EV sales hit record highs — but not everything’s as it seems

Demand for electric vehicles has seen steady, uninterrupted growth since data on the emerging market was first tracked. But this year, the trend has flipped.

The first half of 2024 saw fully electric vehicles lose market share in the U.S. for the first time on record, according to data from the Alliance for Automotive Innovation. While the decline is quite small — just 0.1% — softening demand has already driven EV makers like Lucid to trim their U.S. workforce.

Still, EVs have been a strong point for manufacturers like Ford, which saw EV sales grow even as its internal combustion engine (ICE) sales declined. The market for EVs is far from gone, but it is becoming more difficult for manufacturers to navigate as more options come on the market and demand softens.

EVs marked a historical market share decline this year

In 2016, purely electric vehicles accounted for less than 1% of the total market share of new car sales in the United States, according to data from the Alliance for Automotive Innovation. By 2023, that share had grown to nearly 8% — 18 times greater than just seven years before. But that constant growth came to a halt in the first half of 2024, when the overall market share for EVs shrank for the first time.

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What’s behind the decline in consumer demand for EVs?

Three main factors are driving the decline, according to Goldman Sachs Research analyst Kota Yuzawa.

First, concerns are growing over the high upfront costs of EVs, especially as used EV prices continue to drop. Second, uncertainty surrounding upcoming elections has created doubt about potential shifts in government policies that could impact the EV market.

“The third and final concern is around a shortage of rapid-charging stations. As EV penetration accelerates, rapid charging station infrastructure issues have emerged as a tangible problem,” Yuzawa said. “Several automakers have said that concerns about driving range and charging infrastructure are increasing. These issues may lead consumers to have second thoughts about buying an EV.”

Related: ICE vehicles losing ground as consumers shift to hybrids and EVs

A smaller share of a bigger market

Despite the decline in overall market share for EVs, sales of electric vehicles hit a historic high this year. 570,000 new electric vehicles were sold in the first half of 2024, roughly a 6% increase over the same time period last year.

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How do EVs have a declining market share and growing sales at the same time? It has to do with the size of the overall car market. If EV sales grow slower than the rest of the market then their relative market share can shrink, even as total unit sales grow. That’s exactly what happened in the first half of 2024.

EVs continue to electrify sales for many manufacturers

Although legacy EV brands like Tesla reported disappointing sales figures in the first half of this year, recent reports from relative newcomers like Ford and GM show EV sales as a bright spot in a high-interest environment.

Through September, Ford reported about 68,000 total EV sales, up 45% compared to the same period last year. That growth equates to roughly 21,000 additional EVs sold — almost enough to cover the nearly 25,000 fewer ICE vehicles the company sold this year.

It’s a similar story at General Motors. While GM reported a 2% sales decline across its fleet of vehicles in the third quarter, the company’s EV sales specifically grew 60% in that same time.

“GM’s EV portfolio is growing faster than the market because we have an ​all-electric vehicle for just about everybody, no matter what they like to drive,” said Rory Harvey, GM executive vice president and president of global markets.

Final thoughts

One data point doesn’t make a trend, of course. While the first half of this year did see a decline in EV market share for the first time, the trend is still very much upward. That said, it’s clear that some consumers might not want to make the leap from ICE to EV right away. Hybrid offerings, in fact, are seeing the biggest sales boost from buyers ditching ICE vehicles.

One day we might all be driving around in EVs, but in the immediate future manufacturers will have to continue offering a range of drivetrains if they want to compete.

Related: 2024 Lucid Air available from $550/mo with lease deal — A detailed breakdown