Automakers have curtailed multi-billion-dollar bets on the technology that they made earlier this decade
[NEW YORK] Already sluggish adoption of electric vehicles (EVs) in the US will slow even further after a US$7,500 tax credit for EV buyers expires later this month.
Battery-powered cars will account for half of US auto sales in 2039, five years later than previously predicted, according to a new forecast by EY, a unit of consultant Ernst & Young Global. Growth in EV sales will barely budge this decade, reaching 11 per cent of the US market by 2029 compared with 8.1 per cent last year, EY said in a study released on Monday (Sep 8).
The forecast is the latest to highlight how policies championed by US President Donald Trump are expected to turn the US into a global EV laggard.
Trump vowed to terminate what he called EV mandates as he campaigned to secure a second term in the White House. He directed federal agencies to roll back ambitious emissions and fuel economy regulations, while his US$3.4 trillion fiscal package eliminated financial penalties on automakers for not meeting those standards and cancels the US$7,500 consumer tax credit for EV purchases on Sep 30.
EY predicts those actions will make EVs an even harder sell to American car buyers, who already were turned off by high prices and spotty charging infrastructure for battery-powered cars.
Automakers have curtailed multi-billion-dollar bets on the technology that they made earlier this decade, when they expected battery-powered models to account for as much as half of sales by 2030.
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Now, carmakers are shifting resources back to traditional petrol-fuelled vehicles and slamming the brakes on EV production.
General Motors last week cut production at two EV factories, citing slower customer demand. Ford Motor chief executive officer Jim Farley recently told analysts the automaker is reducing EV spending “pretty massively”, despite revealing plans for a new line of affordable EV models.
Easing regulatory policies, high costs, and infrastructure gaps are all working to drive down EV adoption in the US, Constantin M Gall, global mobility leader for EY, said.
The delay in EV adoption will leave the US years behind China and Europe. EY sees battery-EVs surpassing half the market in China in 2033 and topping 70 per cent of sales there by 2039.
In Europe, EY forecasts that more than half of new vehicle sales by 2032 will be battery-electric, seven years before the US. EY anticipates stricter climate regulations and more generous consumer incentives will propel EV uptake in Europe and China.
“The penalty regime is quite a different one” in Europe and China, compared to the US, Gall said. “You will have way stricter regulatory environments in many of these countries that are being enforced either by taxing the private ownership of vehicles or taxing the” automakers.
A separate forecast on Monday from researcher iSeeCars predicted EV market share in the US will fall by half, to roughly 4 per cent, in 2026 through 2028 due to the elimination of federal incentives and regulatory rollbacks.
“With the US$7,500 EV incentive ending on Sep 30, we have hit peak electric vehicle sales and market share in the US, at least for the next few years,” Karl Brauer, executive analyst for iSeeCars, said.
“There will be a substantial drop in electric vehicle production, sales and market share” starting in the fourth quarter of this year, he said. BLOOMBERG
