US EV sales are booming. Don’t let an election ruin it.
As reported in our latest Global EV Tracker webinar, US battery electric vehicle sales - shown below - exceeded the EU’s in the last quarter, the first time this has happened.
After a brief single quarter dip in Q1 of 2024, sales have continued to trend upwards since, whilst the EU has stumbled in the face of a weak supplier emissions regulation which hasn’t been tightened since January 2021 and consumer incentives that have been cut in some of its largest markets.
Market share by fuel type in US market
Last quarter’s increase suggests more of a steady organic growth in demand and less a last-minute rush to take account of IRA tax credits before they are canned.
And with the election today, there are some reasons to be cheerful.
Part 1 - Sales were pretty good pre-IRA - check the chart above. In Q2 of 2022, the last full quarter before the signing into law of the Inflation Reduction Act, market share of battery electric was 5.1%. That’s well below the 8.9% achieved in the most recent quarter, but this was achieved on the old, much weaker, Advanced Clean Cars Rule, and with a tax credit which wasn’t available on the most popular models.
Part 2 - Trump’s messaging has become more and more mixed - The free-improv jazz-poetry of Trump’s speeches continue to fire out allegations so weird you could hardly even call them misinformation - US charging infrastructure would cost $10 trillion dollars (40% of its GDP), every bridge in the USA would need rebuilding, or that 40% of HGVs’ payload would have to be given over to batteries. But we’re also hearing that “Elon Musk knows the future”, “I love EVs, I think they’re great -but they’re for a certain group of people”, and claims that they will create 200,000 jobs - every one of them in Michigan, naturally.
It’s hard to establish in the whirling toupee tango of Elon and the Donald just which one is coercive and who is the patsy, who is brazenly telling the other what they want to hear and who is the mug. But Trump’s very very large brain is clearly capable of thinking multiple contradictory things at once, and he’s now thinking and saying some positive things about EVs.
Part 3 - Manufacturers - and voters - will want payback.
Trump talks repeatedly about clawing back any of the unspent dollars from the IRA. But the £78bn of funding for clean vehicles since the Inflation Reduction Act - of which 58% is estimated to be in just 7 swing states, creating 33,000 jobs - depends on future demand if it is going to earn any return, and if those jobs are to survive.
Market purists criticised the IRA for its economic efficiency - mandates would be more efficient than bucketloads of incentives. But perhaps the incentives are the source of its genius. Firms, employees, governors and state congressional members are the beneficiaries of that economically inefficient strategy. And they will want to see the investments come good.