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Business Drive

U.S. Electric Vehicle Sales Doubled in the First Quarter of 2021

Photo by Andrew Roberts on Unsplash

It’s 2018 all over again.

That year, plug-in electric vehicle (PEV) sales hit an all-time high in the U.S., nearly doubling from 195,000 in 2017 to 361,000.

Then came the fall.

In 2019, PEV sales dropped for the first time since 2011 — by about 8% to 331,000. The pandemic delivered a second blow in 2020, pegging PEV sales back to 296,000. The tumble was considerably muted compared to gasoline vehicles but it was a setback nonetheless.

This year, the downward trend is finally showing signs of reversal. Many analysts see 2021 as an inflection point for EVs, myself included. I’ll flesh out that thought in another post but there are plenty of markers in the Q1 results that point to a more sustained volume growth in the coming months and years.

Here’s what we learned from the first three months of electrified vehicle sales in the U.S.:

1. Turbo Growth in BEV Sales and Deliveries

Battery electric vehicles (BEV) jumped 44% from 98,832 to 68,247, according to Cox Automotive data. To put it in perspective, total U.S. new vehicle sales only grew 11% — in line with the bounce back you would expect from a down year.

Another surprising outcome was vehicle deliveries. Despite the global chip shortage, production was up across most brands. The U.S. market saw about 102,000 EVs enter the market in Q1 2021, compared to just 48,000 in Q1 2020, as estimated by Clean Technica.

As expected, Tesla continues to dominate the U.S. market (although the story was a little different in rest of the world). It sold about 69,300 cars in the quarter with a 71% market share. But that may not be good news for Elon Musk (more on that below). The Chevrolet Bolt landed at a distant second with 9,025 vehicles.

2. Plenty of Juice Left in Hybrids

I am always surprised by the fact that people still buy hybrids. There was a time when the higher priced hybrid electric vehicles (HEV) / plug-in hybrid electric vehicles (PHEV) did not quite deliver a compelling cost of ownership.

But as average cost of new vehicles hit record highs ($40,000 plus as estimated by Edmunds in Q4 2020), hybrids have become more appealing. Sales were up 105% in the first quarter, crossing the 200,000 mark. Combined market share of BEVs, HEVs and PHEVs sits close to 8%.

The Japanese brands, particularly Toyota and Honda, continue to lead this segment. Both these companies are behind the Europeans and Americans in BEV development but it seems like they are betting on continued growth of hybrids in this transitional decade.

Tesla Model Y (Tesla press photo)

3. There’s a New Tesla Winner

Elon Musk claims the new Tesla Model Y will become the bestselling car in 2022. That may be typical Elonspeak but the new crossover PEV is his answer to the hottest vehicle segment right now, and things are looking good.

Tesla has not released specific Model Y data but various estimates show that it is surging past other Tesla models, even the less expensive Model 3. Clean Technica estimates there were 48,354 Model Ys delivered in the first 3 months, up 48% YoY. Deliveries for all its other models fell during this period.

Other observations also point to Model Y’s ascendant status. Some are clearly anecdotal — like this Forbes article which estimates comparative presence of Tesla models in Los Angeles neighborhoods.

Market data offer more definitive hints on what may be happening. Cox Automotive reports that the Model Y has superseded Model 3 as the bestselling PEV (I have not seen the data behind it).

Another report by Dominion Cross-Sell found there were 12,227 new registrations for Model Y in California in Q1, compared to just 8,060 for Model 3. While new registrations do not exactly equal sales (although they closely mirror purchases) and the data comes from just one state, one thing is for sure — Model Y will be one to watch in the coming months.

4. The EV Wars Heat Up

So back to my comment that Tesla’s 71% market share is not great news for the company. Because in Q1 2020, its share was over 80%. Not that Tesla lost any sales, rather the market has grown.

Many new models entered the fray last year, some as recently as Q1. The Volkswagen ID.4 and Ford Mustang Mach-E, two models that are expected to challenge Tesla’s dominance, began their first deliveries in the quarter. Early reports have been positive and their sales are expected to ramp up. Others such as Audi e-tron and its Sports variation are also gaining ground at dealer lots.

Ford Mustang Mach-E (Ford press photo)
Volkswagen ID.4 (VW press photo)

These new models are simply teasers to the explosion of EVs that’s to come. BMW, Hyundai, Mercedes-Benz and several other brands are planning to roll out new EVs.

Another game changer this year will be the debut of electric trucks. Ford is expected to release a battery driven F-150. But it will also have to contend with newcomers such as Rivian and Lordstown, who are also planning to debut their EV trucks in 2021.

The influx of new models may not pose an immediate threat to Tesla in the U.S., but it is already getting hammered in Europe and China, where rival models are gaining more ground. It will be interesting how the competitive landscape evolves on this side of the Atlantic.

5. Performance EVs Redefining Luxury / Premium

The history of vehicle electrification is littered with the bodies of performance EVs. In the past decade, Mercedes-Benz (SLS AMG electric), Audi (R8 e-tron) and BMW (i8 coupe) have tried to sell top-end sports vehicles with little success.

Out-of-whack price to performance ratios had sunk these premium PEVs. Those with good battery ranges were too expensive. The more moderately priced ones (e.g. BMW i8) never cut it with their subpar battery power.

But, if Porsche Taycan sales are any indication, that story is about to change.

The $100,000-ish EV, introduced last year, has seen deliveries and sales climb steadily every quarter. Globally, over 9,000 Taycans were sold in Q1, a whopping 552% jump from the previous year. The U.S. accounted for about 2,000 of these cars.

The industry and ownership response have been great as well. Sure, it has a slightly shorter range than the Tesla Model S (arguably its closest rival right now in price and performance) but drivers claim that it is all Porsche in its vroom, even with the base trims.

The Taycan is paving the way for other luxury / premium EVs that are about to hit the market. Audi will be introducing its RS e-tron GT variant in 2021 — hitting squarely at the Taycan segment. Then there’s the Mercedes-Benz EQ lineup. Even Tesla is expected to revive its Roadster in 2022.

These cars won’t simply compete as alternative fuel vehicles. Rather, they will upend internal combustion engine performance / premium vehicles, just like the Tesla Model S. The performance EV will emerge as the new purveyors of street envy for the rich and the famous. Taycan is showing how it can be done, even if you are not Tesla.

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