APR
8

So Far, 2015 EV Sales Flat over 2014

 
Following three years of sustained year-over-year growth, the first quarter of 2015 has been somewhat of a disappointment for electric vehicle advocates—sales are almost exactly flat, or even slightly below 2014 levels from Q1 2014. It’s normal for plug-in vehicle sales to lag in the beginning of the year. Auto sales tend to drop as a whole on a cyclical basis, as consumers take a break from large purchases following the high costs of the holidays. However, in 2012, and 2013, Q1 sales always showed some improvement over the year before. There are two obvious explanations for why Q1 2015 sales have failed to follow the same curve. The first is low gasoline prices, which have pushed consumers back towards SUVs, light trucks, and other less fuel-efficient vehicles. In fact, sales of large vehicles surged from roughly 47 percent of vehicle sales in mid-2014 (before oil prices began to drop) to 54 percent in January 2015, and overall SUV sales increased roughly 13 percent over January 2014. A consumer shift back towards inefficient vehicles is corroborated by the findings of the University of Michigan’s Transportation Research Institute, which reports that sales-weighted average fuel economy standards have plateaued in the United States over the past six months, following 8 years of progressive increases. Changes in the variety of electric vehicles currently available to consumers also contributed to the slump. Sales of established models like the Tesla Model S and Nissan LEAF have been very high in relative terms. Tesla moved over 10,000 units in Q1, a company record, while the Nissan LEAF remains the best-selling electric car, both in the United States and around the world. New movers, such as BMW’s i3 and i8, are rapidly gaining market share. The i3 was the third-highest seller in the United States in Q1, after the Model S and the LEAF. However, these three models alone are not enough to prop up the entire electric vehicle market, and steep declines in sales of other vehicles have contributed to poor overall EV sales over the past six months. During the best months of EV sales in 2013 and 2014, plug-in hybrid models such as the Chevy Volt and Toyota Prius Plug-in typically performed on par with the LEAF or Model S, but recently, sales of the plug-in Prius have lagged as Toyota shifts its emphasis towards conventional hybrid and hydrogen vehicle offerings. Meanwhile, sales of the Chevy Volt have declined, potentially because the 2016 Volt is expected to bring significant improvements to the model, including expanded electric range and a revamped interior. Potential buyers could be holding out for the 2016 model's upgrades. With all that in mind, our expectation is that EV sales will remain steady in 2015, but we won’t see significant upticks unless gas prices increase, or new models are released at lower cost and with higher range to capture the attention of motorists. There's reasons to be optimistic about the latter. A few automakers are reportedly competing to release an electric vehicle with 200 miles of range that retails for $35,000 or less before tax incentives, and a recent report has found that the production costs of lithium-ion batteries has declined faster than previously thought. Both of those market signals mean better options and better value for consumers, which will hopefully translate into robust demand for alternative fuel vehicles.