While recent sales figures suggest an upswing in electric vehicle (EV) adoption in the United States, industry analysts caution that this momentum may not be sustainable. In 2022, the number of battery-powered cars sold exceeded 1.2 million, marking a remarkable fivefold increase compared to just four years prior. The surge in hybrid vehicle sales has also been significant, tripling over the same period. Notably, battery electric vehicles constituted 10% of total car sales in August, a noteworthy peak according to data from S&P Global Mobility. Major automakers including General Motors, Ford, and Tesla have reported record-breaking electric vehicle sales in the last quarter, despite the backdrop of high interest rates and economic anxieties.
However, analysts attribute this surge primarily to consumers rushing to purchase EVs before the expiration of a government subsidy that offered up to $7,500 off the price of certain electric, plug-in hybrid, or fuel cell vehicles. With this tax credit now eliminated as of the end of September, many manufacturers anticipate a downturn in sales. Ford’s CEO Jim Farley remarked,
“It’s going to be a vibrant industry, but it’s going to be smaller, way smaller than we thought.”
Similarly, General Motors’ CFO Paul Jacobson warned that demand for electric vehicles may see a significant decline.
Comparative global performance in EV sales
Despite recent gains, the United States, ranked as the world’s second-largest automotive market, lags behind many other countries in electric vehicle sales. For instance, in the UK, nearly 30% of new car sales last year were attributed to battery electric and hybrid vehicles, while European nations collectively saw about one in five sales in this category. China, the largest car market globally, reported that electric and hybrid vehicles made up nearly half of all sales last year, with projections indicating that they could dominate the market in the near future. Other countries like Norway and Nepal are witnessing even higher adoption rates.
The relatively slow adoption of electric vehicles in the U.S. is largely due to a lack of robust governmental support compared to other regions. While former President Joe Biden made strides to boost EV uptake—targeting 50% market share for electric vehicles by 2030 through new emissions regulations, government fleet purchases, and incentives—these efforts face opposition. Former President Donald Trump, who has been critical of climate initiatives, has indicated a desire to dismantle many of these supportive measures, arguing they force consumers to purchase vehicles they might not choose otherwise.
Market dynamics and future forecasts
Although electric vehicles have become more accessible in the U.S. over the years, their costs still exceed those of traditional gasoline vehicles. For example, the average price of an electric car is over $57,000—about 16% higher than the average transaction price for all vehicles. In stark contrast, several electric models in the UK are available for under £20,000, highlighting the pricing disparity. The current market situation is complicated further by tariffs on foreign-made vehicles, which have limited access to competitively priced cars from manufacturers like BYD.
As automakers navigate these challenges, their pricing strategies in the coming months will significantly impact consumer behavior. Hyundai has announced it will reduce prices for its Ioniq EVs to counterbalance the loss of the tax credit, while Tesla has indicated a rise in monthly lease payments for some models. Analyst Stephanie Brinley from S&P Global Mobility cautioned that the future looks uncertain.
“Next year is going to be hard,”
she stated, predicting a potential overall decline in car sales.
Investment in electric vehicle technology has already begun to wane, and experts believe that shifts in policy could further exacerbate this trend. Katherine Yusko, a research analyst at the American Security Project, remarked,
“It’s a big hit to the EV industry – there’s no tiptoeing around it.”
Although Brinley is hesitant to label the U.S. as falling behind in electric vehicle development, she acknowledges that the current trajectory could hinder the industry’s growth unless supportive measures are reinstated.