00:00 Speaker A
Well, August saw the highest sales of electric vehicles this year, up 19.4% from July and since January EV sales are up 61%, but some industry analysts fear those high voltage sales could be short circuited after tax credits for EV buyers expire on September 30th. Join me now is Kevin Roberts, Carguru’s Director of Economic and Market Intelligence. Kevin, good to see you as always. Uh maybe start big picture, Kevin, you know, what is the story with tax credits? They’ve they’ve boosted sales so much.
00:44 Speaker A
Kevin, why are they going away? Explain that for us. And have folks been, you know, have you seen them rushing in ahead of that deadline?
00:54 Kevin Roberts
Yeah, so as part of the big beautiful bill, uh the expiration of the tax credits was pulled ahead to September 30th. and once that was announced, we really started to see the momentum start to pick up from consumers looking to get ahead of that tax credit expiration. So that’s both on the purchase of vehicles and also it’s helping on EV leasing as well. So, uh we’ve been I I’ve been calling it a EV crescendo uh as consumers really look to get ahead of uh get their sales in uh before that credit expires.
01:34 Speaker A
And Kevin, you know, um we did see Tesla update its website, um saying, you know, order by September 30th. This included even a a countdown clock on the site. Kevin, how are how are some of the other auto makers? Do we know? Do we have line of sight there? How are they trying to kind of build awareness, get people in the door in the showroom?
01:58 Kevin Roberts
Well, I mean, I can say from our data, you can see that the sales rate has picked up. and not only that, the amount of, you know, the number of EVs on dealer lots has been declining and the market day supply has dropped quite significantly. Uh from where we were, you know, at the end of June, 108 days supply and now we’re under 45 days supply. So, the message is clearly getting out to consumers and they’re looking to kind of snap up those EVs before that credit expires.
02:30 Speaker A
So now bottom line, Kevin. So, you know, now let’s let’s look ahead. So once we’re past this tax credit, pull out your crystal ball, what what what do you think the EV market looks like ahead, Kevin? What what would you expect to see?
02:47 Kevin Roberts
So, it’s it’s unknown. I I’ve been taking a look at what happened in other markets where tax credits expired. If you look to Europe, you know, you saw double digit declines uh of EV sales afterwards. Uh California is one we’ve been watching, accounting for about 30% of EV sales last year. and there have been talk that they would be replacing the tax credit themselves, but recently it just came out that they’re not going to be replacing that tax credit. So a large EV market that we could be seeing uh a drop in sales volume in.
03:26 Speaker A
Are there certain EV names, Kevin, EV makers that in your opinion, hey, these guys, they they may be better positioned than others in a sort of a post- tax credit world.
03:41 Kevin Roberts
So, normally, I would have assumed that automakers might be looking to plug the gap themselves, but we’re in a post- tariff environment and that tariff tax bill they’re currently consuming most of themselves right now. So I don’t know how much automakers are going to be able to really kind of foot the bill uh as those EV tax credits go away.
04:03 Speaker A
And and Kevin, by the way, what what does the the used market for EVs look like? You have line of sight there?
04:12 Kevin Roberts
Yeah, so there is a used EV tax credit. It’s for vehicles under $25,000. So we’ve been seeing an acceleration in that market as well. Not as much as what we’ve been seeing in the new vehicle market, but there has been an uptick uh in that used EV market and we’ve been seeing a lot more used EVs particularly get under that $25,000 threshold. And so it’s a small but growing market.
04:39 Speaker A
We’ve been talking here about EV’s, but let’s kind of like broaden out this discussion a bit. Look at that larger car market, uh Kevin, so gas, hybrid vehicles. I saw a JD Power site is saying, um, they think sales is expected to actually contract in September. Do you agree with that, Kevin? And if so, is that, what would be the reasons for that? Is that just high higher rates, higher prices, both?
05:10 Kevin Roberts
I I mean, we’ve been seen almost a pull ahead in vehicle sales the past couple months. We saw that at the end of March, early April when the tariffs were first announced, there was a lot of kind of looking to get ahead of those pre-tariff prices. Uh we saw, you know, an acceleration of sales in July and August as well, um as consumers, you know, didn’t see prices increase and were looking to get out there as well. So, there is a concern about potential pull ahead of sales volume. Uh but when and where that might strike is a little bit uncertain at this point.
05:47 Speaker A
Kevin, you you mentioned tariffs, just want to end here on that. Um, and just your sense of how they factor into this discussion because you have trade agreements, frameworks with the UK, EU, Japan. I mean, they they do provide for this um, the 15% tariffs. Is that in your opinion, Kevin, is that a, is that manageable for the industry?
06:14 Kevin Roberts
So, we’ve already been seeing automakers uh absorb a lot more of the tariff costs than what I initially expected. I think most people were initially expecting. We can see with trade data, the tariff rates are there and the tariffs are taking effect. Uh so the trade deals that are going to be announced will help to kind of bring down that rate. uh and will provide more room for automakers to potentially absorb those tariff costs for a longer period of time than what we might have initially thought when the tariffs were initially brought out in March.
06:48 Speaker A
Kevin, great to see you as always. Thank you, sir.
06:50 Kevin Roberts
Thanks for having me back.
