Tesla sales declined for the fourth consecutive month in the US

The electric vehicle (EV) market in the United States experienced a notable uptick in May, with new EV registrations rising by 9.6 per cent. This growth can be largely attributed to attractive sales promotions and favourable lease deals offered by manufacturers. However, the landscape is not uniformly positive across all brands.

Tesla, while still maintaining its position as the dominant EV sales leader, has seen a decline in new vehicle registrations for the fourth consecutive month, according to data from S&P Global Mobility. This trend suggests a shifting dynamic within the EV market.

EVs from 31 different brands collectively captured 7.5 per cent of the U.S. light vehicle market in May, showing growth from 6.8 per cent  in the same period last year. The total EV registrations for the month reached 104,916 vehicles. EV registrations outperformed the broader light-vehicle market, which experienced a slight decline of 0.7 per cent, totalling just under 1.4 million vehicles.

Despite maintaining its position as the EV market leader, Tesla's performance has shown signs of weakening. The company's May registrations fell by 15 per cent to 48,587 vehicles. Consequently, Tesla's share of the EV segment dropped from 60 per cent a year earlier to 46 per cent.

In contrast, several other manufacturers demonstrated strong growth. Kia saw a remarkable 146 per cent increase in registrations, Rivian grew by 87 per cent, Hyundai increased by 40 per cent, and Nissan also showed an 87 per cent year-over-year growth.

It's worth noting that registration data serves as a proxy for automaker delivery numbers, particularly useful for companies like Tesla that don't break out U.S. sales figures specifically. However, this data typically lags behind actual sales by several weeks.

A significant factor driving the overall increase in EV sales appears to be the generous incentives offered by manufacturers. May saw automakers introducing substantial sales incentives, including subsidised financing and attractive lease deals. Some models received discounts exceeding USD 15,000, according to data from Motor Intelligence.

For instance, the Kia EV6, a compact crossover, saw incentives reaching USD 16,812 in May. The Kia EV9 midsize crossover had even higher incentives at USD 18,078 per vehicle, while the Cadillac Lyriq offered USD 17,732 in incentives. Even Tesla, known for its limited discounting, offered incentives of USD 5,570 on its Model Y.

Rivian, a relatively new player in the market, provided USD 4,060 in incentives on its R1T pickup.

These incentive levels represent a significant increase from the previous year. For example, the Cadillac Lyriq's incentives in May 2023 were just USD 761 per vehicle, while the Tesla Model Y had USD 1,195 in incentives during the same period last year.

Despite the current growth, some industry analysts believe that EV sales may be approaching a plateau. Karl Brauer, executive analyst at iSeeCars, suggests that EV makers are facing a challenging situation where they must either offer attractive deals, reduce production or remain on the sidelines of the market. Brauer had previously predicted that EV market share would reach around 7 per cent before stalling, based on a study of U.S. consumer preferences.

The current market conditions seem to align with Brauer's prediction. With the EV market share at approximately 7.5 per cent, there are signs of market saturation, including inventory build-up at dealerships, production shift cancellations, and the introduction of substantial incentives. Brauer notes that while the growth from 2 per cent to 7 per cent market share was achievable, the progression from 7 per cent to 10 per cent presents a more significant challenge.

The future trajectory of the EV market remains uncertain, and predictions are speculative at best. However, the current landscape, characterized by generous incentives, suggests that this could be an opportune time for consumers who have been considering an EV purchase to take action.