One Shining Moment, Part 3 - As Interest in EVs Spikes, Revised Tax Credit Boosts Plans for U.S. Production

By all appearances, the momentum behind electric vehicles (EVs) has done nothing but increase over the last year, boosted by higher gasoline prices and federal legislation intended to speed the pace of EV adoption. But the transportation sector's transition to electric power and away from the internal-combustion engine (ICE) won't be easy, and may take a lot longer than many expect or hope, due in part to the significant challenges in finding the hard-to-come-by metals and other materials needed for EV production. In today’s RBN blog, we look at the continuing focus on EVs, China’s current dominance in the global market, and how the newly passed Inflation Reduction Act (IRA) is boosting plans to make EV batteries in the U.S.

In Part 1 of this series, we discussed the sudden burst of attention that EVs received at the start of the year, a trend highlighted by their significant presence in February’s Super Bowl broadcast. From legacy brands such as BMW and GM to the EV startup Polestar, several automakers used their spots during the big game to highlight their latest all-electric offerings. In Part 2, we looked at how high gasoline prices have prompted would-be car buyers to give EVs a second look — or a first look, in many cases. Gasoline prices have steadily fallen in recent months, but the national average remains about 60 cents/gal higher than a year ago.

There is little doubt that the appetite for EVs is growing. U.S. sales were up 66% year-on-year in the second quarter of 2022 to nearly 200,000 EVs, even as overall new car registrations dropped by 20%, according to Kelley Blue Book data, with many potential buyers stung by higher prices and tight inventories. The most popular EVs were Tesla’s Model Y and Model 3, with sales of more than 50,000 each, followed by the Ford Mustang Mach-E at about 11,000. (It’s worth noting that hybrid-EVs such as the Toyota Prius accounted for about 250,000 more sales, although that category was down 10% from the year-ago quarter and has been trending lower globally as well. The most popular hybrid was Toyota’s RAV4 Prime, with nearly 53,000 sold.) Tesla said Sunday that it delivered about 344,000 EVs in the third quarter, up 35% from the year-ago quarter, although a little below analysts’ expectations. (Tesla reports data for deliveries instead of sales and does not typically break down those figures by region.) And GM said Monday that it was boosting production of its two Chevy Bolt models from about 44,000 in 2022 to 70,000 in 2023 after it sold 14,709 units in Q3, it’s best quarter for EVs ever.

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