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Electric Vehicles in the U.S.

Sooner or later, every country in the world will hopefully come to understand the benefits of developing the electric vehicle (EV) market, and the potential benefits; such as their effects on reducing greenhouse gas (GHG) emissions. The U.S. is no exception. Although EV market growth in the U.S. is slower than in China or Europe, it still has the third largest EV market in the world. Currently, transportation is the largest source of GHG emissions in the U.S., and 91% of transportation energy consumption is related to fossil fuels. Consequently, transportation GHG emissions are about 28% of the nation's GHG. In this case, the government must play an essential role in developing EV infrastructure and raising the total number of EVs driven. This outcome is more likely now, because of the presence of Joe Biden in the White House, and also a Democratic leader in the U.S. Congress.

President Joe Biden listens during a tour of the Ford Rouge EV Center, Tuesday, May 18, 2021, in Dearborn, Mich. (AP Photo/Evan Vucci)


On the 15th of April, President Joe Biden stated that the United States must accelerate the production of electric vehicles to exceed that of China. In the last year, more than 1.3 million passenger EVs were sold in China, while this number was only 328,000 in the United States. Still, 2018 was a great year for the U.S. EV market. Tesla’s Model 3, a best-selling electric sedan on the U.S. market today, had just entered the market. It lead to high demand in the market due to its low price, and high range. However, everything changed in 2020, and the EV market became stagnant. The new U.S. administration knows that it has to face this problem. According to Biden's recent statements, he plans to allocate $174 billion for manufacturing zero-emission cars and buses, and for building EV charging stations. In addition to the government, EV manufacturers also have plans for the future of the U.S. EV market. General Motors Company announced that they are going to be fully electric by 2035. Currently, they are following their electrified path with ambition; and they are using Environmental Defense Fund consultations to meet their goals. Ford, another active company in the U.S. EV market, is also producing an electronic version of iconic brands, such as the Mustang and F-150 truck. In addition, Volkswagen said that they will invest $35.8 billion in mobility. This company also announced that they will offer more than 70 different EVs by the end of 2028. Meanwhile, Tesla has a plan to build a new plant in Austin, Texas. Right now, electric trucks are another focus, particularly of EV startups. As an example, Rivian, an e-truck innovator company, has signed a contract with Amazon to provide them with Rivin's all-electric delivery vans.


Today, people rely on gasoline cars much more than EVs. However, gasoline is no longer a reliable fuel source, and consumers' attitudes will need to change as well to keep up. Although the expected improvements to rechargeable battery technology could allow consumers to one day charge their EV by roof solar panels, or a charging instrument in their garage; at the present, charging batteries for EVs remains the biggest concern for vehicle consumers, which may create doubts about purchasing an EV. Charging station infrastructure is one of the critical bottlenecks in the EV industry. If a government wants people to purchase and use EVs, it has to build enough charging stations to alleviate the people's concerns. While Tesla believes that providing its own superchargers for its customers could be helpful for sales, it doesn't seem that future charging stations will be marked by special brands. Instead, charging stations are expected to be built through the cooperation of automakers and private firms, with the financial assistance of the government. There are more than 27,000 public charging stations in the U.S. today, which is not enough to support the government policy to increase EVs on U.S. roads. To overcome this charging station issue, the Biden administration plans to build 28,000 charging stations, containing 500,000 individual chargers; this would be five times more than what exists now. With the implementation of this program, more than half of the U.S. charging demand could be met by 2030.


Electric cars at a charging station. (Bloomberg)


The U.S. administration also understands that to encourage customers to use EVs, providing several credits and financial incentives could be very helpful. Therefore, different states have offered a variety of financial incentives, such as tax credits, rebates, and registration fee reductions. For example, Connecticut suggested reducing the biennial vehicle registration fee of $38 for EVs. As another example, Colorado implemented a $4,000 tax credit through 2021, on the purchase of light-duty EVs. Moreover, a $2.7 billion Environmental Mitigation Trust Fund was provided to reduce diesel emissions for all 50 states, by Volkswagen’s 2016 Clean Air Act civil settlement. Federal incentives are also available to aid in decreasing the number of diesel vehicles. The $7.500 federal tax credit for purchasing a new EV is one example of this type of aids. However, this aid has a limitation of 200,000 EVs for each company, and after that, it will expire; as it now expired for Tesla and General Motors because they sold more than 200,000 vehicles. Based on recent surveys, Americans are more interested in trucks and SUVs than passenger cars. Since most of the available EVs today are passenger cars, offering more EV truck and SUV models is another main challenge for the government and private companies. To solve this problem, more companies are going to start to offer EV trucks and SUVs; and 2021 will be the first year in which EV vehicles from all three main categories (passenger, SUV, and truck) will be available on the U.S. market.


The future of the EV market in the U.S. is expected to be a bright one. 30 EV models from 21 brands are anticipated to become available in 2021. There will be 11 passenger cars, 13 SUVs, and 6 trucks on the U.S. EV market. The number of EVs on the roads is expected to rise from 1 million in 2018, to 18.7 million in 2030. The annual sales of EVs is predicted to be more than 3.5 million vehicles in 2030, which is more than 20% of all annual vehicle sales in 2030. All these numbers suggest that the U.S. EV market is growing rapidly, and it doesn't show any signs of slowing down.



References

[1] “EV Turning Point: Momentum Builds for U.S. Electric Vehicle Transition”, ​John Paul MacDuffie and Sarah E. Light, Yale School of Environment, 2021

[2] “Biden: U.S. must boost EV production to surpass China”, David Shepardson, Reuters, 2021

[3] “EEI CELEBRATES 1 MILLION ELECTRIC VEHICLES ON U.S. ROADS”, EEI

[4] “U.S. Electric Vehicle Market Poised for Record Sales in 2021, According to Edmunds”, CISION PR Newswire

[5] “State Policies Promoting Hybrid and Electric Vehicles”, Kristy Hartman and Laura Shields, NCSL, 2021

[6] “Why China is so far ahead of the U.S. in electric vehicle production”, Erin Black, CNBC, 2021


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