Buying an EV, the New Waiting Game

Business, Featured

Electric vehicle | Image by buffaloboy / Shutterstock

Consumers hoping to purchase an electric vehicle (EV) in the near future may have to “take a number,” as reservations are becoming a commonplace requirement among EV manufacturers.

Over the past five years, the Electric Vehicle (EV) market has seen substantial growth, according to Forbes. In 2021, U.S. EV sales nearly doubled compared to 2020, while 2022 sales are projected to see a 37% increase over last year’s sales. This growth trend is fueled, in part, by environmentally-minded consumers and a continuing rise in fuel prices.

Traditionally the U.S. has lagged behind European and Asian countries in buying EV-based vehicles. However, Consumer Reports notes that with car manufacturers ramping up production and releasing EV versions of consumer favorites, more Americans are considering taking the plunge and making an EV purchase.

In the face of increased demand and a shortfall of vehicles due to global supply issues, many auto manufacturers now require consumers to make reservations to purchase their desired vehicle, Axios reports. This shift toward reservations helps manufacturers gauge interest, limit overproduction, and show Wall Street investors that consumers are interested in their EV products.

Tesla, the largest manufacturer of EVs, with 72% of the U.S. market share, was the first EV producer to mainstream reservation requirements. Other EV automakers, including Ford, Rivian, GM, Fisker, and Honda, have followed suit, hoping to gain traction in the market.

Ford utilized the reservation method for its new EV-based Ford F-150, the Ford Lightning. The company unveiled the model at its Motor Show in Detroit, opening up the reservation list at the showing. This marketing strategy seems to have worked; Ford has announced it is no longer taking reservations. It has accepted 200,000 orders and has hit the limits of its current manufacturing capacity, Tech IAI reports.

While reservations help gauge interest and allow consumers to feel more confident that they will obtain a high-demand electric vehicle, the reservation process has some downfalls.

The WSJ reported that some EV consumers who reserved an electric vehicle were experiencing trouble receiving adequate updates.

Typically, when a reservation is made, it secures a consumer’s desired vehicle in the order it was received, and a general timeline of expected assembly and delivery to a dealership is given.

However, as some manufacturers experience production issues, consumers have noticed a lapse in updating the expected time frames. CNN reported that buyers may wait months, or even years, for the delivery of their vehicle. This leaves potential EV purchasers feeling frustrated and out of the loop.

General Motors President Mark Reuss spoke to NPR about GM’s ability to handle the rising popularity of EVs while facing a possible supply shortage. Reuss stated that he feels GM is prepared to handle a surge in EV production, saying the company has made preparations in gathering supplies based on market trends and will utilize previous stores if necessary.

While automakers like GM are taking strides to prevent issues in the production process, there are rising concerns that a lack of necessary materials may hinder mass production. Lithium and nickel — both vital for long-lasting EV batteries — are in short supply, as are electronic chips.

Leading auto manufacturers such as Ford, Volkswagen, and Toyota are hoping that reservations will help curb potential supply issues and establish a baseline of interest.

However, the WSJ reports that there are some potential issues with gauging interest based on the reservation process. Due to the high market demand for specific EV vehicles, some consumers may reserve multiple cars and acquire the one that becomes available first. This could cause a skewed view of actual interest.

To curb this practice, some car manufacturers require a monetary deposit with the reservation. Fisker Inc., the maker of the anticipated Fisker Ocean, requires a deposit and will charge a fee for canceled reservations.

With the reservation list growing, the EV market appears primed to continue demonstrating historical growth.

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