Electric Vehicle Sales in the U.S. Surge in 2022 as New Competitors Aim to Challenge Tesla

Electric vehicle sales in the United States increased by two-thirds in 2022, while the overall auto market shrank. This is according to new year-end figures that show traditional automakers are releasing more and more plug-in models, eating into Tesla's dominant market share.

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Auto sales in the United States fell by 8% in 2022, but sales of fully electric vehicles rose by 5.8%. This is according to year-end figures released this week by market-research firm Motor Intelligence. In comparison, total U.S. auto sales fell by 8% in 2022 from a year earlier.

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Tesla remains the leading player in the U.S. EV market, with an estimated 65% of total sales last year, according to Motor Intelligence. That figure was down from 72% in 2021, as more legacy car companies roll out new models. Tesla reports global vehicle-delivery figures but doesn’t provide regional results. According to Motor Intelligence's data, Ford Motor Co. jumped into the No. 2 position in EV sales, accounting for 7.6% of the U.S. market for fully electric vehicles. Hyundai Motor Co. and affiliate Kia Corp. combined were a close third at 7.1%, after rolling out popular new electric SUVs.

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General Motors Co.'s position in the EV market has declined since it stopped selling its best-selling electric car, the Chevrolet Bolt, to fix a battery-cell defect that caused some fires. However, sales have rebounded since the car returned to the market. Volkswagen AG and Nissan Motor Co. have also seen their EV market shares slip in the United States, according to Motor Intelligence's data.

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The changing market dynamics are a sign of the early competition in a sector that is still a small part of the overall car market, but is being targeted by auto executives as a major growth opportunity. Companies that can launch appealing electric cars in large numbers have the chance to attract early EV adopters, who have demonstrated a willingness to switch to new brands, executives and analysts say.

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In an interview last year, Ford Chief Executive Jim Farley said that he saw an opportunity to establish the F-150 Lightning pickup truck as a recognizable name in the minds of early EV-truck adopters. The truck was released in May, and Farley believes that it has the potential to be a leader in the EV-truck market.
He said that all of the brand preferences will be thrown up in the air in the new market for EV trucks. He believes that if they can be the first, it will set the tone.
Ford and Rivian Automotive Inc. are the only companies selling battery-powered pickups in significant numbers. Rivian's R1T pickup, R1S sport-utility vehicle and commercial van delivered 20,332 vehicles in the US last year, accounting for 2.6% of EV sales.

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Despite the industry’s strong EV sales growth in recent years, obstacles have emerged over the past year. These obstacles include a lack of infrastructure, high prices, and range anxiety. However, many believe that these obstacles can be overcome with time and investment. The rising cost of lithium and other battery minerals is prompting car makers to raise prices, which could sap demand. According to J.D. Power, the average price paid for an EV in the U.S. hit about $66,000 last summer, up from about $51,000 a year earlier.

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Tesla's decision to offer incentives of up to $7,500 to some U.S. buyers last month has raised concerns among investors about softening demand. Bernstein Research analysts have cited declining wait times for Tesla vehicles in the U.S. and China as a sign of waning demand. Tesla has not responded to requests for comment.
On Jan. 2, the company reported global vehicle deliveries for 2022 that were below its own forecast as well as Wall Street's expectations.

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Meanwhile, the new clean-energy regulations passed last year are being implemented in phases, which could shake up the EV competitive landscape, analysts say.
For example, new federal guidelines released this week could benefit Hyundai by allowing leased vehicles to qualify for a $7,500 commercial-vehicle tax credit, even if they are assembled outside North America. That rule could allow consumers who lease Hyundai vehicles imported from Korea to qualify for the subsidy, analysts said. This could be a big boost for Hyundai, as it would make their vehicles more competitively priced against other brands.

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Some aspects of the proposed guidelines could hurt Ford and Tesla, analysts said. The government’s proposed rules, set to be completed this spring, would classify the Mustang Mach-E and some versions of the Model Y as cars rather than SUVs. This would mean that those models priced higher than $55,000 wouldn’t qualify for the SUV tax credit. The cutoff for SUVs is $80,000.

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Car makers are investing heavily in battery-cell plants and factory upgrades to produce more EVs, in response to what they say is stronger consumer demand for battery-powered cars than they anticipated even a year ago. According to J.D. Power, there are 53 EV models either on the market or slated to go on sale this year—a fraction of the 625 separate vehicle models sold overall in the U.S. in 2022.

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A survey of more than 2,000 car shoppers from J.D. Power in late 2022 showed that only three in 10 respondents are able to find an EV that works for them in terms of price, vehicle type and other factors. This is a significant challenge for car manufacturers, as they look to increase the number of EVs on the market.
"The key right now is to get EVs to the market," said Stewart Stropp, a senior director of automotive retail who helped oversee the survey.

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On Tuesday, Rivian announced that it had fallen just short of its 25,000-vehicle output goal for last year, citing inadequate parts availability. In October, GM announced that it was pushing back its two-year goal of reaching 400,000 EV sales by the end of 2023, extending the target to mid-2024.
GM was one of the first big auto manufacturers to declare an aggressive push into electric vehicles. However, so far that push has not translated into increased market share. For example, GM sold 854 GMC Hummer pickup trucks last year during a full year of production. Additionally, its other recent U.S. EV entry, the Cadillac Lyriq SUV, sold 122 last year after output began in March.

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GM executives have said that battery supply issues and a slower-than-expected start at a new battery factory in Ohio have been hindering their plans for electric vehicle launches. GM President Mark Reuss has said that future EV launches will be faster, as the company has learned from the issues with the previous two launches.
"We'll be able to ramp up production much more quickly than we did with the Hummer and Lyriq rollouts," he told investors in November.