U.S. Electric Car Transition Off to a Slow Start

EVs are expected to account for just 34% of all new vehicles sold in 2030, well below the 50% goal set by the federal government.

Charging of an electric car
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The U.S. lags behind China and the European Union in electric vehicles (EVs) adoption this year, and efforts by the Biden administration to decarbonize the transportation sector face multiple challenges, industry forecasters say.

According to a new report by ING Think, the research arm of the ING multinational bank, electric cars will make up just 4% of new car sales in the U.S. this year, compared to 9% in China and 14% in the EU. 

EV adoption in the U.S. has been lagging in recent years. The country’s EV fleet, including plug-in hybrids and battery electric vehicles, grew at about 28% a year between 2015 and 2020, which compares to 41% in the EU and 51% in China, the report says.

Even though electric cars are now more affordable, low fuel prices, a preference for gas-guzzling SUVs, and not enough financial incentives are among the factors hampering the growth of the EV sector in the U.S.

Another major challenge is the lack of a strong policy mandate. The Biden administration earlier this year said that starting in 2030 half of all new cars should be zero-emissions—which includes battery electrics, plug-in hybrids, and hydrogen fuel cell vehicles—and although carmakers support the policy, the target is not mandatory.

The EU meanwhile has banned the sale of combustion engine vehicles starting in 2035, forcing carmakers to ramp up their EV plans. Toyota, the world’s biggest carmaker, last week said that by that year it will only sell zero-emission vehicles in Europe. 

Steps Forward Are Not Enough

Major federal policies could give electric vehicles a strong push in the coming years. The newly approved infrastructure package includes about $15 billion for a network of EV charging stations, electric school buses, and financial support for the battery industry. The Build Back Better bill being considered by Congress includes additional tax credits to make EVs more affordable but its future is uncertain due to strong opposition from Republicans and some conservative Democrats.

In addition, states including California, Washington, and New York have ambitious EV targets, and major orders from car rental, ride-hailing, and taxi companies could further boost EV sales.

“Corporate fleet owners — buying roughly half of the new cars sold — may be at the forefront of this transition as they usually buy new vehicles, vehicles are frequently replaced and they drive more miles,” the report says.

Ford, GM, Rivian, Tesla, and Stellantis (which owns the Dodge, Chrysler, and Jeep brands) are some of the carmakers rushing to launch electric SUVs, pickup trucks, and vans to satisfy strong demand for larger vehicles among U.S. drivers—seven out of every 10 cars sold in the U.S. last year fell into the “large” category.

These vehicles could accelerate the decarbonization of the U.S. transportation sector, which accounts for nearly 30% of the country’s carbon emissions, but they will come at high costs for the environment, mostly because larger vehicles need larger batteries. 

The F-150 Lightning is fitted with a 1,800-pound battery pack, roughly twice as heavy as the batteries that power the Tesla Model Y and Model 3, the best-selling electric cars in the U.S. this year.

That means that twice as many minerals—including lithium, nickel, manganese, and cobalt—will have to be extracted, transported, and processed in order to produce those batteries. Of particular concern is lithium, which requires copious amounts of energy and water to be processed, as well as cobalt, which mostly comes from mines in the Democratic Republic of Congo, where child labor and human rights abuses are well documented.

Annual battery demand could see a 20-fold increase in the coming years, which could lead to supply constraints that would put a hold on EV growth. Leading carmakers plan to build large battery manufacturing facilities in the U.S. to ensure a steady supply of batteries but they may not be ready in time because it takes about five years for a new battery plant to reach full capacity. 

Still, analysts say that larger cars won’t be enough to make electric vehicles mainstream in U.S. roads over the next decade. ING forecasts that EVs will account for just 34% of all new vehicle sales by 2030, well below the 50% goal set by Biden—other groups estimate EV penetration at between 23% and 40%.

Reaching Biden’s 50% target would require “a major step up” that would involve more subsidies to make EVs more affordable, the deployment of at least 2.2 million public and workplace chargers in addition to the around 200,000 that already exist, and massive electric grid upgrades to supply additional power for these chargers.

On top of that, American drivers will need to learn to love electric vehicles. They are not there yet. 

According to a Pew Research Center report published in June, only four-in-ten Americans say they may consider buying an electric car, while 46% say they are unlikely to do so. Another 14% are not expecting to purchase a car or truck in the future.

View Article Sources
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