Seizing the Electric Momentum: Current State of the EV Market and Key Strategies for Accelerating Adoption

In 2023, the electric vehicle (EV) market witnessed significant growth, influenced by technological advancements, consumer behavior changes, and increasing regulatory pressures. Global sales of electric vehicles have increased significantly, prompting major automotive manufacturers to intensify their commitments to electrification. Concurrently, governments worldwide are implementing stricter emissions regulations and providing incentives to promote the adoption of EVs.

The diversification of EV offerings is noteworthy, with a growing focus from businesses, municipalities, and consumers alike, including gas and electric companies, highway transportation companies, restaurants, grocery stores and fleet and commercial vehicles.

In examining the future of electric vehicles and the needed infrastructure, it is essential to consider several key factors that will drive their growth and shape the industry's trajectory:

Technological Advancements: Battery technology has improved significantly, extending EV ranges and reducing charging times. Innovations in battery storage and recycling have made EVs more sustainable and affordable.
Government Incentives: Many governments offer tax credits, rebates, and other incentives to make EVs more affordable for consumers and businesses. In the U.S., the Inflation Reduction Act introduced various tax incentives for EV buyers.
Increased Charging Infrastructure: Public and private investments have led to a more robust charging infrastructure. More charging stations have been installed in urban and suburban areas, making EV ownership more practical for a larger population.
Corporate Commitments to Environmental & Social Governance: Many companies embrace sustainable practices, and fleet electrification is a common step toward achieving these goals. Businesses are committing to EVs to increase their sustainability footprint.

However, several business and infrastructure challenges persist. These include the need for a comprehensive charging infrastructure, potential supply chain issues related to battery production, and environmental concerns regarding battery manufacturing.

This series will delve into these dynamics, providing insights into market trends, relevant statistics, and the implications for businesses and policymakers as they navigate the evolving landscape of electric vehicles and the needed infrastructure.

Pacing the EV Transition

As governments and businesses increasingly prioritize sustainability, understanding how this transition will unfold is essential for stakeholders across various sectors. Here, we explore the key factors influencing the EV transition and what to expect in the coming years.

Government Policies and Incentives: The U.S. EV market’s current steady growth can be credited in part to government incentives, including the Inflation Reduction Act’s (IRA’s) Commercial EV and Fuel Cell Electric Vehicle (FCEV) Tax Credit offering businesses and tax-exempt organizations tax credits for purchasing new EVs and FCEVs at 30% of the vehicle purchase price. The Biden Administration has been a proponent of EVs, seeing them as a critical piece in its plan to decarbonize the economy and reach the goal of achieving net-zero emissions by 2050. However, the focus on EV manufacturing and purchasing may shift elsewhere depending on whether it’s a Kamala Harris or Donald Trump administration sitting in the White House come 2025.
Advancements in Technology: Technological innovations are playing a crucial role in the EV transition. Improvements in battery technology are leading to increased energy density, reduced charging times, and lower costs. The development of fast-charging infrastructure is also essential, as it alleviates range anxiety and makes EVs more convenient for consumers.
Growing Charging Infrastructure: A robust charging infrastructure is vital for the successful adoption of electric vehicles. Public and private investments are being directed toward expanding charging networks, including fast chargers along highways and urban centers. Governments are also collaborating with businesses to establish charging stations in strategic locations, making it easier for consumers to charge their vehicles. The availability of charging options will significantly influence consumer acceptance and the overall transition.
Consumer Awareness and Acceptance: Consumer attitudes toward electric vehicles are evolving. As awareness of climate change and environmental issues grows, more consumers are considering EVs as a viable alternative to traditional vehicles. Educational campaigns and outreach efforts by manufacturers and governments will play a crucial role in informing potential buyers about the benefits of EVs, including lower operating costs and reduced carbon emissions.

Accelerating EV Adoption

Addressing and accounting for obstacles such as charging infrastructure, supply chain challenges, and consumer awareness will facilitate targeted solutions and strategic investments, ultimately accelerating the adoption and growth of EVs and the needed infrastructure in communities. Hurdles to consider include:

Supply Chain and Infrastructure Challenges: Ensuring a stable supply chain for these materials is critical to meeting growing demand. The production of EV batteries relies on materials such as lithium, cobalt, and nickel. Recent proposed guidance from the Department of Treasury and Internal Revenue Service on the provisions of the IRA aim to spur even greater investment in American manufacturing of electric vehicles. The hope is to build a resilient supply chain by introducing a new qualification for eligible clean vehicles where they may not contain battery components that are made or assembled by a foreign entity of concern (FEOC). Overcoming obstacles to increasing charging infrastructure and electrical grid capacity will require a joint effort between federal and local governments, utility companies and municipalities and companies investing in EV fleets. For example, major utility companies in Pennsylvania offer incentives for EV adoption including rebates to commercial companies for the purchase and installation of EV charging stations.

Environmental Concerns: The environmental impact of battery production and disposal raises questions about the sustainability of EVs. Addressing these concerns will be essential for gaining public trust and support.
Equity and Accessibility: In addition, a number of states have adopted their own EV incentives or mandates that will last past the November election – most notably California’s mandate that all new passenger cars, trucks and SUVs sold in the state will be zero-emission vehicles by 2035. At least 13 other states have adopted similar mandates, including New York, New Jersey and Maryland. Ensuring that all communities have access to electric vehicles and charging infrastructure is crucial. Policymakers must consider equity in their strategies to promote EV adoption.

Continuing incentives from federal, state and local governments will be a crucial piece in maintaining the momentum around EV adoption and overcoming the speed bumps in the way. Deciding now that you want a seat at the table will help define and shape the policies that will impact your company in the future.

Stay tuned for more insights on the EV transition from our government relations professionals and attorneys at Buchanan Ingersoll & Rooney.