Future of Electric Vehicles Market in USA
From 2011 to 2019, PHEV and BEV sales increased with a CAGR of 35% and 49% respectively in the USA. From 2018 to 2019, PHEV and BEV year on year growth has declined by -31% and 1% respectively. The complete automobile sales in 2019 was down by approximately 2%. But the huge decline in the adoption of PHEV provides a different view on the electric vehicle market. Auto makers are providing both the option of ICE and electric vehicles through their PHEV offering but the end users are reluctant in adopting a combination of vehicles. The end users who are shifting from ICE to electric vehicles do not want the combination of both. They either want electric or non-electric vehicles. This further suggests that the adoption of PHEV will witness a downward turn in long term. Automakers should choose their offering portfolio based on the end user demand and not by the competition. This sole factor will help the automaker to get higher market share.
In 2019, the whole industry has witnessed a down turn because of the trade war. China has acquired the LION share in Lithium-ion batteries, so the three rounds of tariffs imposed by USA on Chinese imports has harmed many EV companies due to increased costs of Li-ion batteries. Lithium-ion batteries are the most important factor in boosting the adoption of electric vehicles. If the Li-ion batteries cost is not reduced, the whole industry will witness a hindrance and huge cost will be transferred to the end user. So there are different types of end users adopting electric vehicles. But the ones who are mostly affected by the increase in the price are the ones who shift to electric vehicles because of the increase in oil prices. This category has huge market share and it will be difficult for the automaker to match their expectations. So Li-ion prices will have a huge impact on the electric vehicle sales.
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HURDLES IMPACT(High to Low)
Limited Range High
Public Charging Infrastructure High
With sluggish sales trends in 2019, the adoption rate of EVs have simultaneously fallen which might upset those in Washington D.C., who have invested $5 billion in electric cars, and affect their outlook towards allocating funds to EV development. Another problem stems from lesser know-how about the range of miles an EV will travel with a particular battery capacity. In addition to range anxiety, the American buyers are concerned with the availability of charging infrastructure. Most EVs take more than 10 minutes to reach full charge to be able to cover longer miles.
Manufacturer and Model Range (miles) Assembly location Cell production location Battery manufacturer
Tesla Model 3 220-310 USA USA Panasonic/Tesla
Tesla Model X 295 USA Japan Panasonic/Tesla
Chevrolet Bolt EV 238 USA South Korea LG Chem
China’s CATL signed a contract to supply Li-ion batteries to Tesla for its Model 3. The contract is for a two year period and is signed in February 2020. The manufacturing giant Chairman Zeng Yuqun has also asserted their readiness on demand basis to produce a battery that lasts for 16years and runs for 1.24 million miles.
MODEL Tax Incentives Price (after tax credit) Range Charging Time(full charge) Body Type Top Speed
Chevy Bolt EV $1,875 federal tax credit $34,745 238 miles 120V = 4 miles of range per hour
240V = 9.5 hours
DC fast charging = 1.2 Hours 4 door hatchback 90 mph with 0-60 mph in 7 seconds
Tesla Model 3 $1,875 federal tax credit $39,190 including delivery charge 250 miles for all models, 322 miles for long range model 50kW = 40 – 60 mins
150kw = 20 min
All the chargers are as per public charging infrastructure 4- door sedan 130 mph with 0-60 mph acceleration in 5.6 seconds
In 2019, the Q1 remained a valuable period for BEVs and PHEVs as a substantial number of units were sold. Tesla dominated the market with its Model 3 sales that accounted for 163,971 units in the US and the company as a whole sold 381,190 units worldwide. The next in line are Chevrolet Volt with 154,664 units sold in 2019 and the Nissan Leaf stood at 132,227 units sold.
The Tesla also outsmarts other vehicles in terms of safety and has been highly marked by the NHTSA. The autopilot system in Tesla is rated more than a Nissan leaf Plus’ ProPilot system which costs an additional $1,800.
The market for BEVs and PHEVs will depend on various factors for its growth. On a brief overview, the parameters that will decide the impact of a new EV depend on the product, price, promotion, place and the consumer base.
The below table summarizes our finding with the help of 5P’s analysis. Please contact [email protected] for the background data
Product Price Promotion Place People/Consumers
Tesla sold most units of its Model 3 in 2019 The Tesla Model 3 variants are available in 3 price ranges which are higher than normal ICE vehicles Capturing the trend of ‘reduction in emissions’ actions in various states
Regional differences play a vital role in the buyers demography in US. American EV owners prefer a consistent system compatible with their phones
The Americans prefer sedans and SUVs in most states The Americans preferred a Honda Accord and Civic in 17 states Aligning with “Zero Emission Vehicle Program” at Federal levels The South and Southwest was dominated by Nissan while the coastal region was taken over by Honda 72% American drivers would prefer not to visit a workshop but the company providing all the service for a minimal fee
The range anxiety plays a crucial part as an average American prefers longer miles with lesser time to charge The vehicles bought by average Americans cost below $30,000 with Nissan Altima leading the way Providing maximum tax rebates and credits along with non-cash incentives in different states, matching the income capabilities 50 states prefer a sedan over a SUV or hatchback. Most states in USA lack superchargers compatible with all EVs. EVs increased ability to run for longer miles on freeways will be a big attraction for the Americans in coming years.
To create an impact on the American EV market, auto makers needs to focus on the main parameters:
1. American car buyers/drivers increasingly prefer a sedan in most states.
2. Regional differences show Alaska, Hawaii, Vermont and Wyoming having preferences unique to other states.
3. The Honda Accord and Nissan Altima are sold at around $24,000 and have almost equal safety rating like the Model 3.
4. The Model 3 for example starts at the price which is more than the top model of Honda Accord i.e., $36,000.
5. Most states do not have a Zero emission program and with oil prices falling, the EVs will face a tougher challenge in comparison to an ICE and the price at which it is sold.
6. California witnessed the highest sales for Tesla Model 3(18,856 units sold). The state also interestingly has the highest number of chargers. So, charging infrastructure directly impacts the sale of EVs.
For Tesla and Ford who will soon release their vehicles – the Cybertruck and Mustang Mach-E respectively – Alaska and Vermont will be crucial states. If Tesla provides tax incentives on its Cybertruck, it will be available at a price lower than the average truck prices in USA that is around $49,543. For an OEM, the main factors for greater sale will be – body type should be sedan, price lower or not more than $30,000, charging time lesser with longer mile capability and most importantly, after sales service that is hassle free for buyers.
To increase your market share and product portfolio planning for the USA and to access our data, please contact [email protected]