The pace of EV adoption in the US has slowed over the past year as the market growth shifts towards hybrids. EV growth has gone from 40% in 2023 to what will likely be 7% in 2024, compared to internal combustion engines (ICE) sales that we estimate will be down 3% this year. That means EVs are still gaining share on gas car.

I attribute about half of the EV slowdown to consumer anxiety regarding the availability of charging infrastructure and range, as well as the fact that EVs typically cost 10% more than their gas-powered alternatives. Another dynamic that’s likely impacting EV sales is there was a pull-forward in EV sales in 2021, 2022, and 2023. Essentially, consumers who had been thinking about getting an EV for years finally had compelling options, including Model Y, Model 3, as well as traditional automakers releasing an assortment of EVs. These factors have created a negative snowball effect as traditional auto sees slowing consumer interest in EVs and pares back investments in the space. This results in fewer EV options, which compounds the slowdown.

It is important to note we are only talking about fully electric vehicles, or BEVs (battery electric vehicles). We do not factor in hybrids or plug-in hybrids (PHEVs) because we believe eventually BEVs will win out given they should have a long-term cost advantage over hybrids.

Detroit’s Big Three have incurred several headwinds this year in their pursuit of EV production. In November 2023, we wrote In Big Auto’s Slow Move to EVs, Tesla Gains an Advantage, and since then there have been even more delays:

Ford: In April 2024, Ford announced a shift in strategy, delaying the production of an all-electric SUV and pickup truck to focus on hybrid technologies. In August 2024, the company announced they are cancelling the above mentioned all-electric SUV and making it a hybrid. Additionally, the company delayed its EV truck “Project T3” by 2 years and is now expected to begin production late in 2027.  Most importantly, the company announced that it is reducing its annual capital expenditures dedicated to pure electric vehicles from about 40% to 30%. In other words, Ford still sees EVs as an important part of its future, but its urgency to get there has diminished. On the positive side, the company reiterated its timing to begin Lithium Iron Phosphate (LFP) battery production in 2026 at BlueOval Battery Park Michigan, benefiting from the Inflation Reduction Act.

GM: In July 2024, General Motors (GM) announced delays in its EV plans, including a second six-month postponement of its second U.S. electric truck plant in Michigan, now set for mid-2026. This delay will prevent GM from reaching its 2025 target of 1 million EVs in North American production capacity. GM also delayed the launch of Buick’s first EV, initially expected in 2024, with no updated timeline provided. In August 2024, GM’s Indiana EV battery plant was confirmed to be delayed from 2026 to 2027.

Stellantis: In August 2024 Stellantis confirmed its postponement of its $3.2 billion battery factory and $1.5 billion in upgrades for electric vehicle production in Illinois. The company cited the need to ensure competitiveness and align with market conditions as reasons for the delay.

Taking a step back, last year Deepwater estimated 50% of new car sales in 2030 will be EVs. Now, after a year of EV headwinds we estimate only 25% of US new car sales will be electric in 2030. The chart below outlines our previous US market share of new car sales that are EVs by year.

The table below outlines our previous and new growth rates per year estimates. To reach 25% market share in 2030 implies a 18% CAGR. The acceleration in 2025 and 2026 is based on a belief that in the back half of 2025, and throughout 2026, several new lower priced ($30k) EVs will come to market. The biggest, of course, will be Tesla’s Model 2, which we should hear more about on October 10.

Sensitivity Analysis:

The table below outlines what EV CAGR (compound annual growth rate) imply for EVs as a percent of new car sales in the US. For example, if you believe the average growth per year for new EV sales will be 10% between now and 2030, then 15% of all new cars sold in 2030 will be EVs.

Note: The sensitivity table includes an 18%, 31%, and 44% CAGR option. The reason why we selected those percentages is they yield a 25%, 50%, and 100% market share in 2030, respectively.

We expect Tesla to grow US deliveries by an average of 15% per year through 2030. This implies total deliveries of 4.5m, compared to the Street at 3.6m (FactSet).

In July, Tesla’s US EV market share fell below 50% in a quarter. While this dynamic is viewed by some investors as the beginning of Tesla’s market share decline to the mid-teens, we see the company’s US market share stabilizing at around 40%. The reason is we believe Tesla’s continued investment in EV production will yield the best vehicle for the price. That means consumers will view Tesla as the best value in EVs, which should support a much higher market share than the roughly 15% share Ford, Toyota, and GM hold today in the US gas market.

If we are correct that in 2030 the market share for new EV sales will hit 25% then there will be about 4.5m EVs sold in the US. If Tesla can achieve 40% share, that implies Tesla will sell 1.8m vehicles in the US in 2030. That compares to our estimate that Tesla will sell 800k vehicles in the US in 2024. The bottom line is we expect Tesla’s US CAGR from now until 2030 will be 15%. That is slightly below the 18% CAGR we’re estimating for the overall US market given we’re modeling for Tesla’s EV market share to decline from about 50% today to 40% in 2030.

While the adoption curve is taking longer than anticipated we believe an electrification is the future. Here’s a preview of some new EVs coming out through 2025:

Tesla:

• Model 2 (Rumored 2025) While it’s rumored today, we should get confirmation at the October 10th event. We expect a vehicle that will share similarities with the Robotaxi. While Model 2 will have a steering wheel, pedals, and mirrors, it won’t require FSD to operate. The body will be distinguishable from the Robotaxi, but overall will be on the same production line as Robotaxi.
• Robotaxi (Rumored 2026) We also believe the model will have a futuristic feel, like that of the Cybertruck, without a steering wheel, pedals, or mirrors. Additionally, the reveal will include a “demo” of the Robotaxi in action, summoned by the Tesla ride-hailing app and showing off its autonomous capabilities by maneuvering some sort of track or route.
• Cybervan (Long shot rumor for 2027) Think of this as a Robotaxi XL for 8-10 people. While the passenger van will be light on Tesla’s sleek signature design, it will be heavy on leveraging autonomy for the ride-hailing vision of affordable transportation. This vehicle will be focused on dense urban areas and could play a role in the future of public transportation, which we estimate expands the ride-hailing addressable market by 20%.
• Stripped down Model 3 (Being Tested) According to Electrek, Tesla is testing a cheaper version of their cheapest model, Model 3, in Mexico. Tesla is known for limiting the customization of interiors and features besides color and seating (on some models). This potential new model rollout will have less features, like textile interior (not vegan leather), no screen in the backseat, adjusted ambient lighting, and no standard heated seats or steering wheel. There is no confirmation of this model being rolled out or timing, but important to note the steps Tesla is taking to make vehicles more affordable.
• Roadster – Elon has stated that the Roadster will go into production in 2025, but delayed timelines are common with Tesla.

General Motors (GM):

• Cadillac Celestiq (Expected: 2024)
• Cadillac Escalade iQ (Expected: Late 2024)
• Cadillac Vistiq (Expected: Early 2025)
• Cadillac Optiq (Expected: Late 2024)
• Chevrolet Corvette EV and SUV (Expected: 2025)
• Chevrolet Bolt EV (Expected: 2025)
• GMC Sierra EV (Expected: Late 2024)

Stellantis:

• Dodge Charger Daytona (Expected: Late 2024)
• Chrysler EV Crossover (Expected: 2025)
• Jeep Wagoneer S (Expected: Fall 2024)
• Jeep Recon (Expected: 2024)
• Maserati Grecale Folgore (Expected: 2024)
• Maserati GranTurismo Folgore (Expected: 2024)
• Ram 1500 REV (Expected: Q4 2024)

Volkswagen (VW):

• Volkswagen ID.7 (Expected: 2025)
• Volkswagen ID.Buzz (Expected: Q4 2024)
• Porsche Macan EV (Expected: Late 2024)
• Porsche 718 Cayman and Boxster EVs (Expected: 2025)

Volvo:

• Volvo EX30 (Expected: 2025)
• Volvo ES90 (Expected: 2025)

Jaguar Land Rover:

• Range Rover EV (Expected: 2025)

Daimler AG:

• Mercedes-Benz G-class EV (Expected: 2025)

Renault Group:

• Nissan Maxima (Expected: 2025)

BMW

• BMW iX3 (Expected: 2025)
• Mini Cooper Electric (Expected: 2025)
• Mini Aceman (Expected: 2025)
• Mini Countryman Electric (Expected: Fall 2024)

Canoo:

• Canoo Pickup Truck (Expected: 2025)
• Canoo Lifestyle Vehicle (Expected: 2025)

Lucid:

• Lucid Gravity (Expected: Late 2024)

Polestar:

• Polestar 4 (Expected: Q4 2024)
• Polestar 5 (Expected: 2025)

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