BloombergNEF’s Electric Vehicle Outlook 2023 forecasts an impressive trajectory of EV sales in the U.S., but cautions that faster progress is needed in order to reach net-zero road transport emissions by 2050.
With the transportation sector being the greatest contributor to carbon emissions in the U.S., according to the EPA, electrifying vehicles of all types will go a long way toward decarbonization.
EV sales at the global level are expected to rise from 10.5 million in 2022 to almost 27 million in 2026, according to the BloombergNEF Electric Vehicle Outlook 2023. The report notes that the EV share of global new passenger vehicle sales will grow from 14% in 2022 to 30% in 2026. Shares in some markets are much higher, with the report estimating that EVs will reach more than half the sales in China and 42% in Europe.
In the United States, as a result of incentives offered by the Inflation Reduction Act (IRA), electric vehicles will make up nearly 28% of passenger vehicle sales by 2026, up from 7.6% in 2022.
This projection is about 20% off from the Biden Administration’s goal for electric vehicles to make up 50% of all vehicles sold in the U.S. by 2030, but perhaps the goal will be met with four years of additional growth.
The IRA provides incentives for buyers of new and used EVs that are made in North America. While there previously was a limit of 200,000 vehicles per manufacturer that could receive the incentive, the cap was lifted with the IRA. Also in 2023, new auto pricing and buyer income caps apply; however, if a taxpayer does not qualify, they may transfer the credit to the dealer, who can then offer a rebate to the customer.
According to SAFE, a group dedicated to accelerating the deployment of sustainable transportation and energy solutions of the U.S. and its sister organization, the Electrification Coalition, EVs must also meet critical mineral and battery component requirements to qualify for the maximum credit available. The IRA also stipulates that battery minerals and components come from North America or from countries with which the United States has free trade agreements.
The U.S. government is also helping to meet its own goals by increasing procurement of electric vehicles for the federal fleet. According to a White House report, government agencies in this fiscal year have acquired five times as many EVs as last year, and are on track to meet the goal for 100% of new light-duty federal vehicles to be zero emission by 2027.
The BloombergNEF report notes that electrification is spreading to all types of vehicles, with light commercial EV sales expected to rise sharply. Municipal bus fleets are increasingly electric and are expected to reach 36% of sales by 2026.
While the trajectory of EV sales is impressive, the BloombergNEF report cautions that faster progress is needed in order to reach net-zero road transport emissions by 2050. The IRA has gone a long way to promote the adoption of electric cars in the U.S., but heavy trucks are still lagging behind in the trajectory and should be a priority focus, according to the report authors.
Other challenges inherent in an EV buildout remain, including the need for a strong network of charging stations. The Biden Administration set a goal of establishing a national network of 500,000 EV chargers. While ambitious, a recent report from Wood Mackenzie forecasts that 18 million chargers will be installed across the U.S. by 2027.
