Plug-ins are a best-seller in Calif. for the first time

Source: By Anne C. Mulkern, E&E News reporter • Posted: Wednesday, August 21, 2019

Californians snapped up Tesla Inc.’s Model 3 plug-in electric car in the first half of this year, making it the third most-purchased vehicle in the state.

The Model 3 trailed the non-electric Honda Civic and Toyota Camry, according to data released by the California New Car Dealers Association (CNCDA). It tracks sales and model popularity through new vehicle registrations.

Tesla sold more than 33,000 Model 3s, while drivers bought roughly 33,600 Toyota Camrys and 39,000 Honda Civics. Drivers bought more Model 3s than the Ford F-series truck, a popular option. Ford sold about 25,000 of those in the first half of 2019.

It shows that buyers want electric vehicles and need more models to choose from, said Gil Tal, research director of the University of California, Davis, Plug-in Hybrid & Electric Vehicle Research Center.

“Traditional [carmakers], they argue that there is not enough demand. If Tesla can sell 33,000, it means that there is a demand,” Tal said. “You just need to make the cars that people like to buy.”

A federal tax credit likely contributed to the surge in purchases of Tesla Model 3s. The credit for Tesla dropped from $3,750 to $1,875 in July and customers might have been scrambling to receive the higher payback.

Overall, plug-in cars constituted 5.6% of sales in California through June, compared with 4.7% last year. Sales of all-electric vehicles in California are on track to top 100,000 cars this year, the association said.

Sales figures for EVs do not include plug-in hybrid vehicles, which have gasoline engines, such as the Chevrolet Volt. That segment made up 2.2% of sales in the first half of the year, down from 3.1% during the same time in 2018.

The climb in EV sales comes as California consumers shun new cars. The state’s new vehicle market is expected to drop 4.6% this year compared with 2018, the third consecutive year of declines, CNCDA said.

The trend is noteworthy because Golden State buyers provide half of all EV sales nationally, Tal said. Even so, “it’s a small number” of all new vehicles that are purchased, he said.

Light trucks made up 56.6% of California new car sales in the first half of the year, compared with 54% for the equivalent period a year earlier.

Outselling Mercedes, BMW, Lexus

Tesla’s Model 3 is considered a “near-luxury” car by CNCDA, with a price tag of $39,000 before adding upgrades. In the near-luxury category, it outsold non-electric models from competitors.

The Model 3 took 46.2% of sales in its category, compared with 10.6% for the Mercedes-Benz C-Class, 7.4% for the Lexus ES, 6.8% for the BMW 3 series and 5.1% for the BMW 4 series.

“If we talk about market disruption, it’s already happening for some segments,” Tal said. “The other companies that are selling a lot of cars in this near luxury [category] — BMW, Lexus, Mercedes — they already have to move fast to offer their own electric cars … because they are losing market share.”

Lexus, part of Toyota Motor Corp., does not have a plug-in option. Spokeswoman Amanda Roark said the longer-term plan is electrification.

“In early July, Lexus committed to selling an electrified version of every vehicle in the lineup by 2025,” Roark said in an email.

Mercedes-Benz and BMW did not immediately respond to requests for comment.

In the subcompact segment, the all-electric Chevrolet Bolt ranked second, taking 14.3% of sales. It came in behind the Kia Soul, which grabbed 16.4% of sales. It isn’t electric.

Electric car sales in the United States will increase in the future because the rules around California’s Zero-Emission Vehicle Program are tightening, Tal said. The state requires automakers that sell cars in California to make increasing percentages of ZEVs.

Ten other states follow that mandate. But the ZEVs’ “travel provision” let automakers earn credits in those other states for vehicles sold in California. That policy ended last year.