- EV demand has fallen while appetite for hybrids has grown, according to a new study from consulting firm EY.
- According to the survey, 11% of U.S. car buyers plan to buy an EV in the next 2 years, down from 22% last year.
- The economy, high car prices and misconceptions around battery replacements are all to blame.
Despite any clickbait headlines you may have seen, the electric vehicle industry isn’t dead in the water. But EV sales, particularly in the U.S. and Europe, have hit a patch of slower growth. It’s a complicated story that’s still very much unfolding, and we love digging into data that explains what’s going on whenever we get our hands on it.
The consulting firm EY has delivered just that in its latest Mobility Consumer Index, which came out this week. The firm surveyed nearly 20,000 consumers across 28 countries about their car-buying intentions. Zeroing in on U.S. buyers and their attitudes toward EVs, the data doesn’t look amazing.
Of the U.S. consumers planning to purchase a new vehicle in the next 24 months, a mere 11% said they intended to buy an EV. That’s down from 22% in 2023. Lumping together EVs, hybrids and plug-in hybrids (PHEVs), buying intent has dropped from 48% to 34%.
That kind of slump in demand sounds bad for EVs. And it backs up the carmakers who have said for months that they’re seeing interest in EVs soften. That’s why some—Volvo, Ford, General Motors and Toyota included—have pared back their EV investments, postponed new models or walked back their electrification goals.
Still, it’s important to note that—and regular readers of this website are probably tired of hearing this—more and more people are buying EVs. Some brands are seeing stellar numbers. It’s just that EVs aren’t flying off of the proverbial shelves like they did over the last couple of years.
But as is usually the case, a couple of sad-looking numbers don’t tell the whole story—nor do they suggest that the end is nigh for EVs.
Why EV Demand Is Down In America
For the story behind the numbers, I chatted with Steve Patton, who runs EY’s Americas automotive practice.
“I’ve been cautioning for a long time, this isn’t going to be a straight line,” Patton told me. “I do think we’re going to see some ebbs and flows in overall demand.”
InsideEVs
The 2024 Kia EV9
For starters, the firm saw an unprecedented jump in EV consideration in 2023 due to, Patton believes, big investments in EV infrastructure, new model launches and greater awareness of the technology. The portion of U.S. car buyers intending to go electric jumped from 7% in 2022 to 22% in 2023. So even with 2024’s slide, the longer-term demand trajectory points up and to the right. Rewind to 2020, and just 5% of U.S. car buyers wanted an EV.
Yet it may be even more critical to factor in the current wider economic backdrop. EY found that the portion of Americans who intend to buy a new car of any kind plummeted from 60% in 2023 to 50% in 2024. That says a lot about what’s happening in the EV market, specifically.
As Patton explains it, new cars are getting increasingly expensive, interest rates are high and people feel squeezed by inflation. In a climate where people are reluctant to drop serious money on anything, it makes perfect sense that they’re especially hesitant to embrace a new and unfamiliar technology. It doesn’t help that electric still cars cost more than gas-powered equivalents, even if that’s beginning to change.
“If things are tight, inflation is high, interest rates are high, maybe this is not the time to go explore a new vehicle, let alone a new electric vehicle,” Patton said.
Plus, between 2023 and 2024, buyers may have looked hard at an EV purchase and noticed challenges they hadn’t considered before, Patton said.
“As people kind of start kicking the tires, they start realizing maybe some of the differences of ICE versus EV,” he said. And some “may not be ready to take that jump yet.”
In other words, maybe they said they were interested in EVs but their thinking changed when they really sat down, crunched numbers and gamed out what it meant for their lifestyle.
New EV Fears Emerge As Hybrids Gain Momentum
Another fascinating takeaway from EY’s study: The major deterrents to buying an EV are shifting. Historically, the limitations of EV range and the availability of public charging stations were what most worried potential EV buyers.
Now those fears are dissipating. In 2024, for the first time, the top concern among U.S. EV owners and potential buyers was the high cost of battery replacement, EY found.
That suggests a consumer education problem, Patton says. EV battery replacements are indeed expensive, costing north of $20,000 sometimes, but they’re exceedingly rare and not something buyers should worry about. Those worries could make battery-as-a-service a palatable solution, Patton said.
Some companies (outside of the U.S.) let customers buy their car but rent the battery. Ultimately, it will take time before people have fully come to grips with the non-issue of battery replacement, Patton said.
Here are the top five EV-related hangups noted by U.S. EV owners and potential car buyers:
- Concerns about expensive battery replacement: 26% of respondents
- Concerns related to quality/availability of public chargers: 25%
- Limited range of EVs: 24%
- Lack of charging stations in cities/travel route: 23%
- Concerns with charging interoperability: 22%
Honda
The Honda Accord Hybrid
People may be trepidatious about EVs, but the discourse around them is driving interest in the benefits of electrification. Hence, more Americans are considering hybrids. This year’s sales figures bear that out, and EY’s survey suggests the trend will continue. That was the only vehicle category that saw an uptick in buying intent over 2023, per EY. Today, 17% of U.S. car buyers say they’ll buy a hybrid, a slight bump from 15% in 2023. As Patton and others have pointed out, hybrids let people save money and be somewhat sustainable without the extra cost and hassle of buying an EV.
Despite all the hubbub around plug-in hybrids lately—General Motors is getting back into that game after a long hiatus—people apparently aren’t more jazzed about them than fully electric cars. PHEV consideration among U.S. car buyers landed at 5%, down from 12% in 2023, 7% in 2022 and 6% in 2021. Maybe that’s because, like EVs, they’re an unfamiliar technology that elicits infrastructure concerns. Like EVs, they’re best for the slice of Americans who can charge at home.
Patton still believes hybrids are a transitional technology, but they may stick around a while longer given how demand for full EVs, or battery-electric vehicles (BEVs), is going.
“I’m beginning to think, just based on what we’re seeing in the overall demand for BEV, particularly in the U.S., that the lifespan of hybrid may be a little bit more elongated than I initially thought,” he said.
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