US government’s proposal to boost EV sales is challenging but not impossible

The US government is proposing to revise auto emissions standards, which would require automakers to significantly increase the sale of electric vehicles (EVs). Under the plan, EVs are expected to make up approximately two-thirds of all new cars sold in the United States by 2032. Moody’s industry analyst Matthias Heck suggests that without these requirements, EVs would have reached such market share levels around 2035. However, the proposal is subject to change before it is finalized.

Over the next decade, various factors will contribute to the transformation of the automotive industry, including advancements in charging infrastructure, improvements in battery technology, and declining prices. These changes, coupled with government incentives like those introduced through the Inflation Reduction Act, are anticipated to attract more consumers to EVs.

Consumer Reports policy analyst Chris Harto emphasizes that EVs will significantly evolve over the next decade, making them different from the current market offerings. While EV market share may rise to two-thirds by 2032, the transition will not happen overnight, and the majority of vehicles on the road will still be powered by gasoline. However, Harto notes that price parity between EVs and traditional vehicles will be a crucial factor in encouraging adoption.

As driving ranges increase and fast charging becomes more accessible, owning an EV will become more appealing due to reduced operating costs. Moody’s analyst Matthias Heck predicts that next-generation EV batteries, expected within the next few years, will have a 30% longer range and recharge 30% faster.

The combination of improved charging networks and more EV models being introduced will make EVs an attractive option for consumers seeking the best value for their money. Elizabeth Krear, VP of the electric vehicle practice at JD Power, suggests that EV equivalents will be available for about 75% of vehicles by 2026, with EV market share already expected to triple to 27%. In California, where EVs are more popular and have a greater model variety, market share is projected to reach the two-thirds mark even before 2032.

While the transition to a two-thirds EV market share by 2032 is not guaranteed, it appears manageable. The involvement of more automakers in the EV market and the loyalty consumers have towards their preferred brands will also contribute to the shift. Automakers like Toyota and Honda, which currently have limited EV offerings, have plans to expand their electric lineup. General Motors, committed to offering only electric passenger vehicles by 2035, will introduce EV models across various segments and price points in the coming years.

The Alliance for Automotive Innovation, an industry group representing major automakers, has expressed caution about the proposed goals and has requested collaboration from government agencies. However, as consumer demand for EVs increases, the economic viability of investing in internal combustion vehicles will decline, leading automakers to make the switch to EVs.