On the Projected Downturn in EV Sales

There are multiple reasons to why electric vehicle adoption is projected to stall in the coming year. Not only is it due to increased interest rates but also higher demands from the next group in the adoption cycle. When consumer confidence returns, it is essential that the pace of product development and infrastructure investments has been kept. 

First year of decrease in EV sales
Electric vehicle (EV) sales is projected to decrease in 2024 - in Sweden and globally. Two commonly stated reasons are the increased interest rates, increasing the capital cost for the high investment of an EV, as well as the removal of subsidies in many countries.

“There is a risk of not getting the complete picture”

The explanation is by no means incorrect. But if the issue of slow EV adoption is considered only a temporary one, stemming from a temporary economic downturn, there is a risk of not getting the complete picture.

A market dominated by the early adopters
The adoption model is often used to conceptualize how a new technology penetrates the market, and it segments customers into “innovators”, “early adopters”, “majority” & “laggards”. Most of the early EV adopters were either interested in the new technology or saw the financial benefit, almost all of which were able to charge at home. Hence, house owners have thus far been over-represented among EV adopters. This is unsustainable if EVs shall be able to reach a broader majority.

Reaching further into the customer base
To reach a wider adoption, the EV sector must fulfil additional requirements than what was sufficient for the early adopters. Studies have shown that potential buyers want better opportunities to charge in public, as well as overnight. The latter may be a key success factor in reaching buyers living in apartments. Moreover, there is still an anxiety among EV owners regarding the residual value of their EV after the initial years. An effective aftermarket securing the second-hand value of EVs could thus also be a driver for increased EV adoption.

A long journey left ahead 
When the early EV adopters are saturated, there will still be a long journey left ahead to fossil-free mobility. The decrease in EV sales is not just a storm to ride out, the momentum in product development and infrastructure investments must be kept. This is a message that can’t be stressed enough.