Will EV Ownership Grow in the US? | VinFast

[VF Staff 7]

Will EV Ownership Grow in the US?

Interest in electric vehicles (EVs) has ballooned over the past decade, reaching an all-time peak of 2.1 million worldwide sales in 2019. While that only represents a fraction of car sales, EVs themselves only represent a fraction of the options available to consumers. And, given that this shows a 40% year-on-year increase in sales, EVs are on track to start punching way above their weight class.

According to Pew Research Center, most of this growth has been in China and Europe, where EVs have a 5.7% and 10% market share, respectively. This is no surprise. EVs are much more environmentally friendly, and the climate crisis is reaching a head. EVs save on gas; they’re quieter; often, they’re more high-tech.

In the US, however, the adoption of EVs is progressing much more slowly. While EV ownership is consistently growing, and that growth was accelerating until about three years ago when federal tax credits phased out, it has never matched the pace of Europe or China. Which is strange, when you realize that a recent survey by Consumer Reports found that roughly 71% of US drivers have an interest in buying an EV. Nearly a third of them planned on doing so for their next purchase.

Given the massive public interest in going electric, a question springs to mind: will EV ownership see growth in the US?

To figure that out, we need to unpack why EV growth has been sluggish in the US, to discuss the changes that may influence those troubling factors, and to consider whether such changes are likely to increase sales.

Why Aren’t We Going Electric?

The aforementioned survey by Consumer Reports also looked into why Americans hadn’t yet bought an EV. The answers are enlightening. CR found that: “Vehicle range and availability of charging stations were chief among US motorists’ concerns. About half of the drivers surveyed say they would want an EV that could travel more than 300 miles between charges, and a little less than half… say inadequate charging infrastructure is holding them back.” The next-most-concerning factor for prospective buyers was purchase price, with 43% of respondents saying the cost was holding them back from buying an EV.

We’ll get back to price in a moment. For now, let’s focus on range and availability. There is one major difference between Europe, where EV adoption has been more widespread, and the US: geography.

But Europe adapted itself to be more close-knit than America after World War II. It covers a much smaller area than the US, in general, and everything is much closer together, built to be friendly to public transit and pedestrians.

The US, on the other hand, is spread out. It is much, much less friendly to pedestrians, often placing people miles and miles away from their place of work. In fact, the US Department of Transportation states that the average person drives around 13,500 miles per year. For the EU, it’s almost half that, at roughly 7,500 miles. Even for their daily commute to work, the average American drives a full 16 miles one way. That’s a little less than the total commute for the average European (even if the European spends more time traveling, due to congestion).

Once you start taking trips out of town, this distance balloons. Take my hometown, for instance: a common spot for a day drip was Pismo Beach, because it was considered close-by… at 150 miles away. Partly due to how spread-out settlements in the US are (especially outside of the Northeast), it’s very possible to go hours without seeing anywhere to stop. And some of these stretches can be in dangerously inhospitable areas, given the extreme climates present in much of the US.

Then, you combine this spread-out nature with the dearth of charging stations. The US currently has about 43,000 public EV charging stations spread over its 3.8 million square miles, with the overwhelming majority of them in California. Europe, by contrast, has 285,800 public EV charging stations dotting its 1.6 million square miles. That makes for an EV charging station density of one station per 5.5 miles in Europe, and one station per 88 miles in America.

So, it’s understandable that Americans are worried about getting an EV that may not have the range to traverse the American landscape and make it to the next station. Make no mistake: this is the biggest obstacle to increasing EV ownership. If America had as many charging stations as McDonalds, we’d probably see sales numbers more similar to that of the European Union. In fact, we have a test case in California, who already has a workable charging infrastructure and, indeed, has EV sales numbers similar to Europe and China.

That means if we want to know whether EV sales will increase in the US, we should look at whether the charging infrastructure will improve. And there’s good news on that front.

More Chargers, More EVs

A major part of current US President Joe Biden’s “Build Back Better” agenda is investment in green infrastructure. In particular, investment in shifting the US auto market towards EVs. One of his stated goals is to build 500,000 new EV charging stations by 2030. While there’s a lack of clarity over whether this means 500,000 new plugs or 500,000 full charging stations, the fact remains that this would be a huge boon to the US EV market. Simply adding 500,000 stations to the 43,000 that already exist would bring the charging station density in the US closer to one station per 7 miles—not far from Europe’s.

There’s also an element of feedback to consider. The US is hugely market driven. It’s rare that you have people making investments for moral reasons (at a huge detriment to our society). But, as property owners and other individuals realize charging stations are becoming more common, they’ll anticipate a resultant growth in EV ownership. As such, they’ll want to cash in by installing their own EV charging stations or starting charger companies. So, you can add an as-yet-unknown sum of private stations to the 543,000 projected by 2030. Add to this the fact that Biden also hopes to turn much of the US government fleet all-electric, providing more incentive for EV charging station adoption, and the signs are good.

Perhaps this is part of the reason that some estimates put the number of EVs in the US at 35 million by 2030. If Biden’s plan works, even a little, we’re set to see a huge increase in EV ownership in the US.

But, there is one last wrinkle to consider.

Economy and Price

As mentioned before, roughly 43% of Americans cited the cost of EVs as part of the reason they haven’t bought one, yet. While some economic projections are good, the fact is that we don’t yet know how the US is going to recover economically from the disastrous effects of the coronavirus pandemic. This happened in a time where wealth inequality was already getting out of control. If it doesn’t turn around, it might be difficult for the average American to afford an EV.

On the other hand, by 2030, EVs will have been around long enough to have an established used car market, which is much more affordable for the average American. Assuming, of course, that owners of modern-day EVs have done well enough for themselves to get a new model in a decade.

There are so many unknowables here that it’s hard to predict where things will go. While all the infrastructure may be there, it won’t do any good if Americans can’t afford new cars. Biden’s “Build Back Better” initiative hopes to pull a nice gravity-slingshot for us, but, at this point, we don’t even know how many parts of that policy he’ll be allowed to pass.

The Outlook?

For the most part, the outlook for EVs is good in the US. While our growth may be slower than that of China and the EU, the political and cultural direction is in favor of going electric. Yes, there are some unknowns that could throw a wrench into the works, but, as it stands, you may be justified in being optimistic.

Until we know more, it’s a good idea for Americans to pay attention to EV ownership in California. California has many of the terrain issues of the rest of the US, but is adopting progressive policies more similar to that of the E.U.. By looking at their results, we could predict how those same policies may affect EV ownership in the US, as a whole.

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