(NewsNation) — Once heralded as the next great automotive innovation that could also save the planet through reduced carbon emissions, electric vehicles are facing multiple setbacks in the early weeks of 2024, including slowed demand and unreliable charging networks.
A record 1.2 million EVs were sold in the U.S. in 2023, according to Cox Automotive, bumping up their share of the total vehicle market to 7.6%. Still, sales growth last year was down from the growth the industry experienced in previous years.
“The EV market in the U.S. is still growing, but not growing as fast,” Cox, an automotive services and technology provider, said in a recent report.
On Wednesday, Tesla warned of notably lower growth forecasts this year, the Wall Street Journal reported, leaving investors worried about how the company would slow it’s “profit-margin erosion.”
Other U.S. automakers General Motors and Ford have announced plans to scale back their EV production, an abrupt change from previous ambitions. Ford pumped the brakes on an electric battery plant in Michigan last year, while GM said it will abandon plans to build 400,000 EVs by the middle of this year.
In Europe, electric car maker Polestar said last week it is cutting jobs due to “challenging market conditions.”
The industry is facing infrastructure challenges, too.
In California, where Tesla manufactures most of its cars in the U.S., charging stations across the state don’t work 20% to 30% of the time, according to studies from UC Berkeley and data firm J.D. Power. Those charging stations are crucial for long-haul drivers, given that the median driving range for EVs is 291 miles, according to Bloomberg, lower than gas-powered cars’ median range of about 400 miles.
Earlier this month, the Biden administration announced it’s awarding $150 million in grants to upgrade public charging stations across 20 states. In total, the White House says more than $25 billion in investments for EV charging networks has been announced, including $10 billion from the private sector.
Consumers are also facing fewer choices if they want to take advantage of federal tax credits for purchasing EVs.
A smaller number of cars now qualify for the full $7,500 federal tax credit, due to more stringent component sourcing requirements established in the Inflation Reduction Act.
The provision barred vehicles including components or critical minerals from “foreign entities of concern” from being eligible for the credit. In November, the Biden administration issued rules for determining which entities fall under this disqualification. This includes companies fully or partially controlled by the governments of China, Iran, North Korea or Russia.
In a list published in early January, the federal government identified only five cars that qualify for the full $7,500 credit. Three are Tesla models and one is the Chevrolet Bolt, which is being discontinued. The fifth is the Ford F-150 Lightning.
Other EVs and hybrids are eligible for half the credit at $3,375.
Despite the headwinds, Cox Automotive projects more growth, even it is at a slowed pace.
“In the automobile business, nothing happens quickly,” Cox said. “The momentum is there and is not going away.”
The Associated Press contributed to this report.
