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2022: Big Year for Electric Vehicle Sales

The U.S. electric vehicle market is expected to grow from $28.24 billion in 2021 to $137.43 billion in 2028, with a forecast period of 2021-2028, at a compound annual growth rate (CAGR) of 25.4%.
2022 was the biggest year on record for electric vehicle sales in the U.S. Electric vehicle sales continued to outsell gasoline-powered vehicles in the third quarter of 2022, with a new record of more than 200,000 electric vehicles sold in three months.
Electric vehicle pioneer Tesla remains the market leader with a 64 percent share, down from 66 percent in the second quarter and 75 percent in the first quarter. The share decline is inevitable as traditional automakers look to catch up with Tesla’s success and race to meet the growing demand for electric vehicles.
The big three – Ford, GM and Hyundai – are leading the way as they scale up production of popular EV models such as the Mustang Mach-E, Chevrolet Bolt EV and Hyundai IONIQ 5.
Despite rising prices (and not just for electric vehicles), U.S. consumers are buying electric vehicles at a record pace. New government incentives, such as the electric vehicle tax credits provided in the Inflation Reduction Act, are expected to drive further demand growth in the coming years.
The U.S. now has a total share of the electric vehicle market of more than 6 percent and is on track to reach a goal of a 50 percent share by 2030.
Distribution of electric vehicle sales
Distribution of electric vehicle sales in the US in 2022
2023: Electric vehicle share increases from 7% to 12%
Research by McKinsey (Fischer et al., 2021) suggests that, driven by more investment by the new administration (including President Biden’s goal that half of all new vehicle sales in the U.S. will be zero-emission vehicles by 2030), credit programs adopted at the state level, stricter emissions standards, and increasing commitments to electrification by major U.S. OEMs, sales of electric vehicles are likely to continue to increase.
And billions of dollars in proposed infrastructure spending could boost EV sales through direct measures such as consumer tax credits for buying electric vehicles and building new public charging infrastructure. Congress is also considering proposals to increase the current tax credit for buying a new electric vehicle from $7,500 to $12,500, in addition to making used electric vehicles eligible for the tax credit.
In addition, through a bipartisan infrastructure framework, the administration has committed $1.2 trillion over eight years for transportation and infrastructure spending, which will initially be funded at $550 billion. The agreement, which is being taken up by the Senate, includes $15 billion to accelerate the adoption of electric vehicles and accelerate the market for electric vehicles in the United States. It sets aside $7.5 billion for a national EV charging network and another $7.5 billion for low- and zero-emission buses and ferries to replace diesel-powered school buses.
McKinsey’s analysis suggests that overall, new federal investments, a growing number of states offering EV-related incentives and rebates, and favorable tax credits for EV owners will likely spur adoption of EVs in the United States.
Stricter emissions standards could also lead to increased adoption of electric vehicles by U.S. consumers. Several East and West Coast states have already adopted standards set by the California Air Resources Board (CARB), and more states are expected to join in the next five years.
US new light-vehicle sales
Source: McKinsey Report
Taken together, a favorable EV regulatory environment, increased consumer interest in EVs, and vehicle OEMs’ planned shift to EV production are likely to contribute to continued high growth in U.S. EV sales in 2023.
Analysts at J.D. Power expect the U.S. market share for electric vehicles to account reach for 12% next year, up from 7 percent today.
In McKinsey’s most bullish projected scenario for electric vehicles, they will account for about 53% of all passenger car sales by 2030. Electric cars could account for more than half of U.S. car sales by 2030 if they accelerate.

Post time: Jan-07-2023