D. Power’s latest E-Vision Intelligence Report for November 2023 tries to shed some light on the issue.
First, the problem of swollen dealer inventories. According to J.D. Power, the majority of reasons–7 in 10–quoted by people who are considering buying an EV simply do not exist in the case of combustion engines: lack of charging station availability, time required to charge, limited driving distance, and inadequate performance during extreme temperatures. Pricing is also an issue, with most EVs being more expensive than their ICE counterparts.
As for the record sales numbers seen by some manufacturers, the story is a bit more complicated that it first seems because the rate at which sales of battery-powered cars are advancing is still quite slow. According to J.D. Power, we’re still very much in the “early adopter” phase seeing how EVs account for just 8.2% of total new-vehicle sales in the United States.
It’s true that adoption is expected to rise in the following years, with a projected 13% by the end of next year, 19% by the end of 2025, and 24% by the end of 2026, but as it stands today, EVs are few and far between when looking at the big picture.
The main reason for this is that there isn’t enough choice where it matters, and that’s in the mainstream compact SUV segment, which is the biggest vehicle segment in the United States, with a market 16.5% market share. Not the premium compact SUV piece of the pie–that’s well taken care of, with 49.6% of sales represented by EVs.
J.D. Power says that just 6% of all the non-premium compact SUVs sold are EVs, which is not enough to put a dent in the big scheme of things, and the pricing gap between comparable electric and combustion SUVs is a big factor.
As per the research company, the average retail price for a mass-market compact SUV is $52,000, while the average MSRP for a similar gas-powered vehicle is $34,000, or $18,000 less. For the price difference alone one could buy a brand-new Nissan Versa, Mitsubishi Mirage, or Kia Rio.
However, the premium compact SUV segment sees a smaller difference of just $4,000, with a new EV in this category costing $58,000 on average, while a comparable ICE vehicle goes for $54,000 on average. Yes, it’s more money, but a customer who’s willing to pay over $50,000 for a new car will be more inclined to take a second look at EVs because the price difference compared to ICE is not that big.
So what not-quite-premium crossovers can you get for less than $40,000? Not too many, unfortunately–at least right now–with the Chevrolet Equinox EV and Volvo EX30 among the few options on the table currently. The upcoming Fisker Pear is slated to cost just a smidge under $30,000 when it arrives in 2025, but we’ll believe it when we see it rolling off the assembly line.