Unless you’ve been hiding the news, you’ve probably heard that electric vehicle (EV) sales have slowed to a crawl in the U.S. market. Concerns include a lack of affordable options and a lack of sufficient charging infrastructure.
But according to a recent McKinsey & Co. survey, the news is even worse for investors in companies like Rivian Automobile (NASDAQ:RIVN).
What is going on?
McKinsey, as part of its biennial survey, asked about 200 questions of more than 30,000 consumers in 15 countries that represent about 80% of global sales volume. And what the survey revealed should worry electric vehicle investors.
The survey found that more than 4 in 10 electric vehicle owners in the United States will likely purchase a combustion engine for their next car purchase. This is a much higher rate than the 29% globally who said they planned to reconsider their EV purchase.
These results came as a surprise to some: “I didn’t expect this,” said Philipp Kampshoff, director of the consultancy’s Center for Future Mobility. Automotive News. “I said to myself: ‘Once an EV buyer, always an EV buyer.’”
The main concern of those surveyed was the lack of public charging infrastructure, but other concerns include high ownership costs and the difficulty of traveling long distances. It’s true that public charging infrastructure has been slower than expected, with only eight stations operational since the National Electric Vehicle Infrastructure Program was established two years ago. Worse, only 23 states funded the $5 billion federal program.
In addition to the survey revealing that more than 40% of U.S. consumers want to ditch electric vehicles, 21% of global respondents do not. Never want to switch to an electric vehicle, again citing charging infrastructure issues.
While these statistics should worry electric vehicle investors, the news wasn’t all bad. The survey also found that overall consumers are still slightly more likely to consider electric vehicles in the future. Specifically, 38% of non-electric vehicle owners say they anticipate a hybrid or fully electric vehicle will be their next vehicle, which is slightly higher than the 37% who anticipated it would be their next vehicle in of the 2022 survey.
Down the road
Of course, the news that many EV owners would prefer to return to combustion engines isn’t a good sign, but Rivian can only control what it can control. This means the company remains focused on refreshing its current R1 platform – which it recently completed – and preparing for the launch of its next R2 crossover in 2026.
In fact, Rivian has even accelerated its launch timeline by planning to bring initial production to its Illinois factory, rather than waiting for its Georgia factory to be completed. It’s a move that will absorb excess capacity at its original facilities and save the company more than $2.25 billion. The move is pretty much a no-brainer for a company that needs to launch its vehicle at a more competitive price as soon as possible.
Ultimately, the results of the investigation are somewhat troubling and the latest sign that the The US electric vehicle market will grow more slowly than hoped.
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Daniel Miller has no position in any of the stocks mentioned. The Motley Fool has no position in any of the securities mentioned. The Motley Fool has a disclosure policy.
Bad news for Rivian Investors was originally published by The Motley Fool
