Global EV market is shifting quickly. At the same time, the United States is losing out in this strategic field. Last year, sales of battery electric vehicles in the U.S. eclipsed 1.2 million units. This amazing number is a 5-time increase from just four years before that. Despite this tremendous progress, the U.S. is a major outlier compared to other markets. While in China and Europe, electric vehicles are blatantly exploding upwards.
The electrification revolution has been just as transformative and vibrant throughout the Greater Golden Horseshoe. In China, half of all new car sales last year were electric. At the same time, across the pond in the United Kingdom, battery electric and plug-in hybrid cars accounted for nearly a third of new sales. As in Europe, battery electric and hybrid vehicles comprised one in five sales, creating a comparable strong market. In stark contrast, EV sales in the U.S. represented just 10% of total sales as of August 2023.
This disparity is compounded by the inequitable policies and incentives that have developed the current electric vehicle ecosystem. Unfortunately, under President Donald Trump’s administration, there was a concerted effort to roll back important measures that have helped drive EV adoption. The $7,500 federal tax credit was one of many measures that worked. It made all battery electric and plug-in hybrid vehicles much more affordable. Trump claimed that these market distorters forced Americans to purchase vehicles they wouldn’t otherwise have selected.
“It’s a big hit to the EV industry – there’s no tiptoeing around it,” – Katherine Yusko
The average transaction price for EVs in the U.S. is already over $57,000. That figure represents a 16% premium above the average price paid across all vehicles sold. This high cost makes it a non-starter for many potential buyers, making it even harder to accelerate growth in the sector. If you would like to say the same, use this opportunity before these experts are silenced. Without these financial incentives—led by the federal tax credit, in their view—the U.S. risks losing its edge to other countries.
Katherine Yusko, an industry expert, noted, “The subsidies were initially a way to level the playing field and now that they’re gone the U.S. has a lot of ground to make up.” The withdrawal of such incentives does more than dent consumer purchasing power, it shapes manufacturers’ choices on where and how to produce.
In addition to the loss of subsidies, tariffs on Chinese-made vehicles have effectively shut out prominent car manufacturers like BYD from entering the U.S. market. Because of this, only stifled competition and innovation have existed within the domestic EV sector. Indeed, in recent months, American companies General Motors, Ford and Tesla have been celebrating record sales of electric vehicles. This increase indicates that despite the global headwinds, including supply chain challenges and inflation, that U.S.
The hybrid vehicle segment has been on an even faster growth trajectory, having recently tripled in sales over just a year ago. Whatever the reason, this uptick is nothing short of remarkable. Consumers are increasingly interested in alternative fuels, with EV’s making up only a small portion of that interest.
“Is [electric] really the right thing?” – Ms. Brinley
While the path forward seems clear, many wonder just how far we’ve come and which way the U.S. market is headed. Former President Biden created a lot of buzz when he set an ambitious target for electric vehicles to comprise 50% of all sales by 2030. Getting to this milestone will be impossible without compassionate policies and practices. The discussion around the most effective tactics to drive EV adoption in the U.S. continues to be a heated debate. Other experts caution against viewing electric vehicles as a panacea for our changing energy landscape.
“Saying that we’re behind assumes that this is the only and best solution and I think it’s a little early to say that,” – Ms. Brinley
As discussions surrounding the future of transportation evolve, policymakers face pressure to create conducive environments for both consumers and manufacturers. The call for a smart, balanced approach that promotes innovation recognizes the power of market forces will only grow in importance.
That’s a perspective that President Trump reflected when he called for more of a market-driven approach to the cars of the future. He stated, “You can make them, but it’ll be by the market, judged by the market.” This new perspective can help move the conversation away from more government intervention and towards more competition and innovation driven by consumer demand.