Record Electric Vehicle Sales in 2023
Earlier this year, we reported that 2023 would be the first year in U.S. history where electric vehicle sales would exceed 1 million units. If the current pace of EV sales continues, the actual number may be much higher, and would likely reach between 1.3 and 1.4 million units, according to the Associated Press and Atlas Public Policy. As such, EVs would reach a record 9 percent of new-car market share, up from about 7 percent in 2022.
Plug-In Sales in Other Markets Stronger
The numbers show significant progress for electrification in America, though the AP notes that new car EV market share still lags behind other markets. For instance, plug-in vehicles account for one-third of total new car sales in China, 35 percent of new car sales in Germany, and a staggering 90 percent of new car sales in Norway, one of the world’s strongest EV markets.
What’s driving sales of plug-ins in other markets? Government legislation is pushing automakers towards aggressive zero-emissions targets, with many of them mandating 100 percent zero emissions share of new cars by 2035. Aggressive tax incentives and subsidies are also present in those markets, though the U.S. does have an attractive $7,500 new vehicle incentive and a new $4,000 used vehicle incentive. In other markets, more affordable options are also driving sales growth.
Improved Affordability Boosts U.S. EV Sales
Improved affordability is also driving the higher U.S. numbers. Tesla, the dominant market player, dropped prices several times throughout 2023, significantly improving the affordability of their models – the most recent happened at the end of November. Other automakers, faced with reduced Tesla prices, were forced to react with lowered prices and improved purchase incentives in order to keep new EVs from stagnating on car dealer lots.
There are still some significant hurdles in the U.S. that must be resolved for EV sales to accelerate. While early EV adopters were higher-income buyers willing to try new technology – with houses where home charging could be installed and often with access to another vehicle – more mainstream buyers will not accept reduced convenience, and must have easy access to charging.
What is Holding Back EV Adoption?
While U.S. public charging infrastructure is constantly improving, the growth of the charging network is lagging the growth in EV sales. The deals many automakers signed with Tesla to provide access to the company’s Supercharger network will help, as will the planned 30,000 high-speed chargers from a seven-manufacturer consortium – but it will take time for both initiatives to gain momentum. Both initiatives really start to take hold in 2025.
Furthermore, EVs continue to be cost more than the average new car, though the gap continues to narrow. Data from Kelley Blue Book says that EVs cost over $3,000 more than the average American vehicle – though aggressive incentives for in-stock inventory are helping to close that gap, not to mention tax incentives that will be easier to access next year.
New EV Brands Coming
While a couple of automakers, such as Ford and GM, are scaling back slightly on their EV plans, new players continue to enter the market. Tesla is, after all, a startup, and Rivian and Lucid are growing sales and introducing new models. VinFast is establishing a national network of dealerships, and several Chinese brands are due to enter the U.S. market in coming years.
Meanwhile, the number of U.S. states that have set target dates for 100 percent zero-emissions share continues to grow. New Jersey is the latest state to follow in the footsteps of California, Washington, and others, with other states sure to follow.
