This December, the first cars sold in the modern era of electric cars will turn five years old. We’ve seen impressive growth in those first 5 years—but have we arrived at a tipping point where EVs are inevitable? Probably not; despite major progress, policy support is playing a critical role pushing automakers who are reluctant and helping consumers overcome barriers to EV ownership. Therefore the next 5 years are critical to get us to that tipping point. To see where we might be going, let’s take a look at the state of the electric vehicle (EV) market and how it has grown over the last 5 years.
1: The fleet of clean electric vehicles continues to grow, fueled by more choices
The number of electric cars on the road in the U.S. continues to climb, with over 350,000 sold since the first models from major manufacturers were released in December 2010. The number of EV models has grown to over 20 different plug-in models available from 16 brands. This month also marks the introduction of Toyota’s Mirai fuel cell electric vehicle, further broadening the types of clean, electric motor-driven vehicles that are replacing gasoline-powered vehicles across the country.
2: Second generation plug-in vehicles are arriving
We are at an exciting point in the development of the plug-in EV market as EV mainstays like the Nissan LEAF, Chevy Volt, and Toyota Plug-in Prius are now transitioning to updated versions that will make it easier to drive on electricity. The Chevy Volt is getting a complete refresh with important additions like a 5th seat and an increase in electric range to 53 miles before the gasoline engine kicks in, up from the previous models 38 mile electric range. Nissan will have a new LEAF available as a 2017 model, and the 2016 model gets an important spec change with the availability of a larger battery pack to get over 100 miles of range on a single charge. The Plug-in Prius from Toyota should also get significant improvements in 2017. Toyota has released few details on updates to either the plug-in or standard Prius models, but many expect better range and fuel economy from the 2017 editions.
3: Will EVs sell with low gasoline prices?
Gas prices in most of the U.S. have been trending lower this year and EV sales have also slowed somewhat this summer. It’s easy to see why one would link the two trends, however the true picture is more complex. Lower gasoline prices may impact EV sales, but so too may model life cycles. The Volt, LEAF, and Plug-in Prius are three of the top four most popular EV models in the United States, and all three are wrapping up production of 2015 models that will be replaced by more capable new versions. This changeover has impacted sales, with dealer inventory dropping and consumers waiting for new models to become available. As a result, third quarter sales dropped by over half for these models when compared to 2014. However, the sales for all other EVs (excluding these three models) grew by over 25% compared to the same time last year, at a time when gasoline prices were falling.
Clearly gasoline prices aren’t the only driver for EV sales, nor should we expect them to be. Most EVs are thriving not just due to savings on fuel costs, but because they represent innovative technology, the convenience of never going to a gasoline station, high performance, and the desire for many to live a more sustainable life.
What will the next 5 years bring to the EV market?
Prediction is hard, especially about the future. But there are some trends that could accelerate the growth of EV sales.
First, Nissan, GM, and Tesla are all expected to release EVs with 200-mile ranges at an affordable price point. This range should make EVs fit into almost everyone’s daily driving needs with no anxiety over running out of charge. These cars will make the market for battery electric much larger than it is today.
Second, we are starting to see a diversity of EV models. For example, Mitsubishi is planning on bringing its plug-in SUV (a best seller in Europe) to the U.S. next year and Chrysler is planning on a plug-in minivan for 2017. These cars, combined with vehicles like the Tesla Model X crossover, will mean that more and more shoppers will be able to choose an electric vehicle for their next car. And as automakers get more experience building electric drivetrains, we’ll see plug-in vehicles offered across the car companies’ line-ups.
We’ve made a good start, and the future looks promising for EVs – but the market is at a critical point in its evolution. Policies, like California’s zero-emission vehicle program, are clearly continuing to have a big influence on the market. Only some of the 22 plug-in models are available in all 50 states; the majority of models are only available in California or other states that have adopted similar vehicle requirements. Consumer incentives are also playing a critical role – access to car pool lanes, rebates and tax credits are making more people take a look at EVs and making the decision to try something new. That’s why it’s important that we continue current policies that increase the choices for consumers and provide incentives to help get more drivers to switch from gasoline to electric drive.
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