(NewsNation) — Electric vehicle sales in the U.S. are on track to surpass 1 million this year, but swelling inventory, and recent price cuts, may signal slower growth going forward.
Nationwide, the number of new EVs sold jumped nearly 50% from Q2 last year to this year, according to Cox Automotive, but in its report, the company said “the hard-growth days are ahead.”
That could end up being good news for consumers who have been waiting for EV prices to come down.
Some manufacturers have already cut prices. On Monday, Ford announced it would be lowering the price of its base F-150 Lightning electric pickup by almost $10,000.
Tesla — which accounts for about 60% of the EV market in the U.S. — has slashed prices multiple times over the past year.
Those cuts, Cox said, have helped drive the average transaction price for a new electric vehicle down to $53,438 last month — 20% lower than the year prior.
The price reductions come as EV inventory soared to over 90,000 at the end of June — more than four times the number available in the second quarter of 2022 (excluding Tesla, which sells direct to consumers).
The rising inventory and price cuts could represent the beginning of a new phase in the EV market.
“We’re coming to the point where we might be running out of early adopters for electric cars and now it has to make sense for the average family,” said Brian Moody, executive editor for Autotrader.
In order to attract buyers with families, EVs will have to be easy to charge, competitively priced and prove they can maintain a strong resale value, Moody said.
For now, there’s still a gap between the number of people who say they’re thinking about getting an electric vehicle and those who actually buy one.
Over half of consumers (51%) are now considering either a new or used electric vehicle, according to a recent Cox survey. And yet, EVs accounted for just 7.2% of the entire U.S. market last quarter. That’s up from 5.7% a year ago but still just a fraction of all vehicles.
The average price paid across all new vehicles last month was $48,808 — almost 10% less than the new EV average.
But as more car manufacturers pivot toward EVs, Moody expects prices to go down.
“One thing we know for sure is that more electric vehicles will be coming online soon,” he said. “More choice and more competition is better for the consumer.”
As the EV market matures, there will also be cost-saving opportunities in the used car sector, Moody pointed out.
Additionally, federal regulations aimed at kickstarting EV sales are set to have a larger impact on the industry in the years ahead.
In April, the Biden administration proposed new rules that would require up to two-thirds of new vehicles sold in the U.S. to be electric by 2032. The Environmental Protection Agency (EPA) is expected to finalize that proposal next year.
EV buyers in the U.S. are also eligible for a federal tax credit of up to $7,500 if the vehicle qualifies under the rules outlined in the Inflation Reduction Act. Though, industry groups have warned most EVs today don’t qualify for the full amount.