March 30, 2023
Over the past few years, electric vehicles (EVs) have experienced a rise in popularity as costs of production have decreased, and the benefits of clean transportation have come into sharper view for consumers, thanks to more effective awareness campaigns. In addition, charging stations are becoming more available around the country, which has also contributed to a rise in EV adoption.
But as EVs have become more popular, they have still lagged behind the sales of other cars– until 2022. Marking a decline for the first time in a decade, fewer cars were sold overall in the U.S. in 2022 compared to the year before. But out of the vehicles that consumers did buy last year, more of them were electric. EV sales jumped by more than two-thirds in 2022 compared to 2021, with EVs accounting for 5.8% of new car sales. Helping to encourage consumers to go electric is the EV tax credit, which was provided in the Inflation Reduction Act. It is expected that the EV tax credit will continue to boost demand for electric cars over the next few years, setting the U.S. on pace to reach its goal of 50% of the EV market share by 2030, a significant increase from the current 6% position.
The Growing EV Market Share
While EV pioneer Tesla was still the market leader in 2022, with 64% of the share, that number was down from 66% in the previous quarter. Newcomers like Rivian and Lucid did not account for much of the burst in EV sales last year, but both manufacturers have boosted their production and have their sights set on gaining ground in 2023 and having more of a presence in the market in the near future. Newcomers as well as legacy automakers are trying to catch up to Tesla and capture their share of the growing demand for electric vehicles.
New models of EVs are being introduced to the market, appealing to an increasing group of auto buyers who have been weary of electric vehicles up to this point. GM, Hyundai, and Ford are out front and leading the other automakers who are working their way deeper into the EV market with the production of the Chevy Bolt EV, Hyundai IQONIC 5, and the Mustang Mach-E.
Can Production Keep Up With Demand?
With consumer preferences shifting towards embracing electric vehicles, one of the crucial questions is whether manufacturers will be able to keep pace with the increasing demand. Production capabilities will be under the microscope as automakers race to secure the necessary battery materials to build EVs at scale. According to a recent article by Bloomberg, by the end of 2022, the production of fully electric vehicles accounted for 7% of North American car production, up from 4.7% the year earlier.
But First, More Charging Stations
To meet the demands of more EVs hitting the road in the U.S., there will need to be at least about 13 million charging stations in place by 2030 to account for the growing electric vehicle infrastructure needs. For reference, there are currently only 56,256 charging locations around the country.
The Bipartisan Infrastructure Law has made $5B available for installing charging stations across the country, including along the interstates as well as in urban areas in convenient and safe locations. President Biden has pledged that the government will fund the installation of 500,000 chargers.
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