New vehicle sales in the U.S. saw a nearly 5 percent increase in the first quarter of the year, despite high interest rates. However, the growth in electric vehicle (EV) sales slowed down during the same period, with mainstream buyers expressing concerns over factors like limited range and inadequate charging infrastructure.
According to reports from automakers, a total of 3.8 million vehicles were sold in the first quarter, translating to an annual rate of 15.4 million in sales. With inventory levels on dealer lots returning to pre-pandemic levels, auto companies were forced to lower prices. The average sales price in March dropped by 3.6 percent compared to the previous year, marking the largest decline recorded for the month.
Sales of EVs only grew by 2.7 percent during the quarter, reaching just over 268,000 units. This is a significant slowdown compared to the 47 percent growth seen in the previous year. The drop, led by Tesla, reflects automakers’ concerns that they may have rushed into targeting the EV market without addressing the reservations of mainstream buyers.
Industry experts point to real-world concerns about charging infrastructure, battery life, and insurance costs as factors contributing to the hesitation among mainstream buyers to adopt EVs. As a result, the EV share of total U.S. sales fell to 7.1 percent in the first quarter.
The industry is also facing challenges due to high interest rates, prompting buyers to wait for potential rate cuts later in the year. Vehicle sales data indicates that consumers are more inclined towards purchasing affordable options, with sales of smaller and less expensive vehicles outperforming larger and pricier models.
Major automakers like General Motors, Stellantis, Kia, and Tesla reported declines in their sales for the quarter, while companies like Toyota and Honda saw significant increases. Despite the fluctuations in sales figures, the industry continues to navigate through changing consumer preferences and market conditions.
