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May 23 2022

A couple of years ago, we wrote an article about the extinction of internal combustion engines and the rise of electric vehicles. However, there were several roadblocks that were slowing down the speed of adoption, including high battery costs, the lack of infrastructure, and the desire for bigger vehicles that didn’t offer electric alternatives at the time.

As the auto industry adjusts to business post-pandemic, it appears that electric vehicles are picking up pace again with increasingly more OEMs offering electrified options in their model lineups. The current White House administration has urged OEMs to increase the production of electric vehicles to the point where they will make up more than 50% of new vehicle sales by 2030, according to MarketWatch. In this article, we thought it would be helpful to highlight some of the prominent factors that are supporting the current rise of electric vehicles.

1. OEMs are investing in electric

While each OEM seems to have a different plan for how they will electrify their entire vehicle lineup, they have all set aggressive goals and invested heavily in the infrastructure to make it a reality. Some OEMs, including Mercedes-Benz and Volvo, plan to offer electric vehicles exclusively by 2030.

Manufacturers with a wide range of vehicle types, such as Ford and GM, have all started offering/developing entirely electrified versions of their flagship trucks (F-150 and Silverado) and vans (E-Transit).

For more details on OEM electric vehicle plans, check out this MarketWatch article.

2. Emission requirements are increasing

The increasingly more stringent emission requirements set forth by the EPA are certainly not a new trend, however, they continue to be a driving force behind the move to electric vehicles. As mentioned in the introduction, the U.S. government is pushing for 50% of all new vehicle sales to be electric vehicles by 2030.

According to an EPA's Revised 2023 and Later Model Year Light-Duty Vehicle Greenhouse Gas Emissions Standards document, “The final program represents the most ambitious light-duty vehicle greenhouse gas (GHG) standards ever established and will reach a projected industry-wide target of 161 grams CO2/mile, or 40 miles per gallon value on fuel economy window stickers in 2026. The final emission standards target for 2023-2026 increase in stringency by between 5-10 percent in each model year.”

3. EV Incentives / Warranties / Battery Lifespan

While also not a new trend, several electric vehicles are eligible for federal income tax credits up to $7,500. Additionally, many states offer EV incentives, which can be viewed on the U.S. Department of Energy’s Alternative Fuels Data Center. There is no shortage of incentives for purchasing an EV.

Though EVs have far fewer mechanical components than their internal combustion engine (ICE) counterparts and don’t require as much maintenance and repair, OEMs still offer warranties. And these warranties tend to be more generous than those for an ICE vehicle, with many EV manufacturers offering 5-year basic warranties. For more EV warranty information, check out this article TrueCar has compiled on the 16 best EV warranties in 2022.

Most importantly, there are federal regulations in place that require EV manufacturers to warranty the most expensive component of their vehicles, the battery, for a minimum of 8 years or 100K miles. There are some exceptions to be aware of, which MYEV.com has covered in this article.

4. Expanded charging infrastructure

One of the greatest challenges that has hampered the mass adoption of electric vehicles is charging infrastructure. While charging infrastructure is still not where it needs to be for electric vehicles to fully replace ICE vehicles, it’s heading in the right direction with the number of public charging outlets (or charge points) in the U.S. almost doubling over the last few years. According to Statista, there are nearly 120k public charging outlets in the U.S., whereas in our article about the extinction of ICE vehicle back in April 2019, the ChargePoint Charging map only showed ~63k charging outlets.

For EVs to be fully adopted country-wide, the number of charge points will need to grow exponentially. Though, according to a PwC publication, 80-90% of charging is done overnight at home or during the day at work, on-the-go charging is still key to EV growth. In this same publication, the PwC states that “Given a central estimate of 5% penetration of EV total vehicle parc by 2030, the market could require about 120,000 to 235,000 fast-charge points or about 30,000 to 60,000 charging locations.”

In an effort to help expand the charging network across the US, "the Biden administration has unveiled a plan to award nearly $5bn over five years to build thousands of electric vehicle charging stations," according to The Guardian. The initial focus will be on placing charging stations every 50 miles along interstate highways with a minimum of four fast charging ports. These fast charging ports will be capable of fully recharging an EV in about an hour. 

5. Medium and Heavy-Duty vehicle market

Much of the conversation around EVs has been focused on the passenger/light-duty vehicle market, though it’s not the only vehicle market making changes. The medium and heavy-duty, aka commercial vehicle, market is also making changes. This is largely due to the emissions concerns. According to the EPA, in 2019 the commercial vehicle market was responsible from 24% of greenhouse gas (GHG) emissions. And while the percentage of total GHG emissions for commercial vehicles is smaller in comparison to the passenger and light-duty market (58%), there are far fewer commercial vehicles on the road.

Until recently, electrification of commercial vehicles had been a challenge given their high energy requirements and the costs associated. As battery technology improves, commercial EVs are becoming more affordable and are offering better performance. While still quite a bit behind consumer EVs, commercial EVs, including electric transit buses, delivery vans, buses, and even semi-trucks are making progress. Great Plains Institute has written a great article on this subject which you can view here.

6. Fleets are phasing in EVs

Many fleets are looking to add electric vehicles as they become more available. According to a Rocky Mountain Institute report, 81% of the 91 fleet managers they surveyed have already begun electrifying their fleets. Vehicle rental companies have started to integrate EVs into their fleets, such as the 100,000 Tesla Model 3 cars that Hertz recently ordered. With the recent release of the Ford E-Transit and the development of GM’s all-electric van, delivery fleets, among a wide range of other businesses utilizing fleet vans, will be electrified before we know it. We can also expect to see the rise of commercial EVs impacting many fleets in the coming years.

7. Ever-evolving EV market

Among the major OEMs that have started shifting to EVs, and Tesla who started it all, there are a number of smaller companies also tapping into the EV market. This not only includes businesses building their own EV vehicles from the ground up, but also those partnering with larger manufacturers to provide certain EV components.

You’re probably familiar with some of the more prominent startups such as Rivian, Polestar, and Lucid (former Tesla exec), however, there are many more players in the EV space including Aspark, Bollinger, Byton (former BMW and Nissan execs), Canoo, Faraday Future, Fisker, Pininfarina, and Rimac.

We are in for some exciting, and drastic, changes in the auto industry. While still a small fraction of the U.S. vehicle market share, we are seeing increased consumer interest in EVs, which accounted for ~9% of new car sales in 2021 (up from 2.5% in 2019) - source. As such, many businesses are starting to adapt their business models to support this growth.

Stay tuned for more blog content around EVs, including how this shift impacts all facets of the auto industry.

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