The surge in electric vehicle (EV) popularity in the United States experienced a notable setback during the final two quarters of 2023, with even California, a stronghold for EVs, witnessing a decline in sales. Despite a 5% growth in new EV market share throughout 2023 compared to the previous year, the last quarter revealed a concerning trend as 10% fewer new EVs were registered than in the preceding quarter.
California, often regarded as a key indicator of EV adoption trends in the nation, saw EVs comprising 21.4% of the new vehicle market by the end of the year. Concurrently, internal combustion-only vehicles witnessed a 7.7 percentage point decrease, accounting for 63.9% of overall sales in 2023. The rise of plug-in hybrids and simple hybrids, the latter comprising 11.1% of vehicles sold, contributed to electrified vehicles commanding 35.9% of the market.
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The cautious sentiment in the EV sector has led major players to reassess their strategies. General Motors (GM) responded to the increasing interest in hybrid vehicles by slightly scaling back its electrification plans, with a focus on introducing plug-in hybrid vehicles in the coming years, a move positively received by investors.
In contrast, shareholders have exhibited less optimism toward companies prioritizing EVs. Tesla’s acknowledgment of a potential sales growth slowdown in 2024 resulted in an $80 billion reduction in its market valuation. Established automakers like Ford and Renault are also recalibrating their global EV plans, with Ford adjusting production rates and Renault shelving plans for an initial public offering (IPO) of its EV business, Ampere, citing subdued stock market performance.
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Across the globe, challenges are becoming apparent in the EV market. Chinese EV manufacturers, such as CATL and BYD, anticipate slower growth in 2024 compared to the previous year. In Korea, LG Chemical likewise foresees a deceleration in growth.
While fluctuations were expected in the EV market’s trajectory, the recent developments have prompted automakers to reassess their projections, acknowledging that the industry’s upward trajectory may face challenges in the near term.
