US electric vehicle sales to hit record this year, but still lag behind China and Germany

Electric vehicle (EV) sales in the United States are poised to reach a historic high this year, constituting approximately 9% of all passenger vehicle sales, as projected by Atlas Public Policy. This marks a substantial increase from the 7.3% share of new car sales recorded in 2022. Notably, this year is anticipated to witness the sale of over 1 million EVs in the U.S., with estimates ranging from 1.3 million to 1.4 million, as predicted by the research firm.

While these figures indicate significant progress in the realm of electrification, the United States still lags behind leading nations such as China, Germany, and Norway. China has achieved an impressive 33% EV market share, Germany stands at 35%, and Norway remarkably leads with a staggering 90% share in the first half of 2023, as reported in the BloombergNEF EV outlook published in June. It is crucial to note that these statistics encompass both battery electric vehicles (BEVs) and plug-in hybrid EVs (PHEVs).

The success of EV adoption in these countries can be attributed to several key factors, including ambitious government zero-emissions targets, incentivizing vehicle tax policies, substantial subsidies, and the availability of affordable EV options. These incentives have played a pivotal role in swaying consumers toward adopting plug-in vehicles.

In the United States, a reduction in EV prices has been a driving force behind increased adoption. Tesla, a dominant player in the EV market, has lowered prices for its popular EV models multiple times throughout the year, compelling other automakers to follow suit. Additionally, car manufacturers are offering more substantial incentives on their electric models, and dealerships are providing deeper discounts as EV inventory grows.

The Inflation Reduction Act has further contributed to cost reduction for EV buyers, offering tax credits ranging from $3,750 to $7,500, depending on specific eligibility criteria. Moreover, the decreasing costs of electric car batteries, driven by the declining prices of critical materials like lithium, have made EVs more economically viable.

However, despite the steady growth of the U.S. EV market share, challenges persist for potential electric vehicle buyers. Early adopters of EVs tended to be higher-income individuals who were open to embracing new technology and had the capability to charge their EVs at home. To expand the EV market, the automotive industry must address disparities related to these factors when targeting the next wave of EV consumers.

Concerns regarding unreliable and inaccessible public charging infrastructure, coupled with the higher initial costs of EVs, remain barriers for many consumers, according to BloombergNEF. In the latest data, new EVs still carry an average price premium of $3,826 compared to the average new gasoline-powered vehicle, with EVs priced at $51,762 versus $47,936, according to Kelley Blue Book estimates.

To tackle some of these infrastructure challenges, several major automakers have aligned with Tesla’s charging technology. Tesla has long utilized the North American Charging Standard for its EV connectors and boasts a robust public charging network. The rest of the industry primarily operates on the Combined Charging System (CCS). Integrating Tesla’s technology is expected to provide non-Tesla EV drivers with more charging options, alleviating concerns, although these changes are projected to take effect in the coming years.

Additionally, the EV market faces uncertainty as some automakers, including Ford Motor Co. and General Motors, are revising their electrification targets. Meanwhile, foreign car companies, particularly from China, are increasing their presence in the U.S. market, with companies like BYD expected to enter in the near future.

Several U.S. states have established ambitious targets for transitioning to zero-emission vehicles. California and Washington have mandated that all new vehicle sales within their borders be zero-emission by 2035, while New Jersey plans to ban the sale of new gasoline-powered vehicles by the same year.

In conclusion, while the United States is making notable strides in the adoption of electric vehicles, it still faces challenges in catching up with global leaders in the EV market. Factors such as pricing, infrastructure development, and government policies will continue to shape the trajectory of EV adoption in the country.

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More about US EV Market Analysis

• Atlas Public Policy
• BloombergNEF EV Outlook
• Tesla
• Kelley Blue Book
• BYD
• Inflation Reduction Act
• Zero-Emission Vehicle Mandates