Renewable Energy

The Rise of Electric Vehicles: Unveiling the Reasons Behind Record Highs

Bird's eye view of a busy intersection at night in a city

In recent years, the global automotive industry has been undergoing a significant transformation as electric vehicles (EVs) gain ground in the market. This paradigm shift is more apparent than ever as the EV market in the United States is witnessing a significant surge, with sales hitting record highs

In the second quarter of 2023, U.S. consumers bought nearly 300,000 new battery-electric vehicles (BEVs), marking a new record. This figure represents a more than 48% increase compared to the previous year and exceeds the total number of EVs sold in all of 2019. The third quarter brought another record, with quarterly EV sales surpassing 300,000 for the first time. Several factors are contributing to this upward trend in EV sales.

Growing EV competition

For example, the availability of a wider variety of EVs is giving consumers more options; the number of models grew more than 50% from Q1 2021 to Q1 2022

The EV market has also witnessed a significant increase in competition, with a growing number of manufacturers entering the fray. This increased competition has resulted in more affordable options and a broader range of vehicle types from electric SUVs to compact EVs, catering to a wider audience. 

As traditional automakers invest heavily in EV production, it spurs further growth in the market.

Tax incentives and other government support

Additionally, government policies play a pivotal role in shaping the automotive industry, and the support for EVs has been evident in various countries. Generous incentives like tax credits from the Inflation Reduction Act (IRA) and other legislation have made EVs more attractive to consumers. 

Seemingly every country is scrambling to come up with its own piece of legislation to mimic the IRA, hoping to spur growth in EVs and other renewable energy sectors. Under one provision in the IRA, the federal government began offering tax credits of up to $7,500 on EVs at the beginning of the year. These initiatives have driven up sales by reducing the economic barriers associated with EV adoption.

Infrastructure growth

Another factor supporting EV growth involves addressing a critical, long-standing concern widely held by potential EV buyers, which is the accessibility of charging infrastructure. However, recent developments in charging networks have started to alleviate this concern. 

The expansion of charging stations and the introduction of faster-charging technologies have significantly boosted consumer confidence in the practicality of electric vehicles. For example, Ideal Power recently released the SymCool IQ, which provides a low-loss, bidirectional solution for EV charging with built-in intelligent controls. 

This technology and many others have enabled more consumers to consider EVs as a viable alternative to gasoline-powered cars, further contributing to the surge in sales.

Changing consumer preferences

Another notable catalyst for the rise in EV sales is the shift in consumer preferences. As concerns about climate change and environmental sustainability grow, more consumers are opting for eco-friendly alternatives to traditional gas-powered vehicles. People are increasingly conscious of their carbon footprint, and combined with tax incentives and the alleviation of “range anxiety,” more and more consumers are willing to make the transition to EVs. 

Other consumer-oriented factors, like higher inventory levels and increased product availability, have also helped spur continued growth of EV sales in the U.S. market. 

Additionally, price cuts from Tesla, the number one player with a 50% market share, and the number two player Ford, with a 7.5% market share, have also contributed to the increase in sales as EVs become more and more affordable to lower-income consumers. 

In fact, Tesla’s price cuts brought the average EV price down to $50,683 in September from $52,212 in the prior month

A promising future for EVs

After making it through significant supply chain issues, the EV market now has higher inventory levels and demand driven by price cuts, incentives, and improved technology, all of which are creating a perfect storm for growth in EV sales.

With environmental concerns at the forefront and more affordable and technologically advanced electric vehicles available, the future of the EV market looks promising. Additionally, as the automotive industry continues to evolve, it's clear that electric vehicles are set to play a pivotal role in the future of transportation, with record-high sales serving as a testament to their growing popularity and acceptance.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Dan Brdar

Dan Brdar is the President, CEO and a Director of Ideal Power. He has over 30 years of experience in the power systems and energy industries and has held a variety of leadership positions during his career. In addition to his role at Ideal Power, Dan previously served as President and CEO of FuelCell Energy Inc., a Nasdaq-listed company with a market cap of over $250 million.

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