COP27: North America
In 1991, California implemented an innovative and ground breaking policy framework. Its ZEV Mandate was designed to accelerate the transition to electric transport, by driving the EV industry forward. This policy, which has since been replicated in China and a number of other US states, was an early indication that this part of the world may be one of the first regions to electrify. Unfortunately, this has not been the case since. The USA and Canada are now lagging behind in their transitions compared to Europe and Asia. However, this may be about to change, as North America, and the USA in particular, catches up with the leading pack.
Past Progress: 2021
Similarly to most markets, 2021 saw a boom in EV sales in North America, with electric doubling its market share compared to the year prior, up to 4.5%. This increase represented a further 667,731 EVs on the roads. Although these figures are significant, they still represents a nascent part of the market, and there is a profoundly uneven distribution of EV uptake across the states.
California, widely regarded as a hub for progressive EV policy and manufacturers, registered 39% of all new EV sales across the USA in 2021. This is indictive of a huge disparity in the rates that states are electrifying. The 2nd fastest state to electrify is Florida, with 7% of all EV registrations in the USA over 2021. Florida has closed the gap with California by just 1% since 2020. This gap is huge, and it is vital that the other states begin to catch up with California. At the moment, when we talk about EVs in America we are really just talking about EVs in California. In last place sits the state of North Dakota with just 0.03% of USA EV registrations in the state, one of six states to register less than 0.1% of their fleets electric in 2021. North Dakota registered just 380 EVs in 2021, a modest 160 more than in 2021.
Canada registered a smaller market share compared to its American neighbours, with EVs responsible for just 3.8% of overall vehicle sales. This equated to a total of 60,800 EV sales. Like North America, Canada is trailing the Europe and China. Additionally, Canada too has a distribution problem. 93% of all zero-emission vehicles were registered in the three largest provinces: Quebec (43%), British Columbia (28%), and Ontario (22.9%). Both Quebec and British Columbia have had ZEV Mandates since 2016 and 2019 respectively, which has incubated the EV market and allowed them to accelerate ahead of the other provinces.
2022 Thus Far
A lot can change in a year - so how are American and Canada fairing this year? Canada’s market share for EVs has increased to 6% in Q1 of 2022 and 5% in Q2 of 2022. Again, in Canada, it is the same three provinces electrifying the fastest, with British Colombia seeing an electric market share of 10.8%, Quebec at 6.5% and Ontario at 4.7%.
A persistent problem in the reporting of data in Canada is the mixing of hybrid and EV data. This is a problem more commonly seen in the more nascent markets around the world. It is important to separate these statistics - even if policies such as local ZEV Mandates group them together.
America is also improving its electric market share, with around 6% of new vehicles registered being EVs thus far this year. Looking at sales per manufacturer, Tesla absolutely dominates the EV market, with overall registration figures of 360,058 total vehicles across 4 models. The marque is set to break into the top 10 manufacturers in the country - this would be the first time an EV manufacturer made this list.
Graph: US EV Sales January to September 2022, Clean technica
Barriers and Road Blocks
It is always difficult to pinpoint one single problem which can be blamed for slower uptake of EVs. One issue is the fact that there is a trend towards larger vehicles in the USA. This represents a significant challenge as there are not currently many EV models available in this category at the moment. Either American motorists will have to undertake a modal shift in the way they think about private transport, or they will have to wait for the 4x4 EV market to mature. Another issue was that under President Trump, the adoption of EVs was essentially put on pause for four years. He even went as far as to sue California over their stringent emission regulations. He was taken out of office before this case was heard, but it has had the effect of effectively delaying the USA’s transition for a few years.
The Policy Landscape
After a number of years with limited federal incentives, America’s Inflation Reduction Act was put into place. It includes an extension to the tax credit programme for those purchasing a new EV, as well as the creation of a new tax credit for the purchase of a used EV. In the act, EVs were positioned as a viable way to reduce bills for Americans during the ongoing cost of living crisis. Despite this, there are some drawbacks to the programme; it does not help the lowest income households, as you can only be rebated on what you have paid in tax the previous year. On average that means people need to earn over $50,000 to get the full new vehicle tax credit. In order for a vehicle to qualify, none of the materials used, can come from a ‘foreign entity of concern’. According to the group Alliance for Automotive Innovation, that disqualifies around 70% of EV models on the US market. In Canada, incentives are available in the form of money off a purchasing or lease agreement - this is is not tied to taxation, so people can benefit from it regardless of income.
Going Forward: Next Steps & Future Prospects
The USA and Canada are making progress, but remain significantly behind Europe and China. It will be important that in the coming years they accelerate their transition in order to keep up. It is equally important that both countries push their laggard states and provinces into electrifying at a faster rate. A more evenly distributed transition will help to push the countries forward, as well as making sure there are no areas that miss out on the running cost savings EVs offer compared to polluting diesel and petrol cars.