Several countries across the world have pledged to phase out conventional internal combustion engine (ICE) cars and replace them with battery electric vehicles (BEVs) as part of broader efforts to combat climate change. BEVs run entirely on electricity and produce zero emissions at the tailpipe, making them a great option for nations looking to cut their reliance on fossil fuels like oil.
Despite relatively poor global economic conditions, consumers are buying electric cars in record numbers. Data from Cox Automotive shows that in Q2 of 2023 alone, American drivers bought close to 300,000 new BEVs, breaking EV sales records in the U.S. market and suggesting that drivers are becoming increasingly welcoming to electric cars.
EV sales are more than 48% up compared to 2019; plug-in hybrid electric vehicle (PHEV) sales are also on the rise. Predictions from Cox Automotive put electric vehicle sales in 2023 at over a million units, a first for America’s nascent electric vehicle industry. Recent increases in EV sales are tied to increased supply and price cuts that have made EVs more affordable for regular drivers.
EV tax credits in the 2022 Inflation Reduction Act have also driven the growth in EV sales, Cox Automotive director of industry insights Stephanie Valdez-Streaty says.
However, electric cars still make up a small percentage of overall car sales. Valdez-Streaty notes that price is still the largest barrier to EV ownership. Even with price cuts and tax incentives, electric cars are still prohibitively expensive for many drivers. Insufficient and often unreliable public-charging infrastructure has also kept many drivers from making the transition from ICE cars to electric vehicles.
Limited access to reliable charging has contributed to range anxiety and likely hampered electric vehicle adoption. The Biden administration has invested significant funds into building out a wide network of charging stations, but the existing network still has a long way to go before it can support a mass transition to electric cars.
The California Energy Commission estimates that to meet a charger-to-car ratio of seven to one, the U.S. would need two and a half times the 43,800 charging stations it currently has. A recent Electric Vehicle Quarterly Report from the Alliance for Automotive Innovation also notes that there are major geographical disparities regarding access to public EV chargers.
Close to 30% of all EV chargers in the United States are located in California, and the rest are concentrated in mostly urbanized regions. Low-income communities and rural areas have barely any access to EV charging, and this impacts EV demand in these areas. These factors will likely dampen EV demand into the near future and make the transition to electric cars take a much longer time.
EV makers such as ElectraMeccanica Vehicles Corp. Ltd. (NASDAQ: SOLO) have their work cut out to develop technologies that address the concerns of motorists and lure those customers into buying EVs en-masse.
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