The number of electric vehicles on the road in the U.S. is expected to continue to increase in the coming years, and will account for between 13% and 29% of new vehicle sales by 2050, and about half of global car sales by 2035.
Reports from the U.S. Energy Information Administration (EIA) and Goldman Sachs Research make those projections, although both studies acknowledge that there are some major uncertainties that could affect the rate of EV adoption.
The EIA’s Annual Energy Outlook indicates that the sales growth will be driven by lower component costs and federal and state policies that provide incentives for EV purchases. Goldman Sachs said that more stringent environmental rules on greenhouse gas emissions and improving technology will also play a role.
EV sales globally will soar to about 73 million in 2040, up from around 2 million in 2020, rising to 61% from 2% of total vehicle sales during that span. The share of EV sales is anticipated to be well over 80% in many developed countries, the Goldman Sachs report indicates.
“The decision to purchase an EV can be affected by many considerations and purchase price is among the most important,” the EIA report states. The EIA projects that prices will continue to decrease and that EVs with less than a 150-mile range could reach parity with gas-powered vehicles by 2029. EV’s with a range between 150 and 250 miles could reach parity by 2038. Light truck EVs, however, do not reach parity but approach it by the 2040s.
Clean vehicle credits contained in the Inflation Reduction Act will help spur adoption, as will federal funding to build out the charging network to alleviate one potential roadblock to wider adoption. However, the IRA also promotes domestic production of EVs and battery assembly, which could have an effect on sales if certain models do not qualify for tax credits.
The EIA points several other uncertainties that could affect adoption, including future government policies, including emissions regulations, fuel economy standards, and vehicle sales mandates; disruptive technological advancements; critical mineral supply chains needed for battery production, and consumer attitudes.
The Goldman Sachs report says innovation will be critical for the industry, with new battery materials and designs expected to drive improvements, along with more efficient power consumption.