US electric vehicle sales to hit record, but still lag behind China and Germany
According to Atlas Public Policy, electric vehicle sales are expected to reach a record 9% of all passenger vehicles in the US this year. That will be an increase from 7.3% of new car sales in 2022.
It will be the first time that more than 1 million electric cars will be sold in the US in a single calendar year, which will likely be between 1.3 and 1.4 million cars, the research firm predicts.
Although the figures show significant progress in electrification, the country lags behind countries such as China, Germany and Norway.
According to a BloombergNEF EV outlook published in June, electric vehicles reached 33% of sales in China, 35% in Germany and 90% in Norway in the first six months of 2023. These figures include both battery electric vehicles and plug-in hybrid electric vehicles.
In those countries, ambitious government zero-emission targets, car tax incentives and subsidies, and affordable options play a role in consumers’ decision to adopt a plug-in vehicle.
Several factors have driven EV adoption in the US this year, but in short: prices have fallen.
Tesla, the current EV market leader, has cut prices on its popular vehicles multiple times throughout the year. This forced other automakers to try to keep up. Auto companies are also now offering bigger incentives for their electric models, and dealers are offering increasingly bigger discounts as the supply of EVs at dealerships increases.
The Inflation Reduction Act, which increased tax credits for qualifying new and used EV purchases, also helped lower EV costs for buyers, by $3,750 or $7,500, depending on certain requirements.
The cost of electric car batteries is also falling as critical battery materials such as lithium become cheaper, making the vehicles increasingly affordable.
But even as the U.S. EV market share grows steadily, there are still hurdles in the way of some car buyers considering electric cars. Early EV buyers largely had higher incomes, were willing to try unfamiliar technology, and were more likely to charge their EVs at home. The auto industry must address the discrepancies with these factors as it focuses on the next wave of EV buyers.
According to BloombergNEF, unreliable and inaccessible public charging infrastructure, as well as the higher upfront costs of going electric, remain barriers for many consumers. Last month, new electric cars still cost an average of $3,826 more than the average new car, at $51,762 versus $47,936, Kelley Blue Book estimates.
To address some of the infrastructure challenges, several major automakers have signed on to Tesla’s charging technology. Tesla has long used the North American charging standard for its EV plugs and also has the strongest public charging network. The rest of the industry has largely been working with a system called CCS, or the Combined Charging System. Integrating Tesla’s technology will give non-Tesla EV drivers more options to charge elsewhere and eliminate charging concerns. But those changes won’t take effect until next year and 2025.
The sector is also facing concerns about a slowdown in the EV market. Some automakers, including Ford Motor Co. and General Motors, are scaling back their electrification targets.
But at the same time, many foreign car companies are strengthening their plans. Consumers can expect to see Chinese EV makers like BYD make their way into the US market in the coming years.
Several U.S. states have set target dates by which they expect vehicle sales to be largely zero-emission. California and Washington have mandated that 100% of new vehicles sold in the state must be zero-emission by 2035, while New Jersey will ban the sale of new gas-powered vehicles by the same year.
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Alexa St. John is an Associated Press climate solutions reporter. Follow her on X, formerly Twitter, @alexa_stjohn.
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