Electric vehicle (EV) “mania” might be at an end, or, at a minimum, easing down, according to research, as concerns about supply chains, lithium sourcing, inflation, and more affect production capacities while customer demand decelerates globally, as evidenced by industry leader Tesla cutting prices in order to increase sales.
“The lithium comes from one place, and it’s all processed in China. So, just building the alternate processing infrastructure … and by the way, we have to invade Russia too … just to get the materials to do EVs at scale is just laughable for the next decade,” he said at the time.
Meanwhile, in the UK, production estimates for electric cars and vans in 2025 have been reduced from 360,000 to 280,000. Consumers in the UK are worried about the operating costs of EVs since the average cost of charging an electric car has risen by 58 percent since last May.
In the United States, sales of electric cars rose in 2022 by 66 percent compared to the overall decline in auto sales of roughly 8 percent.
The IER believes that "the EV mania may be over or at least slowing" down given interest rate hikes, supply chain shortages, inflation, and restriction on tax credits.
“While some politicians are following in California’s footsteps by banning gasoline-powered vehicles and President [Joe] Biden has a goal for 50 percent of new car sales in 2030 to be electric, those feats may not be attainable due to problems in manufacturing and selling of electric vehicles,” the IER said.
“Range and performance problems still exist making consumers wary. And with escalating electric rates, operating costs may not be less than those for gasoline vehicles as Europe is seeing.”
Global EV Sales, Tesla Price CutsA KPMG survey of more than 910 auto executives conducted last year found that expectations of worldwide EV sales have tempered.
In 2021, auto execs were “very optimistic” about the prospects of global EV sales, expecting the vehicles to capture as much as 70 percent market share by 2030. But in the 2022 survey, the expected market share plummeted to 40 percent at most.
“The closer the expert is to the customer, the lower the EV share expectations seem to be," says the report. "For example, U.S. executives say car dealers expect EVs to capture 22 percent of the market by 2030, eight percentage points less than OEMs predict,” referring to the original equipment manufacturers.
Tesla has cut prices of its cars by up to 20 percent in Europe and the United States in a bid to boost demand. By doing so, the company is sacrificing some of its profits to raise sales volume.
Restricting EV Sales in AmericaIn the United States, some states are seeking to restrict the sale of EV’s. In Wyoming, six Republican lawmakers are pushing to phase out the sale of new electric vehicles by 2035 to protect its oil and gas industries as well as to preserve crucial resources.
Moreover, the batteries used in the EVs contain critical minerals needed in many other applications. The domestic supply of these minerals is limited and at “risk of disruption,” the bill stated.
In addition to that, these critical minerals are “are not easily recyclable or disposable, meaning that municipal landfills in Wyoming and elsewhere will be required to develop practices to dispose of these minerals in a safe and responsible manner,” the bill adds.