Electric car sales falling world over, leaving carmakers in shock. Here’s why

Electric vehicles (EVs) have long been promised as the inevitable future of mobility. Carmakers across the world have been forced to accept a ‘perform or perish’ mantra leading most to invest billions of dollars in developing battery technology and/or newer models with battery power. But while the rise in demand for such machines was growing at a rapid pace once upon a time, that time may well be over. Demand for – and sales of – electric cars has been growing in a far more tepid manner in recent months and while no alarm bells are ringing yet, the panic button is being kept close at hand.

Take the case of Ford Motor Company. The F-150 Lightning is one of its hottest-selling models in the US. But the company now plans a seven-week shutdown of its facility in Michigan where the electric truck is manufactured. Why? Well, demand for the model is just not what it was previously. “We continue to adjust production for an optimal mix of sales growth and profitability,” the American company said in a recent statement.

(Also read: Ford cuts 2024 earnings guidance, shares fall)

Even Tesla, the world’s largest EV maker, has been facing the heat with its Model 3 and Model Y cars not performing as strong as in the past. Globally, Tesla saw sales rise by 6.4 per cent in the third quarter of this year but analysts mostly say it is due to the new Cybertruck that compensated the lacklustre showing of its smaller siblings. Tesla also faces enormous heat from competitors, especially the likes of China’s BYD which has expanded aggressively.

Across the Atlantic, local carmakers in Europe are also having to fend off the invasion of Chinese electric brands. Despite imposition of higher tariffs on China-made EVs by the European Union (EU), the threat from these EVs remaisn as is. But in the overall scheme of things, EVs just don’t seem to be faring as well as in the past. Volkswagen is planning plant shutdowns in Germany and Mercedes-Benz reported its third-quarter profits had plunged by 50 per cent.

What may be hurting EV sales across the world?

According to a report prepared by Goldman Sachs Research analyst Kota Yuzawa, multiple factors are at play which are proving to be a challenge for the EV sector the world over. While a few are local factors – uncertainty around Presidential elections in the US, for example, others include a rise in demand for pre-owned electric-vehicles which has impacted new EV sales, slow pace of constructing rapid-charging stations and the inability of any manufacturer to offer a real value proposition.

Here in India, the absence of Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme, electric car sales have been on the decline for four months straight even though electric two-wheeler sales remains strong. Maruti Suzuki, the country’s largest carmaker, plans to have its first electric car in the market by early 2025 while the likes of Hyundai and Mahindra are also determined to expand their electric portfolio. The Hyundai Creta electric is also ready for a 2025 debut. But can the likes of Maruti Suzuki, Hyundai and Mahindra play the volume game?