Sales of electric vehicles (EVs) are set to triple by 2025 worldwide, driven in part by policy, conscientious consumers, and increasing gas prices. According to the International Energy Agency’s (IEA) Global EV Outlook 2023 Report, EV sales are seeing exponential growth with over 10 million cars sold in 2022 alone – 14% of all new car sales. The stocks of EV-related companies have consistently outperformed the stocks of traditional carmakers since 2019, and investments in new battery technologies have also boomed.
While the EV market is growing globally, it’s American-made EVs that are dominating the market, with Tesla coming out on top. However, with the growth of EVs worldwide, competition from Asia and Europe is growing faster than predicted.
Recent EV Policy Leads to a Boom in Growth
EV sales in the US have been driven partially by policy, especially under President Biden, who set a goal of having 50% of all new vehicle sales be electric by 2030. The Inflation Reduction Act of 2022 extended the previous EV tax credit for individuals until 2032 and eliminated the previous cap of the credit (as it only applied to the first 200,000 vehicles per automaker). However, there is a new requirement for a vehicle to qualify: the EV must also undergo final assembly in North America.
The IRA also created a new Commercial Electric Vehicle credit, the first ever EV tax credit for companies, and sets aside billions of dollars to support battery production and the mining and processing of lithium and other minerals. The majority of new EV sales (36%) were in California, which is not surprising given their recent sales ban on new gas-powered vehicles by 2035.
Europe saw an exceptional growth in EV sales in 2020 and 2021, with the passing of new CO2 emission standards. And China, too, has seen a boom in new EV manufacturers “as a result of generous government subsidies, tax breaks, procurement contracts, and other policy incentives.”
American-Made EVs Dominate
With the growth in EV sales worldwide as well as policy support, EV companies everywhere have been growing, but American-made EVs have continued to dominate the US market.
According to Experian’s Electric Vehicles 2022 Year in Review, there was minimal competition, with Tesla coming out on top by a huge majority. The most valuable auto industry company in the world by market capitalization, Tesla accounted for over 60% of US EV sales last year and also has the largest network of fast-chargers criss-crossing the country. Ford came in second place with 7.4% of the market, followed by Chevrolet at 4.7%.
The Tesla Model Y and Tesla Model 3 paved the way as the most popular EVs buys in 2022 at 31.2% and 25.4% of the market share respectively. These were followed by the Ford Mustang Mach-E (5.2%), Tesla Model X (4.3%), Tesla Model S (4.1%), and Chevrolet Bolt EUV (3.2%).
Future Global Competitors
While American-made EVs may be dominating the US market, there is fierce competition globally.
There are many more debuting EV manufacturers, especially in China and other emerging markets, that are set to offer more affordable options. Last year, Chinese EV manufacturer BYD beat Tesla in 2022 EV sales.
In 2022, the number of EV models available reached 500 and is only set to grow. Several new EV options will become available in the US by the end of 2024, including the Cadillac Celestiq, Honda Prologue, Hyundai Ioniq 7, Jeep Wrangler EV, Kia EV9, Volvo EX90, and Volkswagen ID. Buzz.
It’s not just EV manufacturing where the US faces competition. Electric car sales in the United States comprise an 8% sales share, while in Europe this number is over 20%, and more than half of the electric cars on roads worldwide are now in China. Collectively, EV sales in India, Thailand, and Indonesia tripled in 2022 compared to 2021.
While recent US policy may help boost EV sales, only time will tell if American-made EVs such as Tesla can remain on top, especially in the global marketplace.
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