Better-than-expected U.S. electric-vehicle (EVs) sales in the second quarter brought relief to investors after a sharp slowdown in demand triggered by high interest rates, but EV makers still face obstacles ahead. General Motors, Rivian and Toyota posted upbeat EV deliveries on Tuesday, while Tesla reported a smaller-than-expected decline. Investors responded by driving up shares of several of the companies.
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Demand for EVs has grown slower than expected due to high borrowing costs, economic uncertainty and consumer preference for gasoline-electric hybrids, leading Tesla and other EV brands to slash prices or offer more incentives to lure consumers to showrooms.
Analysts said pressure to continue cutting costs in manufacturing and batteries will not go away.
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EV sales globally are expected to rise to 16.6 million vehicles annually, from 13.7 million in 2023, according to the International Energy Agency, with China’s growth outpacing other regions.
Analysts caution, however, that Tuesday’s sales figures are insufficient to forecast a re-acceleration of EV sales growth.
“We’re expecting this period of time to have bumps along the way for the next few years as the transition goes from early adopters to mainstream buyers and we’re going to see this happen for a long time,” said Sam Fiorani, VP at research firm AutoForecast Solutions.
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“Some quarters will be up, some will be down, but all in all, it won’t be as strong a growth as we saw over the last few years,” he added.
GM reported a 40% rise in EV sales in the U.S. in the second quarter.
“We can win as more customers embrace EVs and we can keep winning if they want to stay with the engine technologies they know,” GM’s North American president, Marissa West, said in a statement.
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Even Toyota, which has ridden demand for hybrid gasoline-powered vehicles to strong sales, cited growing demand. It plans to start building two new EVs for the U.S. market at its Kentucky and Indiana plants starting 2026.
“We’re continuing to hear some positive demand from the marketplace,” Damon Rose, VP, sales, Toyota, told Reuters. A Kia spokesman said although percentage growth might not be as sharp as a year earlier, overall EV sales continue to grow at a strong pace.
Rivian, Tesla and Hyundai did not immediately respond to requests for comment. To stimulate demand, China has introduced subsidies of up to $1,375.29 each for auto trade-ins, and automakers like Tesla and BYD are offering zero-interest loans and no-down-payment options in that market.
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Tesla shifts focus
These incentives by Elon Musk’s Tesla in the U.S. helped the EV market leader beat delivery expectations despite a second consecutive quarterly decline.
“But this isn’t the time to claim victory over a weak EV market. Tesla would need a mammoth second half to match last year’s volumes, which is probably unlikely,” said Matt Britzman, Tesla shareholder and equity analyst at Hargreaves Lansdown.
Tesla has shifted focus in the past few months to its artificial-intelligence efforts such as its soon-to-be unveiled robotaxi product and Optimus humanoid robot to combat the slowdown in EV sales, which generate more than 80% of its quarterly revenue.
EV fans are not shaken in their resolve by any warning signs, however.
“Given how bearish the market was on EVs, and particularly on Tesla, in the last couple quarters, these factors should lead to a repricing of the EV story on Wall Street,” Investing.com analyst Thomas Monteiro said in an email.
“It’s a multitude of positive catalysts that have gathered at the right time,” he added.