The Fuse

EV Sales Smash Records Despite Gasoline Prices Remaining Low

by Matt Piotrowski and Paul Ruiz | January 18, 2017

The numbers for electric vehicles sales in December are eye-opening, and very encouraging. U.S. EV sales skyrocketed last month, jumping to a new monthly record as automakers posted big gains in the increasingly competitive and diverse EV space.

December 2016 EV sales surpassed the previous monthly record set in September by an enormous 44 percent.

Tesla Motors, whose Model X battery electric sedan sold 3,300 units, registered the largest increase for any automaker, growing total sales by approximately 4,900 units or a whopping 133 percent y-o-y. GM complemented Tesla’s success, selling roughly 4,300 sedans as its Chevy Volt rocketed to the number one top-selling EV or plug-in hybrid for the fourth quarter, and the company rolled out its brand-new Chevy Bolt. December 2016 EV sales surpassed the previous monthly record set in September by an enormous 44 percent.

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EV sales for the entire fourth quarter were impressive, obliterating previous records, propelled by customers buying large numbers of the Chevy Volt and Tesla Model S and Model X sedans. Automakers sold 49,000 plug-in and battery electric vehicles, a 7.1 percent increase quarter-over-quarter and a massive 45.7 percent increase year-over-year.

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Some 23,300 vehicles were sold in December 2016 alone—which itself far surpassed the previous monthly record set in September 2016 by 45 percent. Tesla reported particularly strong December sales, but narrowly missed its 80,000 vehicle global sales target, selling 76,230 vehicles. In the U.S. last month, Tesla reportedly sold an estimated 8,600 cars. The company has set ambitious goals going forward, with CEO Elon Musk counting on 500,000 sales per year by the end of 2018 and 1 million by 2020. Analysts do not believe the company will hit these targets, particularly with its Model 3 likely delayed until late next year.

EV sales growth far outstripped total passenger vehicle sales, which were up 1 percent annually to 18 million cars. For the year, 17.5 million units were sold in 2016, compared to 17.4 million in 2015, according to Bureau of Economic Analysis data.

There were other milestones reached during that latter part of 2016. Automakers sold 48,800 U.S. plug-in and battery electric vehicles in Q4 2016. In all, the U.S. market consisted of 33 advanced fuel vehicle models in Q4 2016, including 18 PHEVs, 13 EVs, and 2 FCVs, with three new market introductions: Mercedes C350e PHEV; BMW 7-Series PHEV; and the Chevy Bolt. Since the beginning of 2011, some 560,000 alternative vehicles sales have been sold, most of which were EVs.

For Tesla, much of the growth stems from the company’s remarkable marketing strategy to boost consumer awareness and education in this space. Tesla has appealed to consumers’ acceptance of changes in technology and their desire for cost savings, no matter where gasoline prices stand.

Are higher gasoline prices responsible for the spike in EV sales? Even though fuel prices were roughly 36 percent higher than their low point in February, this uptick fails to explain the entire increase, since prices are still well below levels that consumers had to contend with from 2011 through 2014—when oil consistently traded above $100 and retail gasoline was at or above $4 per gallon in many states. Another reason for the jump was that auto sales typically do well in December as carmakers try to end the year on a high note and entice consumers around the holiday. For Tesla, much of the growth stems from the company’s remarkable marketing strategy to boost consumer awareness and education in this space. Tesla has appealed to consumers’ acceptance of changes in technology and their desire for cost savings, no matter where gasoline prices stand. Still, part of the robust numbers for December came as a result of a statistical quirk: Tesla had a large inventory built up after an issue with AutoPilot 2 hardware delayed deliveries in October and November. Toyota became a bigger player again in December, with its hybrid model Prius seeing sales soar by 1,600 in just one month after the company doubled the battery capacity and the car’s range.

A good year, but what’s next?

The December sales closed out a strong year for EVs, but with annual sales of just under 160,000, they still make up only less than 1 percent of total vehicle purchases and therefore are only marginally impacting oil demand.

The December sales closed out a strong year for EVs, but with annual sales of just under 160,000, they still make up only less than 1 percent of total vehicle purchases and therefore are only marginally impacting oil demand. In addition to the strong sales and successes of companies such as Tesla and GM in 2016, a number of researchers, including Bloomberg New Energy Finance and Wood Mackenzie, put out bullish reports on the future of EVs, with expectations that they will eventually see enough penetration to disrupt oil markets—although that won’t likely occur for another couple of decades. It’s too soon to tell whether the EV market has reached a turning point. Although gasoline prices have stabilized around $2.36 per gallon, they are still below levels seen in 2008 and from 2011-14, limiting the incentive for consumers to switch from vehicles that use internal combustion engines to ones that run on electricity. Furthermore, sticker prices for EVs are higher than regular cars and trucks. Even though consumers save longer over time due to lower fuel costs, the initial price is still a deterrent to some buyers as most EVs are considered luxury cars.

 

 

 

 

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