Plug in for the Year of EV's

OVERVIEW

Electric vehicles went mainstream in 2022 and the global electric car sales rose to 6.6 million, representing nearly 9% of the global car market and tripling its market share from 2019. By the end of 2023 EV sales will increase 25%, and double that number over the next two years. People used to think of EVs as fragile, small vehicles that were clogging up the fast lane. Now with trucks (F150 Lightning) and the luxury brand EVs (Jaguar, Audi, etc.), auto makers are showing that EVs can be both rugged and fun to drive. With more automakers investing in EV research and production, the market is expanding at a rapid pace. Overall, EV adoption is growing and perceptions are changing with EV technology being pushed into the mainstream.

1. EV’S WELCOME SUV’S THE FLEET 

An impressive selection of brand-new full-electric cars including trucks and SUVs are scheduled to debut during 2023 with stunning styling and extended operating ranges that could well help to increase sales exponentially—perhaps even dramatically— among an expanding assemblage of EV aficionados. Some new EV SUV’s hitting the market will include Audi’s recasting of their Q8 e-tron, a full-electric SUV later in 2023 with freshened styling and larger battery packs. The new-for-2023 Cadillac Lyric is the brand’s first full-electric vehicle and  Chevy begins its full-electric future with a battery powered version of its stylish compact Blazer crossover SUV. Henrik Fisker’s fledgling upscale electric car company rolls on with the expected launch of the full-electric Ocean SUV in early 2023. Genesis is introducing its Electrified GV60 is a four-wheel drive crossover SUV.  The latest model in Mercedes-Benz’s growing arsenal of EVs is the midsize EQE crossover SUV that’s expected to go on sale this spring. Elon Musk first unveiled a prototype of the oddly angular Tesla Cybertruck back in 2019, with the real deal finally expected to bow in late 2023 following what amounts to a two-year delay. 

2. ACCESSIBLE EV CHARGING FOR ALL 

The more people see chargers in the wild, the better they'll feel that an EV could be right for them. Putting more EVs in driveways will require a vastly greater number of public and private charging stations. The federal government is taking the lead in building this infrastructure. The Bipartisan Infrastructure Law allocated $5 billion for states to develop their charging infrastructure strategically. In addition to this public money, private companies are also expanding their charging networks. Mercedes-Benz announced its answer to range anxiety and the great electric-vehicle charger shortage. They shared a plan to develop a 10,000-charger network by 2030, starting with the U.S. and Canada and later expanding into China, Europe and other key markets. Mercedes-Benz also named EV charger company ChargePoint as a partner in the venture. And, Tesla has agreed to make 7,500 of its chargers (out of ~17,700) available to drivers of vehicles made by other automakers by the end of next year. Cities are even getting in on the grid with LA attaching EV charging stations to streetlights, while Seattle is installing curbside chargers for renters. Denver has partnered with Hertz to build out neighborhood charging stations, while Hoboken, NJ, has partnered with Volta to install charging stalls. San Diego is experimenting with solar power to charge its EV fleet, and Tucson is requiring some new businesses and multi-family dwellings to provide charging stations in their parking lots.

3. BATTERY PRODUCTION IS GAINING SUPPORT  

Electric vehicles passed 10% of global vehicle sales in 2022, and they’re on track to reach 30% by the end of this decade. With recent climate legislation in the US is pumping billions into battery manufacturing and incentives for EV purchases. The European Union, and several states in the US, passed bans on gas-powered vehicles starting in 2035. This transition though will require lots of batteries—and better and cheaper ones. Most EVs today are powered by lithium-ion batteries, technology that’s also used in laptops and cell phones. While lithium-ion batteries keep getting better and cheaper, researchers are tweaking the technology further to eke out greater performance and lower costs. Nevada-based Redwood Materials and Li-Cycle, which is headquartered in Toronto, are building facilities and working to separate and purify key battery metals like lithium and nickel to be reused in batteries. And the U.S. The Department of Energy announced $42 million in funding for 12 projects to strengthen the domestic supply chain for advanced batteries that power electric vehicles.But the real unlock is going to be when solid state batteries are available and that's what the auto industry is moving towards right now. Several automotive manufacturers like BMW and Ford have invested in battery maker Solid Power, which was established in 2011 and claims its solid state batteries will be safer, offer higher energy and cost less than lithium-ion batteries providing lower costs and more range. 

4. CAR SHOPPERS ARE CONSIDERING USED EV’S 

At first glance, today's product pipeline might not paint a good picture for the future of the used EV market. About 77% of all EV sales in the fourth-quarter commanded luxury prices. But, those who want to drive electric without breaking the bank are checking out the used EV market as an alternative. In 2021, over half of EV shoppers were interested in buying used — a year later, that number rose to 80%. Consumer interest mounts as prices drop. According to Recurrent’s index of popular used EV models, the average cost of a used EV, about $33,00 last December, is down 14.4% since a peak of $38,500 last July. Still, used EVs remain more expensive than their gas counterparts. Automakers hope the used EV tax credit introduced in last summer’s Inflation Reduction Act could help consumers in the short term.

5. FORD VS. TESLA 

Demand for pricey EVs are under threat as high interest rates make financing auto purchases more expensive and recession fears leave people less willing to crack open their piggy banks to snag dream cars. When Tesla announced its price reductions, many recent buyers were upset that they paid the higher price. In some cases, there were even protests. Ford is looking to avoid this situation by offering recent buyers something. Ford announced that they would cut prices on its electric Mustang Mach-E models by as much as 8%, putting the price range at about $46,000 to $64,000. The move follows the unprecedented and sweeping discounts Tesla rolled out earlier this month. The Mach-E is the third-best-selling electric vehicle in the U.S., behind Tesla's Model 3 and Y, and Ford is the second-best automaker behind Tesla. Ford's reduction of the price of the Mach-E is a natural response to remain competitive to Tesla and push its model higher up the ranks of best-selling EVs.

6. TAX CREDIT FOR EV’S 

The federal government dramatically changed how an EV qualifies for the maximum $7,500 tax credit in late 2022 with more new rules that kicked in at the start of 2023. To promote EV purchases now and in the coming years, the IRA added a new $4,000 EV tax credit for used vehicles that sell for under $25,000. The IRA also sets income and price limits on qualifying buyers and vehicles, excluding higher earners and expensive EVs from getting any credits. This is providing more incentives for people to buy EV cars and helping to expand the market from not just high income buyers but trying to make EV’s more affordable to the regular car buyer. The decisions and rule changes follow Tesla CEO Elon Musk publicly criticizing the former standards on Twitter as well as automakers such as GM and Ford Motors lobbying to change the guidelines. 

TAKEAWAY

After a difficult year dealing with electric vehicle availability and supply chain shortfalls, the U.S. EV market will rebound in 2023. Consumers will have more model options to choose from and efficiencies in batteries and charging will continue to expand making EV adoption more attractive. In many segments, EVs are the better choice for vehicles, not just for ecological, but also for economical and performance considerations. EV charging infrastructure is expanding, helping to make charging easier and more accessible.  Increased global competition and innovation and price options will drive the EV market growth over the next decade. 

Visual Design by Jonné Pratt, Research and Write Up by Catherine Marsh.

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