Stuck on the lot

NICK EICHER, HOST: It’s Tuesday the 2nd of January, 2024.

Glad to have you along for today’s edition of The World and Everything in It. Good morning, I’m Nick Eicher.

MARY REICHARD, HOST: And I’m Mary Reichard.

First up on The World and Everything in It, unsold electric vehicles filling up lots.

We started last year with big goals for electric vehicles from the Biden administration, but even with tax breaks and credits, dealers can’t move EVs off their lots. So we’re starting this year with dealers losing money on EVs that have sat on their lots for too long.

What accounts for this: Is it simply a slow season or is there a bigger trend in the auto industry?

WORLD Radio’s Mary Muncy has the story.

SOUND: [OBRIEN GETTING IN AND STARTING HIS CAR]

MARY MUNCY, REPORTER: Zach O’Brien hops into his 2022 Hyundai Tucson plug-in hybrid. He’s going on a quick trip into town.

ZACK O’BRIEN: We can go months without a time without having to use gas even.

He works from home and he and his wife use the car mostly to shuttle their kids around town and for groceries. He got it used earlier this year. He would’ve gotten it new if there hadn’t been a months-long waiting list.

O’BRIEN: I definitely want to go EV but think the infrastructure isn't quite there for it to be easy and quick. We do have two children that we were planning to take road trips with and the idea of stopping more often for longer for charging up the car if it was pure EV just wasn't something we wanted to jump into right now.

O’Brien isn’t alone. Most Americans are choosing a hybrid over an EV for similar reasons.

AUDIO: [OBRIEN GETTING OUT AND TURNING OFF CAR]

Dealers can’t keep enough hybrids on their lots, while Cox Automotive estimated in December that EVs sat unsold for an average of 114 days. That’s about double how long they should be there.

Don Rickard was in the car business for 33 years and sold his business last year. He says EVs weren’t selling well when he owned his business, and it’s only gotten worse.

DON RICKARD: They have to sell them for a loss typically, unless the manufacturer puts incentives on them, which they're trying to do right now. But dealers have to get rid of them, because once they come to their lot, they're theirs.

Rickard says manufacturers are people too and are just trying to meet their quota.

RICKARD: They want you to take a lot of EVs because they have to because the government's making them produce them.

In April, the Environmental Protection Agency proposed new rules that would require nearly two-thirds of new cars sold to be electric by 2032.

But while Cox Automotive confirms that EV sales are rising at record rates, they’re not climbing as fast as manufacturers had hoped.

Over the past few months, several manufacturers stopped or delayed projects that would have increased their EV manufacturing capabilities.

Ford delayed construction of a massive battery manufacturing plant in Kentucky. GM delayed the production of several electric vehicles, and then announced about 1,300 layoffs. Even Tesla’s sales numbers have been hit, but not nearly as hard as other manufacturers.

Only Toyota has managed to escape the decline. Toyota has consistently invested across the spectrum of cars, rather than throwing everything into EVs.

RICKARD: Customers have spoken with their feet and their dollars and they’re not buying it. They're just not buying it.

The problem reached such a fury that last fall when the United Autoworkers Union went on a six-week strike.

PROTESTORS: We are the union! The mighty mighty union.

They said manufacturers were increasing investment in EV technology, instead of their wages. The strike ended in a deal that will cost Ford and GM billions of dollars.

Then in November, 233 members of Congress sent a letter to the Biden administration asking for the EPA to push back its mandate, saying it will hurt the economy.

Kelly Senecal is co-founder and owner of Convergent Science and vice-chair of the American Society for Mechanical Engineers’s Internal Combustion Engine Division.

KELLY SENECAL: We are seeing that like a lot of auto companies are coming out and saying, you know, maybe we're going a little too quickly on the EVs. Let's keep pushing them. But like, let's ramp up the hybrids as well.

Senecal says that just like diversifying an investment portfolio, it makes sense for auto manufacturers to diversify what they make—and not force them to put all of their eggs in one basket. That way if America does end up with a clean charging infrastructure in place, they’ll be ready… but if there is more innovation in something like renewable fuels, they’ll be able to pivot in that direction as well.

SENECAL: So I think what we're seeing here is, as soon as you start to dictate, I guess, the technology either from a government level, or from an automotive company level, consumers, if they don't like that, they will push back.

Senecal says EVs are not the silver bullet. Until manufacturers, dealers, and the government can provide affordable EVs that are just as convenient and reliable as gas-powered cars, consumers will likely continue to leave EVs on the lot.

Reporting for WORLD, I’m Mary Muncy.

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