Electric vehicle sales have doubled. Is there a “tidal wave” coming?
Electric vehicle sales are booming in the US, with purchases nearly doubling over a year ago.
This trend breaks the long-held narrative that drivers are not ready for electric cars and is causing some analysts to recalibrate their predictions.
“We used to have a lot of very clear predictions,” said Tyson Jominy, vice president of data and analytics at JD Power, a global consumer intelligence company based in Michigan. “We kind of had to blow this up because the adoption rate is going a lot faster.”
Last year, electric vehicles made up around 2 percent of all car sales. This summer, according to the latest data, that number rose to almost 5 percent of light commercial vehicles such as SUVs and sedans and more than 20 percent of all car sales (Climate wire, September 24).
However, higher EV adoption rates could stall without stronger federal and state policies, proponents warn, hindering President Biden’s goal of decarbonizing the sector by mid-century. Still, the recent increase in sales is remarkable, partly due to the proliferation of vehicle models among different manufacturers, heightened consumer awareness and government support.
“Electric vehicle sales are pretty much a gangster,” said Ryan Gallentine, policy director for Advanced Energy Economy. “You see automakers moving to building assembly plants only for electric vehicles and announcing these new battery manufacturing facilities – for me that means they are putting their business on electric vehicles.”
This week Ford Motor Co. and SK Innovation announced plans to raise $ 11.4 billion.Power wire, September 28). The company, along with General Motors Co., Stellantis, and others, predicts 40 to 50 percent of auto sales will be electric by 2030, which is in line with the Biden government’s plan.
The transportation sector is the largest emitter of greenhouse gases in the United States, accounting for 29 percent of total emissions. Cars release the majority of these heat-storing gases.
Analysts say the surge in demand for electric vehicles is partly due to the influx of new models.
“Consumer choice has exploded,” said Chris Harto, chief transportation and energy policy analyst at Consumer reports. “Up until a year or two ago, if you wanted an electric car, you had to get a small car that isn’t very popular even with gasoline-powered vehicles.”
SUVs make up almost 60 percent of vehicle sales in the United States. So if motorists didn’t want a small electric car or an expensive Tesla, they were out of luck.
That is no longer the case.
There are smaller crossovers like the Volkswagen ID.4 and the upcoming Hyundai Ioniq 5. More medium-sized crossovers like the Toyota bZ4X are on the way. And in 2023, Ford plans to offer larger SUVs, such as electric versions of its Explorer and Lincoln Aviator.
Full-size pickups include Ford’s F-150 Lightning, which has garnered more than 130,000 reservations since its debut last May, as well as electric versions of the Chevy Silverado, GMC Sierra and Dodge Ram.
“So now we come to the point where over the next year you can find an electric vehicle in almost every market segment that is likely to suit your needs,” said Sam Abuelsamid, a principal analyst at Guidehouse Insights.
An additional 40 EV models are expected to be available in the U.S. market by the end of next year, Abuelsamid said, and over 500 EV nameplates will be available worldwide by the middle of the decade.
The variety of models is particularly noteworthy given the consumer tendency towards brand loyalty.
“They’re about 48 percent true to their brand,” said Jominy of JD Power. “So if there’s a Hyundai or a Tesla in the segment you’re considering but don’t currently own, you probably won’t be considering it.”
However, fleet owners can be more flexible.
A survey of 28 major companies, including Amazon.com Inc. and T-Mobile, published yesterday found that respondents plan to buy at least 377,750 zero-emission vehicles in the US over the next five years – and 95 percent of them said that they would switch vehicle manufacturers to get the specific capabilities and functions they need.
Another factor that may contribute to the demand for electric vehicles is what is known as the network effect. A Consumer reports opinion poll The study published last year found that 7 out of 10 adults in the US with a valid driver’s license were interested in an electric vehicle. But that interest tripled for drivers who had direct experience with it, be it driving an electric vehicle, driving in one, or meeting an owner.
“These network effects are beginning to take hold as more and more people buy and own electric vehicles,” said Harto von Consumer reports called. “The problem is that only 6 percent of the population in our survey had this experience.”
One hill ahead for electric vehicles
In fact, the electrification of vehicles is still in its infancy. And while many analysts say electrification is inevitable, the speed of adoption is not.
“It’s a matter of time, but the schedule is so dictated by public policy and other factors that it could stretch for decades,” said Nick Nigro, founder of Atlas Public Policy. “And it is not the case that conventional vehicle technology simply remains inactive; it will continue to improve too. And so there will be ups and downs for electric vehicles when the market picks up. “
A significant boost in the EV timeline could depend on two pieces of legislation currently in Congress: the $ 3.5 trillion reconciliation package and the $ 1.2 trillion bipartisan infrastructure deal.
“People are really starting to understand that electric vehicles are here to stay, and if we can get the infrastructure and reconciliation bills off then they’ll have a huge incentive to buy this electric vehicle,” said Paul Bledsoe, a former Senate finance committee member. which now works with the Progressive Policy Institute.
There is a provision in the Atonement Bill that would offer a tax credit of $ 7,500. An additional $ 4,500 incentive would be provided for unionized electric vehicles assembled in the US, while the infrastructure package includes electric vehicle financing.
“The total incentive is $ 12,500. That’s a lot of money. It’s the biggest consumer incentive in the country’s history, ”said Bledsoe, who also worked on energy and climate in the Clinton and Obama administrations.
“If we pass these bills, you will see an electric vehicle-like acceleration in market demand. From zero to sixty in about 2 seconds. ”
The path for both legislations is riddled with obstacles. And even if tax incentives survive unscathed, resource allocation and implementation could pose additional hurdles, AEE’s Gallentine said.
“We have a number of members who want to distribute physical goods and electrify their fleets, and in many states they just don’t have the framework to do so,” he said. “So we start talking to government regulators and lawmakers about, ‘Do you have a plan for how you can spend this money? Do you have programs in place to get this infrastructure money out the door quickly? ‘”
Brianne Eby, senior policy analyst at the Eno Center for Transportation, said market movement must work with federal and state policies to achieve a number of goals.
“There are investments in infrastructure to support electric vehicles, that is, direct state support for public charging networks both on motorways, but also in residential areas and companies. There is government coordination with and support for utilities to upgrade their distribution networks for faster charging, ”she said. “And also to support the demand for the supply chain and manpower for domestic production.”
And while EVs still make up a small percentage of the total market, analysts say the writing is on the wall.
“The bottom line is that the investment money is now all flowing into electric vehicles, which means the tidal wave is coming,” said Jominy.