Credit By: Power Technology
According to vehicle sales data from Cox Automotive, the trajectory of electric vehicle (EV) adoption has hit an unprecedented milestone this year, with a surge in popularity surpassing all previous records.
While the growth of EV sales has been steady over the past few years, this trend has accelerated dramatically in the current year. The second quarter of the year witnessed US consumers purchasing nearly 300,000 new battery-electric vehicles (BEVs), marking an all-time high, as reported by Cox.
This figure represents a remarkable increase of more than 48% compared to the previous year. Notably, the number of EVs sold during this quarter alone exceeded the total EV sales for 2019. Notably, this does not even factor in the sales of plug-in hybrid electric vehicles (PHEVs), which can run on gasoline and electricity, with a battery rechargeable through a charging cable or a generator powered by the engine.
Cox Automotive has now forecasted that the sales of fully electric vehicles in the United States are poised to cross the one million mark for the first time in history in 2023. Impressively, over 557,000 BEVs have already been sold within the first half of this year, culminating at the end of the second quarter.
Analysts attribute the surge in EV sales to various contributing factors, including price reductions, a broader spectrum of available vehicle choices, and amplified investments from governmental and manufacturing sectors.
Stephanie Valdez-Streaty, the Director of Industry Insights at Cox Automotive, describes this as a “perfect storm” of converging elements driving this trend.
Furthermore, the recent enactment of the Inflation Reduction Act (IRA) has been a pivotal catalyst for the upswing in sales, as Valdez-Streaty explained to CNN. Under this act, the federal government commenced providing tax credits of up to $7,500 for EVs, considering the cars’ sourcing and assembly locations and electrical components. Out of the 97 EV models available in the market, only 18 currently qualify for this tax credit, according to the Alliance for Automotive Innovation.
This year’s highest-selling EV models, such as the Tesla Model 3, Tesla Model Y, Chevrolet Bolt, Rivian R1T, and Volkswagen ID.4, all meet the criteria for at least a portion of the IRA tax credit.
As the electric vehicle market undergoes a transformative phase, Valdez-Streaty asserts that a shift is underway. A June survey conducted by Cox Automotive revealed that more than half of consumers are considering purchasing a new or used BEV within the next year, in stark contrast to only 38% expressing the same sentiment in 2021.
Valdez-Streaty underscores the following challenge: “We’ve had the early adopters, and now it’s about increasing sales. It’s about converting those considerers into buyers.”
However, achieving a market predominantly dominated by EVs is expected to take decades, according to US Energy Information Administration sales projections. With current laws and regulations remaining unchanged, the projected annual percentage of newly purchased BEVs and PHEVs is expected to plateau around 17-19% from 2035 through at least 2050. Despite the sensitivity of consumer interest in EVs to gasoline prices, the agency anticipates that even with oil prices as high as $190 per barrel in 2022 dollars, the EV market share will remain under 30%.
The most substantial hurdle for consumers remains the price differential, as emphasized by Valdez-Streaty. Despite significant price reductions by manufacturers like Tesla and Ford this year, transitioning to electric vehicles still entails a premium compared to the average gasoline-powered model. The average cost of an electric car in July was $53,469, as reported by Kelley Blue Book, in contrast to an average price of $48,334 across all vehicle types.
In Cox’s consumer survey, the second most pressing concern after price for those considering EVs was the scarcity of accessible charging stations. Although battery ranges have seen improvement – with the number of electric models offering a range of at least 300 miles rising from 13 in 2021 to 51 in 2023, as per the US Department of Energy – the number of charging stations remains inadequate to support widespread EV adoption. At the end of the first quarter of 2023, approximately 134,000 charging stations were available, serving 3.34 million EVs nationwide, according to the Electric Vehicle Quarterly Report by the Alliance for Automotive Innovation. To achieve a charger-to-car ratio of 7:1 – a necessity identified by the California Energy Commission to realize the state’s goal of 5 million EVs on the roads by 2030 – the country would need to establish more than two and a half times the current number of chargers, as noted in the AAI report.
Geographical disparities are also evident, with nearly 30% of the country’s public charging infrastructure concentrated in California. Notably, AAI state sales data highlight that the market share of new EVs is substantially higher in California, along with the District of Columbia, where electric vehicles constitute over a fifth of all light-duty vehicle sales.
Valdez-Streaty concludes that ensuring the establishment and functionality of charging infrastructure will be pivotal in sustaining the growth of EV sales. State and national incentives also play a crucial role. The California Air Resources Board’s landmark decision to ban new gasoline-powered car sales by 2035, followed by at least 17 other states, holds significant potential for impacting sales trajectories.
Valdez-Streaty anticipates an exciting evolution in sales trends over the next few years as these regulations are embraced: “It’ll be fascinating to see how sales start to increase as those states adopt the CARB regulations.”