Supply vs. Demand in the 2024 Electric Vehicle Market. What's Next for Automakers?

One year ago, automotive dealerships were contending with a significant backlog of electric vehicles languishing on their lots. (Non-Tesla/Rivian) EVs accounted for 5.5% of total inventory, but represented only 3.5% of total vehicle movement in September 2023.  

Fast-forward to September 2024 and EV supply and demand are in much better balance. ZeroSum uses MarketAI to track vehicle inventory and movement. Through that data we can see that Electric Vehicle inventory share grew only slightly to 5.7% in September 2024. Meanwhile, EV movement jumped from 3.5% to 4.9% over that same time frame.   

What happened? Changes in environmental regulatory requirements for the automotive industry shifted focus from electric vehicle production when the Biden Administration slashed EV targets from 67% to 35% by 2032.  

As a result, OEMs adjusted their EV production volumes. For example, in June, General Motors reduced the upper range of its production forecasts of its all-electric vehicles by 17%, and many other manufacturers have followed suit. Multiple companies have said that they will produce volume to match demand. The most recent supply and demand numbers indicate that those decisions are already affecting the EV marketplace. 

There are two important things to note for both OEMs and their automotive dealership networks: 

1. There is EV demand in the market. Movement jumped by 57% year-over-year, going from 37,151 in September 2023 to 58,425 in September 2024. This outpaced other fuel types on a percentage basis, with hybrids growing by 41% and gas-powered vehicles by 6%, for example. While total vehicle volume is still relatively low, the high percentage growth bodes well for the long-term prospects for EVs.
2. When supply and demand are in harmony, the entire industry operates more efficiently. The scale-back in EV production has given automotive dealerships some breathing room to make sure they can move these vehicles off their lots. Inventory Turn Rates were up for EVs, moving from 31% to 33%. While this is a not a dramatic move up, EVs were the only fuel type to see a rise in Inventory Turn year-over-year. 

The better balance between EV supply and demand is a win for OEMs and automotive dealerships alike. Growing vehicle movement is a positive sign for EVs in the long run, while the slowdown in inventory share growth will help profitability in the short term. 

The long term regulatory requirements are still looming, but the industry can take a bit of solace that the current picture is more manageable in the shorter run.