Home Business Car Manufacturers Postpone Investments in Electric Vehicles due to Decreased Demand

Car Manufacturers Postpone Investments in Electric Vehicles due to Decreased Demand

Car Manufacturers Postpone Investments in Electric Vehicles due to Decreased Demand

Normally a 50 percent increase in sales is considered very good. But when the number of electric vehicles sold in the United States grew that much during the third quarter from a year earlier, it was a disappointment.

Carmakers and analysts had expected more. Instead of celebrating, auto executives worried that demand for electric vehicles was slackening, raising questions about their plans to invest tens of billions of dollars to develop new models and build factories.

In recent weeks, General Motors, Ford Motor and Tesla cited slower sales and signs that the economy was weakening in announcing that they would delay that spending. That was a blow to the Biden administration’s plan to fight climate change by promoting zero-emission vehicles, and it cast doubt on whether generous federal tax credits for electric car buyers were working as well as policymakers had hoped.

“Our commitment to an all-E.V. future is as strong as ever,” Mary T. Barra, the chief executive of G.M., told analysts on a conference call last month. But, she added, the market is turning out to be “a bit bumpy.” As a result, G.M. is waiting several months to begin selling some new electric models, including a battery-powered incarnation of the Chevrolet Equinox sport utility vehicle.

Ford and G.M. have staked billions to retool factories and build new ones to produce electric vehicles, batteries, and other components. If the carmakers have miscalculated, the consequences could be severe. (Stellantis, the parent company of Chrysler, Jeep and Ram, has not yet begun selling any all-electric vehicles in the United States.)

Sales of electric vehicles in China and Europe are also growing more slowly than they were a few months ago.

Still, electric vehicle sales are growing faster than any other major category of automobile, and Americans will buy more than one million of them this year, a record. From July through September, battery-powered cars accounted for 8 percent of the new cars sold in the United States, up from 6 percent a year earlier, according to Cox Automotive.

But some once-hot models are selling more slowly. Sales of the Ford Mustang Mach-E, which commanded a stiff markup a year ago, slumped 10 percent in October from a year earlier, Ford said last week.

“E.V.s are still in high demand,” Jim Farley, Ford’s chief executive, told analysts. But he added that increased competition had pushed down prices. Carmakers have introduced at least 14 new all-electric models in the last year, according to Cox, and stepped up production of other models that had been in short supply. Inevitably, some sell better than others.

“The demand is inching up, but it’s not moving up nearly to the degree that supply and production is increasing,” said Rob Cochran, chief executive of #1 Cochran Automotive, which owns 34 dealerships in Pennsylvania and Ohio that sell nearly all major brands, including Ford, Chevrolet, Hyundai, and Volkswagen.

Even Tesla — which dominates the electric car market, with about half of all sales in the most recent quarter — has struggled to sell cars and had to cut prices by thousands of dollars.

Some conservatives have seized on recent data to argue that electric vehicles are overhyped. Republicans like Senator J.D. Vance of Ohio have claimed electric vehicles are destroying auto industry jobs, and have proposed rolling back policies designed to encourage people to buy battery-powered cars.

A political agenda is driving some of those proclaiming an end to the electric vehicle boom, said Albert Gore III, executive director of the Zero Emission Transportation Association, an industry group whose members include carmakers like Tesla and Rivian, charging companies like EVgo and ChargePoint, and suppliers of equipment and raw materials.

“There are a lot of folks eager to draw a conclusion we should be less aggressive with policy,” Mr. Gore said.


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