EV sales grew rapidly in the third quarter of 2021 to reach an all-time high, even amidst an overall new-vehicle sales decline, according to a new report by Kelley Blue Book.
The report states sales of new vehicles declined 13.4% year over year in Q3 primarily due to low inventory and high prices affecting seemingly every industry on Earth right now. Meanwhile, sales of electrified vehicles, meaning the combined total of electric vehicles, hybrids and plug-in hybrids – jumped by nearly 60% during that same timeframe. Through Sept. 30 of this year, auto manufacturers in the U.S have sold more than one million new electrified vehicles, and one in 10 vehicles sold in Q3 came equipped with a significant battery pack.
OK, so why is this? It’s the combination of a few factors, mainly that consumers are starting to turn a corner on accepting these vehicles, and more manufacturers are making them.
Now, keep in mind that the 60% jump doesn’t equate to millions of vehicles like it might if we were talking internal combustion engine vehicles. In this case, it’s a lot closer to just a little over 350,000, accounting for 10.4% of total vehicle sales. But the fact remains that this is still a record high, and is nearly double the volume of one year ago when electrified vehicle sales comprised only 5.5% of total sales in Q3 2020.
It’s also worth noting that consumers appear to be nearly equally as interested in pure-EVs as they are in hybrids. When examining the data by specific electrified vehicle category, sales of hybrids and plug-in hybrids increased 62.2% in Q3 2021, while sales of EVs increased 51.3%.
It’s also worth noting that even as the auto industry faces major challenges in labor and raw materials, compounded by higher prices, the growing demand for electric vehicles is still going up. One thought is that the EV price point is high enough anyway that a small price increase to make up for labor and microchips isn’t a big deal to consumers in this space.
A big part of the EV movement is Tesla. Like them or not, you can’t deny Tesla’s gargantuan presence in the EV world. The company continues to lead the market and increase sales with the Model 3 and Model Y, and Tesla’s total share of the EV market jumped back above 70% in Q3 after falling to 64% in Q2. The Tesla Model Y holds the title of the industry’s best-selling EV, accounting for nearly 40% of total EV sales, but new players from other auto manufacturers, including the Ford Mustang Mach-E and Volkswagen ID.4, continue to enjoy early success.
Of course, Tesla has plenty of tricks up its sleeves. Let’s not ignore the significance of Hertz’s recent investment with Tesla. The company is ordering 100,000 Teslas by the end of 2022, and customers can now rent a Tesla Model 3 at many Hertz locations. With the current order, EVs will comprise more than 20% of the Hertz global fleet.
Combine that announcement with Hertz’s agreement with Uber to supply 50,000 Teslas available by 2023 for drivers to rent when using the Uber network, and I’d say it’s safe to say that Tesla won’t be giving up its EV dominance so easily.