EVs at a ‘Low-Tide Moment,’ Report J.D. Power Experts

Expect more discounts and incentives to move the “all-time high” EV inventory.

Nancy Dunham, Principal Analyst/Retail

May 31, 2024

3 Min Read
Additional lease deals drive some incentives, experts say.Getty Images

J.D. Power’s prediction for a healthy sales month is coming true, with a 2.9% increase in retail and non-retail — such as F&I products — from May 2023.

But that doesn’t mean EVs are moving.

“We’re seeing a ‘low-tide moment’ for EVs right now, but it’s unclear how long it will last,” says Elizabeth Krear, vice president, electric vehicle practice, J.D. Power.

The decline in shopping interest for EVs comes as the industry has reached an all-time high in EV availability. EV availability is at 54.3 — the highest it’s ever been on a 100-point scale — as it moves toward parity with gas-powered vehicles.

EV shopper consideration has dropped to 24% of shoppers “very likely” to consider purchasing an EV, according to J.D. Power data. A year ago, that figure was 26%.

Shoppers who are rejecting EVs point to the lack of charging station availability, purchase price, limited driving distance per charge, the time required to charge and inability to charge at home or work.

“EV retail share, while having some bright spots when it comes to certain models, is not growing at the same pace as EV availability,” Krear says. “This is bringing aggressive conquest sales programs to the EV segment, so we’ll see if shoppers find them attractive enough.”

Discounts and incentives are likely to pinch dealers’ already tight profits.

“Manufacturer discounts are expected to be similar to April (up $33 per unit) but have materially increased from a year ago,” Thomas King, president of the data and analytics division at J.D. Power, says of discounts for both EV and gas-powered vehicles. “The average incentive spend per vehicle has grown 48.1% from May 2023 and is currently on track to reach $2,640.

"Expressed as a percentage of MSRP, incentive spending is currently at 5.3%, an increase of 1.7 percentage points from a year ago. "

An increase in available lease deals is one of the drivers of incentives, King says. In May, he says, leasing was expected to account for 23.9% of retail sales, up 3.3 percentage points from 20.6% in May 2023.

Other details from J.D. Power’s most recent analyses:

  • The average new-vehicle retail transaction price in May is expected to reach $45,033, down $1,045 from May 2023. The previous high for any month — $47,329 — was set in December 2022.

  • Retail buyers are on pace to spend $50.9 billion on new vehicles, up $3.3 billion from May 2023.

  • Average incentive spending per unit on trucks/SUVs in May is expected to be $2,710, up $877 from a year ago, while the average spending on cars is expected to be $2,341, up $767 from a year ago. 

  • Trucks/SUVs are on pace to account for 80.6% of new-vehicle retail sales in May.

  • Fleet sales are expected to total 259,723 units in May, down 3.4% from May 2023 on a selling-day-adjusted basis. Fleet volume is expected to account for 18% of total light-vehicle sales, down 1.2 percentage points from a year ago.

  • Average interest rates for new-vehicle loans are expected to increase to 7.1%, 17 basis points higher than a year ago.

 

About the Author(s)

Nancy Dunham

Principal Analyst/Retail, WardsAuto

Nancy Dunham became an auto journalist more than twenty years ago. She has worked as an editor and writer for the National Automobile Dealers Association, US News & World Report, CarFax, and various newspapers in Washington, D.C. and Baltimore. Her work also appears in Costco Connections, AARP, the New York Times, Rolling Stone and other publications.

Before specializing in automotive retail journalism, she was a newspaper reporter, magazine editor and publisher.

She lives in Tucson, Arizona, with her three beloved cats.

Contact her at [email protected] or https://www.linkedin.com/in/nancydwrites/.

Subscribe to a WardsAuto newsletter today!
Get the latest automotive news delivered daily or weekly. With 5 newsletters to choose from, each curated by our Editors, you can decide what matters to you most.

You May Also Like