In an auto market that saw total new vehicles fall 8% year over year, battery-electric vehicles (EVs) sales were a bright spot. According to the latest counts from Kelley Blue Book, total new-vehicle sales in the U.S. fell in 2022 to 13.8 million units, down from 15 million in 2021 and well down from the 17.3 million the market delivered five years ago in 2018.
As the analysts at Cox Automotive reported earlier this week during the annual Industry Insights and Forecast Call, the U.S. market started the year struggling with extremely low new-vehicle inventory and ended the year with falling new-vehicle demand, as higher interest rates and elevated new-vehicle prices sent many would-be buyers to the sidelines. At the end of December, the average transaction price for a new vehicle was approaching the $50,000 mark.
New EVs continue to be expensive compared to the overall market, but there are signs prices are coming down. EV-leader Tesla announced big price cuts recently, and new models on the horizon from mainstream makers such as General Motors promise “more affordable” EV pricing.
Still, even with high prices, EV sales in the U.S. in 2022 soared, as new models and high interest pushed sales volumes past 800,000 for the first time, according to Kelley Blue Book estimates, an increase of 65% versus 2021. EV share of the total market hit 5.8%, up from 3.2% in 2021. Tesla is still far and away the EV market leader – and overall luxury vehicle leader for the second straight year, according to Kelley Blue Book estimates – but Tesla’s share of the EV market continues to tumble, as forecast, falling below 60% for the first time in Q4 of 2022.
Even with rapid EV growth, roughly 94% of new vehicles sold in the U.S. last year had a gas tank in the back and a combustion engine up front. This is the EV Decade, but the market is a long way from becoming an EV market. Cox Automotive is forecasting 1 million EV sales in the U.S. for the first time ever in 2023, which will push EV share higher. With new government-backed incentives and fresh product set to launch, passing 1 million is all but guaranteed.