Despite a wave of doubters, the electric vehicle revolution is still going strong. Per the latest report by Cox Automotive, 2025 will be the strongest year for the auto industry since before the pandemic.
The firm has a positive prognosis for the auto industry in 2025. "With 2024 finishing on a high note, Cox Automotive is optimistic about 2025, with plenty of reasons to believe it will be the best year since 2019," said Cox's chief economist, Jonathan Smoke.
A nationally representative sample of 2,557 American car buyers and 526 dealers participated in its most recent study. The aim was simple: to better understand the attitudes, preferences, and views of those dealers and consumers regarding electric car options.
Cox Enterprises is one of the world’s largest automotive services and technology providers. Cox Automotive, specifically, offers "digital marketing and software for automotive dealers and consumers, as well as vehicle remarketing services." The likes of Kelley Blue Book, AutoTrader, Dealer-Auction Ltd, vAuto, and Dealer.com are all Cox Automotive brands.
This particular report is appropriately titled "Cox Automotive’s 2024 Path To EV Adoption." To ensure the results appropriately reflect the varied makeup of the American customer base, the survey was designed to collect a wide range of demographic information, such as age, income, location, and current car ownership.
Let’s look at 2024 first. Overall, almost all automakers reported better sales in 2024 compared to the previous year, except for Stellantis and Tesla. General Motors was the best-selling carmaker in 2024, while Honda and Mazda also saw significant growth.
Sales of electric cars in the US topped one million units for the first time per Kelly Blue Book. Looking at the second-hand EV market, the percentage of people who are thinking about buying a used electric vehicle has risen sharply – up from 62% in 2021 to 77% currently.
For 2025, Cox Automotive suggests that EVs will account for around 10% of the market, up from about 7.5% in 2024. Coincidently, sales of ICE vehicles will fall to 75% of overall volume, the lowest level ever, with EVs and plug-in hybrids expected to make up around 15% of the market.
This year, around 15 new EV models are expected to hit the market, with most buyers expected to make those purchases before the Trump administration cuts the $7,500 tax credit. This rise is also being aided by the quick expansion of the EV charging network.
The lack of sufficient charging networks is seen as one of the major entry barriers to EV adoption. With 86% of dealers committing to continue investing in EV charging infrastructure, this problem should also see a decline in 2025.
Although affordability remains a big barrier for EVs, 2025 should bring about an improvement here as well. Per Cox Automotive, yield spreads are expected to shrink and loan portfolio performance is expected to improve, meaning credit availability should keep growing.
Additionally, assuming the economy stabilizes as anticipated and loan performance improves, loan rates could lower even further without any additional Fed actions, indicating that Fed policy will probably be less significant in 2025 than it has been in previous years.
Now I’m not a finance guy, but it seems like EVs are set to become a whole lot more popular. In a world where most news about electric adoption is negative, this study is a bright ray of hope.
Source: Cox Automotive
