U.S. light vehicle sales came in stronger than expected with a seasonally adjusted annualized rate (SAAR) of about 16.2M in April, up from 14.8M level in March and representing an increase of +12% YoY. Within that increase, electric vehicles (EVs) were up +32% to 6.6% of total units, while Tesla was up only +21%. Internal combustion engine (ICE) vehicles were up 11%. Dealership inventory at 1.7M units remains far below historic levels of 3M-4M. Dealership incentives picked up +12% MoM, bringing the level up 29% YoY to $1.7K (per Morgan Stanley) and compared to ~$3.7K pre-pandemic.
On the outlook for competition in the EV market, Ford CEO Jim Farley observed, “By 2025, we now expect there to be 45 EV models to be offered in the U.S. in the small and mid-sized segment.” That’s a lot of coming competition to the Tesla Model 3 and that’s going to make for a very dynamic 2025. As prices settle lower and benefits (including free charging) escalate, we would expect the EV share of the new car market to gap higher to the mid-teens range.
As it relates to the pickup/chassis-cab truck segment which is 20% of the new market, Ford isn’t the only legacy OEM launching new electrified trucks into the market. GM has the Silverado and Sierra, and Stellantis has a range of trucks hitting the market in 2024. Rivian is the first mover in the segment; however, as we previously shared, they are subscale and don’t have the resources of an ICE business to quickly scale to achieve favorable unit economics. Many “retail” commentators say that this will be a hard segment to talk into EV. All of these coming new models will make 2024 the first real telling year to learn how willing truck consumers are to transition to EV. We expect Ford and Stellantis to pitch especially hard to their customers.