US market for electric vehicles to grow by 20%

Do you notice that more electric vehicles drive by on your daily commute? It’s not just about you. The US electric vehicle market just surpassed 6.7% in the first half of 2022, up from just 1.8% in 2019. And new data suggests that’s just the beginning, as recent US climate initiatives have pushed the US -have brought the electric vehicle market into high gear.

The US electric vehicle market is set to grow 20% on the back of the IRA bill

With an expected 1.64 gigatonnes of carbon dioxide (GtCO2) in 2022, according to a new study out BloombergNEF.

In recent years, the United States has been slower than China and Europe in adopting zero-emission electric vehicles. China was responsible for more than half (56%) of global EV sales, while Europe accounted for 28% in H1 2022.

Several countries in Europe have seen explosive growth in EV market share from H1 2019 to H1 2022. For example:

  • Germany: 3% to 26%
  • UK: 2.2% to 24%
  • France: 2.8% to 21%

Why has the United States lagged behind, you ask? For one thing, the deployment of publicly available fast chargers (and electric vehicle chargers in general) has been much faster in other countries. Additionally, stricter policies and mandates have accelerated the transition.

US EV market
Publicly available fast chargers worldwide, 2015-2021 Source: IEA

Meanwhile, recent climate initiatives and updated fuel economy standards in the United States are driving the EV market to new heights. The inflation reduction law passed in August provides for: a tax credit up to $7,500 for new light-duty EV purchases, $4,000 for used EV purchases, and $40,000 for heavy-duty commercial EV purchases.

BloombergNEF research finds that the outlook for the US electric vehicle market has changed dramatically over the past year:

Recent regulatory changes in the US – the Inflation Reduction Act and revised fuel economy regulations – should accelerate EV adoption in the country and bring it closer to the EV leaders.

BNEF estimates that 64% of EVs sold in the United States in the first half of the year qualify for at least a portion of the new EV tax credit, compared to 31% under the old policy.

In addition, the IRA law includes “strong incentives” to accelerate domestic battery manufacturing. The IRA bill has already tightened over $40 billion with 15 new EV battery plants or extensions.

Perhaps, more importantly, the National infrastructure for electric vehicles (NEVI) program, part of Biden’s bipartisan infrastructure bill, provides $5 billion in funding to create a national EV charging network to encourage EV adoption in the United States. All 50 states have now approved plans to build the network.

As a result of recent US climate initiatives, BNEF predicts:

The US electric vehicle fleet will be over 20% larger by 2030 than previously forecast.

Electrek’s take

BNEF data confirms that incentives and policy changes are helping drive adoption of zero-emission electric vehicles. Recent initiatives in the United States are already beginning to pay off as EV sales hit new records every month.

Take California, for example, which has ramped up charging infrastructure much faster than other states. The state has and holds nearly 30% of the EV chargers in the United States or 18% EV proportion, nearly three times the US average.

With new incentives and policy changes driving adoption, 2023 should be a big year for most US states in terms of EV adoption, and adoption should accelerate even further towards the end of the decade.

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