US EV market takes a breather amidst rising inventory

Rolling through a growing cityscape of electric vehicle enthusiasm, the U.S. auto market seems to have taken a surprise pit stop. Latest reports are showing an unexpected buildup in unsold EV inventories. Quite a turn, considering we'd just grown used to hearing about the relentless growth of this sector.

The luminaries in this auto-space - General Motors, Ford, Hyundai, Toyota - find themselves with an overstock. A study by Cox Automotive reveals that there are over 92,000 brand-spanking new EVs just lounging around in dealerships across the country, a figure three times higher than the previous year. The conversation now seems to be subtly shifting from the meteoric rise in EV demand to a more prosaic one - how to move the EVs already in the market.

But let's not run to call this the bursting of the EV bubble just yet. Sure, GM has a 50-day supply of Cadillac Lyriqs waiting for buyers, but they insist that over 80% of their Lyriqs and GMC Hummer EVs are still en route to dealerships. Ford, for its part, has about 86 days' worth of F-150 Lightnings and a 113-day supply of Mustang Mach-E. But wait, Ford's U.S. sales analysis chief, Erich Merkle, disputes these numbers. According to him, these estimates are rather generous, with actual figures standing at 58 days for the Lightning and 83 days for the Mach-E.

"There's a natural speed of market growth here that many are fighting against," investment banker Vitaly Golomb offers insight into the situation. It seems that amidst the frenzy of EV market growth, many forgot that markets, much like nature, often take their sweet time.

While we could say there is a slowdown, Volkswagen takes a different stance. The German auto giant recently admitted to some softening in US EV sales. At the same time, they believe the problem isn't lack of demand, but rather a specific model's supply issue and "customer confusion" about tax credits for EV models. Quite a diplomatic way to put it, wouldn't you say?

In all fairness, it's not a disaster, but rather a reality check. The EV market is still in its infancy, and while initial interest and demand surged, perhaps this is the necessary breather before the next growth sprint. It’s more likely an indication of customers not being confused, as the VW Group tries to imply, but customers actually getting wise about the purchases they’re making. While initially there were only a few EV models available, everyone was buying and now that we finally have some choice - well, mediocre EVs with inflated price tags just won’t do it anymore.

The automotive market, after all, isn't a sprint but a marathon. And in this race, the players aren't just competing against each other, but they're also trying to win over customers, regulatory bodies, and market realities. Interestingly, the report doesn’t mention Tesla which is sitting on 2,481 vehicles as of July 13 which is no more than 3 days of its production in the US.

"Too many brands" fighting for a slice of the pie may lead to a bit of a glut, but it's hardly a catastrophe. It's a rite of passage, a part of the growing pains for this blossoming industry. The winners here will be those who adapt, who figure out how to make the most of these pauses, and who can turn a setback into a setup for a comeback.

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