Electric Vehicle Sales In Q2 2024 Prove Progress Isn’t A Straight Line

Let’s make sense of where EV sales are at after Q2. Plus, Mercedes’ CEO commits to making gas cars “until deep into the 2030s.”

Mercedes EQS Top Mercedes EQS Top

I believe two things are true of the car market in the summer of 2024. First, Americans are fed up with the car prices that shot up during the pandemic, especially now that they have to finance them for 7% even if they have amazing credit. And second, they will break up with gasoline if they’re given a chance. Those two factors help explain the overall flat new car sales we saw in Q2, with the exception of EVs, which are on the rise from most brands thanks to aggressive price cuts, tax credits, lease deals and even dealer incentives.

But can EV growth be sustained without those deals? That’s the question that could define the rest of this year and beyond.

Welcome back to Critical Materials, our morning roundup of news about the auto industry, technology and the EV transition. Also on today’s agenda: Mercedes-Benz recommits itself to the gas engine, and the Germans are freaked out by the new anti-China tariffs. Let’s dig in.

30%: Winners And Losers For EV Sales In Q2 2024

Chevrolet

2024 Chevrolet Blazer EV, Equinox EV and Silverado EV

This data point struck me the most: General Motors’ overall new vehicle sales were “up” 0.6% year-over-year in Q2, but the automaker also had its best EV sales quarter ever

Objectively, that’s good news for the General. It promised a “do-over year” for EVs after 2023 was such a mess, and it seems to be delivering on that so far. The Ultium plan seems to be paying off. But interest rates, being as high as they are right now, aren’t going to equate to a great year for new car sales, period. And part of the appeal of GM’s many EVs (which I’m increasingly impressed with) is the tax credits, great lease deals and other discounts. 

The same could be said for Hyundai and Kia, which had a fantastic Q2 (and month of June) for their electric SUVs—many of which can be had for incredibly low lease prices right now. Let’s be honest, the same is probably true of the Toyota bZ4X: not the strongest EV in terms of fast-charging times, but I heard from a guy the other day who leased one in New York for $159 a month. (Which can be less than a dinner out for four in New York City, including drinks and tips.) 

So Q2 was a great quarter for EV sales, and in many cases, they show that customers within certain brands are choosing the electric options over their gas counterparts. But how sustainable would this growth be if the lease deals went away? Or if automakers and dealers cut back on the discounts to focus on profits? Or if a Trump Administration 2.0 ends the EV tax credit system? 

That, I do not know. Obviously—and this is happening right now—EV costs will go down over time and eventually reach price parity with ICE vehicles. And I’m certainly not advocating an end to the tax credits or deals that are getting more people to go electric. But at some point, we’ll hopefully have to see a more organic takeoff point for EVs to see real, true, continual growth. 

I’ll add that I think 2024 has the potential to not only eclipse 2023’s EV sales, but eclipse them entirely. But I’m starting to wonder what the longer game looks like. 

60%: Mercedes: ‘You Didn’t Buy Our Weird EVs So We’re Sticking With Gas’

2024 Mercedes-AMG EQE SUV Exterior Rear Quarter

Some of these automakers are deeply committed to going eventually zero-emission, as a matter of survival if nothing else. Others are pretty clear that they feel they’re being dragged kicking and screaming into the electric era. Though its approach to software is impressive, I get the sense that the company that thinks it invented the car (it actually didn’t) feels especially reluctant to give up the gas engine.

In fact, the last electric Mercedes I drove was the AMG EQE SUV. And I thought that if the question is, “What is an electric AMG, exactly?”, then that car’s answer is “We don’t know yet.” Overall, Mercedes buyers really haven’t warmed to the soap-bar styling of the EQ cars, and so its EV sales have trailed rivals like BMW. 

Now, CEO Ola Källenius is telling Bloomberg that the plan is to keep building gas cars for much longer than it would’ve said a few years ago: 

The product offensive over the next two to three years will also see the S-Class maker pivot to spending more on its lucrative lineup of fuel-burning vehicles. Top-level buyers, in particular, “keep reaching for our high-tech combustion-engine cars,” Chief Executive Officer Ola Källenius said in an interview.

“We need flexibility for longer, until deep into the 2030s,” Källenius said, keeping intact the company’s goal of being carbon-neutral by 2039. “We remain committed to offering electric versions of the entire lineup this decade, but we have to ensure our combustion-engine cars remain competitive.”

The preeminent luxury-car maker has pared back electrification plans in recent months as EV demand has slowed. But Mercedes also has trailed archrival BMW AG because its lineup of electric models has put off buyers with high prices and polarizing designs. The company’s battery-vehicle sales fell 9% during the first quarter to 50,500 units, while its Munich-based competitor’s deliveries surged to 82,700 vehicles.

That isn’t to say that it’s not doing more EVs. There’s a compact electric G-Class coming, as well as the new CLA-Class, which I think will end up being a range-extender EV. But Benz’s plans may now include putting new battery plants on hold. 

90%: Germans Hit Back At Anti-China Tariffs

2025 Mini Cooper SE First Drive

We also cannot discount global political chaos in the EV market—not just the glut of elections all over the world, but ongoing tensions with China. Initially, the European Union seemed hot to trot to counter an influx of Chinese-made EVs into their market, which were poised to kneecap companies like Volkswagen and others.

But the EU’s member states are not united on this front, Reuters reports. Germany is especially worried about retaliatory tariffs from China and impacts on its own auto industry:

Germany has stressed the need for a negotiated solution with Beijing. Its automakers have said tariffs are the wrong approach, with the negative effects outweighing any benefits.

In a last-ditch effort to influence negotiation, its auto association on Wednesday urged Brussels to drop the tariffs.

Increasing the cost of EVs for consumers undermines the EU’s goal of being carbon-neutral by 2050, opponents say. Tesla has said it will hike prices.

Beijing’s retaliation could bring extra tariffs on EU exports of cognac, pork or luxury cars.
The Commission says duties are needed to counter cheap loans, land and raw materials and other subsidies and the goal is a level playing field, not shutting Chinese car makers out, as the United States’ planned 100% tariff is likely to do.

Seeing as how the EU tariffs’ biggest victim is the China-built but BMW-owned Mini Cooper, I think this plan could be somewhat half-baked. 

100%: How Do Automakers Sustain EV Growth?

Ford Explorer EV production start in Cologne, Germany

Cheaper models? More public charging options? More range? All of the above? There’s probably no one magic bullet here, but if you had to emphasize one thing, what would it be? 

Contact the author: patrick.george@insideevs.com

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