The recent spike in gas prices may not have turned consumers away from gas and diesel cars, but it has changed the perception of EVs.
Manufacturers of electric vehicles are frustrated.
Despite their desire to produce more vehicles, their hands are tied because of the disruptions to supply chains triggered by the Covid-19 pandemic persist. Those are now exacerbated by the invasion of Ukraine by Russia, a major nickel-exporter country.
Nickel, palladium and aluminum are important in the manufacture and assembly of electric vehicles.
They help make catalytic converters, air conditioner condensers and other essential car parts. Nickel is used to make stainless steel and the batteries, which are the heart of an EV, because they determine a car’s range and play a key role in the performance and the security of the vehicle.
These factors thwart the desires of car manufacturers to meet demand. This is has raised an unprecedented fact: Now the question is not whether consumers are interested in electric vehicles, but rather whether car manufacturers can meet demand.
Signals from the second-hand market reinforce this new dynamic.
“This has shifted a lot of people who were intrigued by electric or somewhat interested in electric but hadn’t made the decision,” CoPilot CEO & founder Pat Ryan told TheStreet. CoPilot tracks prices at car dealerships nationwide.
“They’re going to leave this crisis electric buyers will leave this crisis with a much larger market ready to buy EVs,” Ryan said.
Demand is Catching Up
For Ryan, the Covid-19 pandemic and soaring gas prices eventually convinced many curious consumers to make the leap to electric vehicles.
“If you look at how much electrics were sold in the U.S. market in 2001, it was a real question of are we going to supply a lot more electrics than there was demand,” Ryan said. “Now I think the demand is starting to catch up with the supply.”
From Tesla (TSLA) – Get Tesla Inc Report to GM (GM) – Get General Motors Company Report via Ford (F) – Get Ford Motor Company Report, Volkswagen (VLKAF) , Rivian (RIVN) – Get Rivian Automotive, Inc. Class A Report or Lucid Group (LCID) – Get Lucid Group, Inc. Report, most automakers have full order books. The problem is knowing when consumers will be able to have their vehicle delivered.
A consumer ordering a GMC Hummer electric pickup today will not see it delivered until 2024, a GM spokesperson told TheStreet recently.
The EV Hummer pickup, an environmentally friendly version of the iconic Hummer, is the second electric vehicle produced by GM. The Detroit giant has three EV models in production: The Hummer EV, the Cadillac Lyriq SUV and the Chevy Bolt EV/Bolt EUV.
At Tesla, the market leader, the wait is shorter to buy a car because Elon Musk’s group is in the process of operating four vehicle factories at the same time. But the delays for delivery are still long. If you order the Model Y SUV today, one of Tesla’s best-selling vehicles, it will only be delivered to you between October 2022 and January 2023.
Interestingly, strong demand is also occurring as manufacturers continue to raise prices to preserve margins in the face of soaring raw material prices. In other words, consumers do not seem to be put off by the high cost of electric vehicles.
Tesla
An Affluent and Progressive Clientele
The same trend is seen in the used vehicle market, where Tesla models are in high demand and represent more than 55% of available used EVs, according to CoPilot.
Used Tesla prices are up to record highs of $66,000 as of March 27, up over 8% over the past three weeks, according to CoPilot.
Newer used models — one to three years old Teslas — have peaked to an average of $72,101.
A days supply of used Teslas — how many days will it take to sell the inventory — is down to a record low of 18 days compared to 62 days in mid-February, Ryan said.
“Now you can’t buy a (Tesla) Model 3 for less than $50,000,” Ryan added. At this price, the used Model 3, Tesla’s entry-level sedan, seems to have almost the same price as a new one.
While high prices are good for Tesla and sellers of Tesla vehicles, they do not broaden the customer base for electric vehicles. This clientele remains affluent, progressive, urban and suburban, according to CoPilot.
“It tends to be people who are environmentally conscious, college educated,” Ryan said. “So there’s a real chance that we find that electric vehicles are going to find greater adoption in the luxury market.”
