• Niall Riddell, CEO & Co-founder at Paua alongside co-host Chris Sass speaks to Corey Cantor, a Senior Associate for Electric Vehicles at BloombergNEF. They discuss ‘energising the EV market shifting gears in the US’.
• Link in blog to full episode

The EV market in the US is growing

The EV market in the US is growing, with sales up 54% year-on-year for both battery electric and plug-in hybrid vehicles. However, the growth is still dependent on Tesla hitting its targets. The US market currently has a 9.3% EV share of sales, compared to 22% in the UK.

The biggest concerns in the US are public charging infrastructure and upfront cost, while in the UK, it is the cost of living.

The availability of more affordable EV models and charging infrastructure will be key to further growth in the US market. There is also a political element to the perception of EVs in the US, with some viewing it as a political statement rather than a transportation choice.

According to research, there was a positive correlation between EV fleet share and Biden vote share in the 2020 election. However, it is not a one-to-one correlation, and there are exceptions such as Republican states with higher levels of EV adoption.

California is leading in EV adoption, but there is still room for growth in the market.

Auto manufacturers like GM and Ford have faced challenges in meeting demand due to battery supply issues and higher upfront costs. The US market for affordable EV models is still limited, and automakers are following Tesla's strategy of starting with more expensive models and gradually lowering prices.

The share economy, including companies like Uber, Lyft, and Revel, has been driving the transition towards electric transport in some areas.

However, the lack of fast and public charging infrastructure remains a concern. Currently, EV adoption is primarily driven by individual consumers rather than companies, although governments are starting to promote electric vehicles more forcefully.

‍Toyota EV in the US

‍Toyota has entered the EV market in the US with a few models, but they have been lagging behind other automakers. They have a multiple drivetrain strategy but have not been successful in all categories.

Tesla, on the other hand, is releasing its highly anticipated cyber truck and has a more successful EV lineup. They have been able to reduce prices and increase demand due to economies of scale.

Tesla's influence on the truck market is still unclear, but their vans have been performing well. The success of the semi-truck is yet to be determined.

‍The US market is still developing

There is increasing commercial electric vehicle activity in China and Europe, but the market in the US is still developing.

California's regulations and policies are driving the adoption of EVs in the state. The Inflation Reduction Act, passed last year, includes a commercial EV tax credit of up to $40,000 or 30% of the vehicle cost to incentivise the market. However, the US charging network still has a long way to go, with slow deployment of chargers and issues with uptime from charging infrastructure operators.

Grid interconnection, availability of hardware, and regulations at the state level are factors slowing down the adoption of EVs in the US. Despite the messy landscape, there is a lot of potential for different automakers and charging network operators. The Infrastructure Investment and Jobs Act (IIJA) has led to over $100 billion in investments in the North American EV supply chain, but the impact of these investments will likely be seen from the second half of next year.

‍Battery manufacturing and Chinese automakers

‍Battery production incentives and the impact of tariffs on Chinese vehicles in the US is a noteworthy subject, according to Corey.

The potential challenges for Chinese companies in the US market, such as not receiving tax subsidies and facing higher costs, are highlighted. Volvo, despite being a Swedish company owned by a Chinese group, is seen as a potential market player in the US.

State-by-state differences in EV adoption and the influence of California's fuel economy standards are also an important factor.

‍The US dealership model

‍Direct sales versus dealership models and their impact on EV sales are also mentioned. Different dealership laws in various states affect the ability of companies like Tesla, Rivian, and Lucid to sell directly to consumers. The pricing and transparency issues associated with dealership models, as well as the potential challenges faced by consumers who are not well-educated about EVs both influence the US market demand.

Ford is implementing measures to ensure that their dealers are invested in the transition to electric vehicles, such as certifying dealers as EV specialists and requiring them to install chargers.

However, this adds additional costs and hurdles for US automakers, who already face upfront costs in producing EVs. The strong dealership network in the US also makes it difficult for automakers to break contracts and transition to online sales like Tesla.

It is uncertain whether legislation will change to allow for this transition or if other states will follow California's model.

Overall, automakers need to make progress in terms of production, sales, and reducing upfront costs in order to succeed in the EV market.

Full Epiosde of Insiders Guide to Energy EV Series can be found here