EV Sales Tick Up as Payment Challenges Define the Road Ahead

electric car

As U.S. consumers take to the road this summer, the state of electric vehicles hangs in the balance and the payments industry grapples with the issues that will provide the right platform for its growth.

First, the sales update. As the major car companies report their second-quarter 2024 sales, the results for overall electric vehicle (EV) sales are mixed with some very bright spots to report. Ford’s EV sales surged 61% year over year in Q2, with 23,957 units sold, leading to the automaker’s overall growth for the quarter. This performance allowed Ford to maintain its position as the second-largest EV seller in the U.S., ahead of GM but still trailing Tesla. The F-150 Lightning saw a 77% sales increase, remaining the top-selling electric truck. The Mustang Mach-E and E-Transit also experienced significant growth, up 46% and 96% respectively. In the first half of 2024, Ford sold 44,180 EVs, a 72% increase from last year. In a recent interview, Ford Motor Company CEO Jim Farley emphasized the company’s strategy to introduce smaller, more affordable EVs to compete globally while still expanding the overall audience.

“You have to make a radical change as an [automaker] to get to a profitable EV. The first thing we have to do is really put all of our capital toward smaller, more affordable EVs,” Farley told CNBC recently. “That’s the duty cycle that we’ve now found that really matches. These big, huge, enormous EVs, they’re never going to make money. The battery is $50,000. … The batteries will never be affordable.”

Tesla delivered 443,956 electric vehicles globally in Q2, exceeding Wall Street’s estimate of 439,302. Despite this, deliveries fell 4.8% year-over-year, following an 8.5% decline in Q1. This marks the longest streak of quarterly delivery declines since 2012. Tesla’s production also decreased by 14% to 410,831 units, influenced by a factory shutdown in Germany and shipment disruptions. However, Tesla’s expected focus on affordable cars and its energy storage segment could drive future growth.

GM reported selling 21,930 electric vehicles in the second quarter of 2024, a 40% increase from the same period in 2023, driven by the Cadillac Lyriq and Chevrolet Blazer EVs. This total includes 490 electric delivery trucks from its BrightDrop subsidiary. In the first half of 2024, GM’s EV sales reached 38,355, up 6% from 36,322 units in the first half of 2023, with 746 units sold at BrightDrop. All EVs sold this year utilize GM’s new Ultium propulsion system, replacing the previous Bolt and Bolt EUV models. GM plans to reintroduce the Bolt with Ultium technology in 2025.

Payment Issues

Part of the consumer apprehension about buying more EVs lands in the lap of the ability to access EV charging stations and then the ability to pay for that service. JD Power released a report in May that reinforce those concerns. “As the industry inches toward mass consumer adoption, the main roadblocks to getting consumers behind the wheel of an EV are the continued shortage of affordable vehicles, charging concerns and a lack of knowledge regarding the EV ownership proposition, including incentives,” said Stewart Stropp, executive director of EV intelligence at J.D. Power.

The ability to pay at the EV charging station has been addressed by several payment companies. For example, Visa advises its merchants that the success of a charging station often hinges on the ease of payment for customers. It recommends installing Visa-accepting terminals and offering contactless payment options can enhance the experience, while digital payment solutions, such as mobile app payments, should be complemented with tap-to-pay options for accessibility. Using the correct merchant code (MCC 5552) is crucial for bank rewards and reducing service issues. Clear checkout processes, whether estimating charges or using set amounts, Visa suggests, should be communicated to customers, with additional compliance for European merchants regarding customer authentication.

The payment issue has also been addressed in a recent U.S. Department of Energy report. “Best Practices for Payment Systems at Public Electric Vehicle Charging Stations,” authored by Kristi Moriarty and John Smart, addresses significant challenges in the payment processes at public EV charging stations. Key issues include the reliability of network connections, the robustness of hardware, and the integration of payment systems. The report emphasizes the necessity of strong network connections, suggesting the use of external antennas and redundant SIM cards to enhance connectivity. It also highlights the importance of durable, weather-resistant card readers and recommends regular maintenance to ensure functionality.

A crucial point from the report states, “Failure to accept and process payment is a cause of public electric vehicle (EV) charging session failures,” underscoring the need for reliable payment solutions to avoid service disruptions. The report also recommends standardized procedures for user interfaces to reduce customer confusion and improve overall user experience.