Here’s how the EPA’s tough new rule could impact US electric vehicle sales

The Environmental Protection Agency (EPA) announced a tough new auto pollution rule in April that will virtually guarantee that electric vehicles will account for up to 60% of new cars sold in the United States in just seven years – here’s how it could impact EV sales.

Electrek spoke with Ronen Slonim, Principal Data Analyst at Fullpath, an automotive industry data and customer experience platform, about how the new EPA rule could impact dealerships automobiles, original equipment manufacturers (OEMs) and electric vehicles sold through direct sales.

How will the new EPA rules impact direct sales models versus dealerships?

Let’s look at Tesla, which uses a direct sales model. Tesla has cut prices several times over the past year or so in an effort to compete with dealership prices and reach a wider audience. While Tesla’s cuts initially led to increased sales and a short-term decline in EV sales at dealerships, this method of price-cutting to beat dealerships isn’t sustainable in the long run, especially considering the steady increase in EV purchases from dealerships in the second half of 2022.

Sales of electric vehicles from Volkswagen dealers jumped 126% in the second half of 2022 compared to the same period a year earlier, and brands such as Kia and Volkswagen, which produce quality electric vehicles at lower, can be credited with pushing Tesla to drop their prices in the first place.

Although adoption of electric vehicles in the United States has been slow compared to much of Europe and Asia, competitive pricing has proven to increase interest and purchases. The EPA’s proposed rules will open up the market in the United States, giving dealers an opportunity to educate the public and increase sales of electric vehicles.

How have the OEMs that introduced electric vehicle sales fared so far?

Although the general environment is difficult, we are seeing a growing gap between OEMs that offer electric vehicles and those that do not. Those with electric vehicle deals fare much better than their counterparts who don’t.

Almost every car brand saw a decrease in the number of cars sold, both new and used, in 2022 compared to 2021. However, Kia not only saw a massive 33.5% increase in sales following of the pandemic, but also a 3.5% increase in sales in 2022 compared to 2021. Kia also saw one of the lowest percentage changes in loyal customers in three years (-0.9%), compared to compared to the average reduction in sales of loyal customers (-22.6%). Kia’s EV-centric mindset could explain why it enjoys continued success as major auto brands such as Toyota struggle to maintain market relevance due to a lack of strategy for electric vehicles. electric vehicles.

Electric car sales have been growing despite recent industry and economic headwinds, but Toyota isn’t even in the top 20 when it comes to electric vehicle production. Toyota slipped to No. 2 in US auto sales, with General Motors taking the top spot.

What will be the implications of the new EPA rules for perception and brand loyalty?

Car brands that trusted their electric vehicles experienced greater success and brand loyalty than those that did not. The rules proposed by the EPA may seem drastic, but the auto industry has been driving the change with the rapid adoption of EV initiatives by major OEMs and a significant increase in EV sales. OEMs that prioritize adoption have seen greater success over the past year.

OEMs used to be able to bank on brand loyalty, with statistics from just five years ago showing that 81% of used car owners and 76% of new car owners repeatedly bought the same type of car. As brand loyalty declines rapidly in automotive, data suggests consumers are more loyal to OEM offers, prices and initiatives, with significant growth in electric vehicle sales at dealerships seen in the second half of 2022.

Although there are still fewer returning customers, Volkswagen has managed to slow its year-over-year reduction from -31% of customer return sales in 2020-21 to -16% in 2021- 22. The significant reduction indicates that Volkswagen’s new automotive strategy, which focuses on digital adoption and EV initiatives, is having a significant impact. Comparing Volkswagen’s electric vehicle sales statistics with repeat customer sales data suggests that consumers may no longer be loyal to a specific brand, but a brand’s commitment to meeting demand and consumer interests has become a determining factor in car sales.

This trend can be seen in all car brands and prices. For example, Porsche is the only OEM to have seen its brand loyalty increase significantly by 32% since 2019. By prioritizing its electric sports car, Porsche is positioning itself as the go-to luxury car brand.

Learn more: Dramatic new EPA rule will force up to 60% of new car sales in the US to be electric vehicles in just 7 years

Picture: VW

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