Are electric vehicles doomed? We don’t think so, despite poor sales

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This year's Super Bowl featured three advertisements for new electric vehicle (EV) models, matching the total from all previous Super Bowls combined. With multiple automakers coughing up more than $5.5 million per 30-second spot during the United States' marquee television event, EV enthusiasts hailed the milestone as a harbinger for the automotive sector in the coming decade. More skeptical industry watchers questioned whether we had actually hit a turning point.

Their concern isn't unwarranted. After a large increase in 2018, EV sales as a share of the overall US passenger vehicle market barely grew in 2019, to 2.5 percent. A recent consumer survey from Cox Automotive found demand for EVs barely budged between 2016 and 2018. Automakers not named Tesla, whose Model 3 represented more than half of US EV sales in both 2018 and 2019, are still struggling to make inroads in the US market. Toyota's Prius is old news, and though its sales are respectable, neither the Chevrolet Bolt nor Nissan Leaf has been a game-changing product. Offerings from Jaguar, Audi, and Porsche haven't totally flopped, but their ultra-premium segment is a small fraction of the overall consumer vehicle market.

These automakers have all benefited from generous federal- and state-level incentives, some which have now sunset. Moreover, the COVID-19 pandemic has thrown state budgets into disarray, jeopardizing current and future incentive programs. Shutdowns across the country are devastating household finances and have sent oil prices to two-decade lows, potentially dampening EV appeal for the near future. Automakers face existential threats from the collapse in economic activity and must decide whether to double-down on emerging technologies or taper investments and retrench behind profitable business segments.

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