The long road to electric cars

Less than 1% of the 250 million cars, SUVs and light-duty trucks on the road in the United States are electric.

Getting drivers to switch from gas-powered to electric vehicles (EVs) is essential for the U.S. to be carbon-neutral by 2050.

However, changing the composition of vehicles on the road will be a slow process because only about 17 million new cars are sold each year.

The long road to electric cars

Less than 1% of the 250 million cars, SUVs and light-duty trucks on the road in the United States are electric.

Getting drivers to switch from gas-powered to electric vehicles (EVs) is essential for the U.S. to be carbon-neutral by 2050.

However, changing the composition of vehicles on the road will be a slow process because only about 17 million new cars are sold each year.

An industry forecast

Sales estimates of new EVs vary widely due to the uncertainty around local adoption rates, purchase prices and incentives, among many other factors.

By 2035, about 45% of new car sales could be electric according to industry analysis IHS Markit.

At this rate, about half of the cars on the road would be electric by 2050.

An industry forecast

Sales estimates of new EVs vary widely due to the uncertainty around local adoption rates, purchase prices and incentives, among many other factors.

By 2035, about 45% of new car sales could be electric according to industry analysis IHS Markit.

At this rate, about half of the cars on the road would be electric by 2050.

President Biden’s goal

President Joe Biden has set an ambitious goal for half of new car sales to be electric, fuel cell or hybrid electric vehicles by 2030.

If half of all cars sold by 2030 were electric, EVs could make up between 60%-70% of cars on the road by 2050.

President Biden’s goal

President Joe Biden has set an ambitious goal for half of new car sales to be electric, fuel cell or hybrid electric vehicles by 2030.

If half of all cars sold by 2030 were electric, EVs could make up between 60%-70% of cars on the road by 2050.

Momentum is certainly building for the transition to electric. Automakers are ramping up EV production and many new models are expected over the next few years.

However, about half of adults who are aware of electric vehicles say they are unlikely to seriously consider purchasing one, according to a Pew Research Center survey from June.

Consumers hesitant to make the switch cite concerns such as the high purchase price, limited driving range and lack of sufficient charging infrastructure.

Using a model that is a stylized portrayal of the U.S. auto market created by David Ross Keith and colleagues at MIT, we’re able to simulate the impact of policies intended to overcome these concerns about EVs.

Each scenario assumes a limited number of vehicle technologies are available to consumers; the number of cars on the road remains constant; new powertrains are supported by targeted advertising campaigns to raise awareness.

Scenario 1

Electric cars for sale!

Buyers have a choice between gas or electric cars. However, because the battery technology is new, EVs have a higher price tag and require a new refueling infrastructure.

Policymakers decide to support the new EVs in two ways over the first five years by offering a $10,000 purchase incentive and installing a modest 50,000 charging stations.

5 years later…
New car sales
gas
electric
Charging stations

About 6% of new car sales are electric, but government policies expire.

10 years later…
New car sales
gas
electric
Charging stations

Sales of EVs decline. Charging remains costly because stations are underutilized. Unprofitable stations are not replaced and the total number of charging stations declines.

25 years later…
New car sales
gas
electric
Charging stations

Though sales initially grew, there were not enough cars in operation for the charging infrastructure to be sustained.

A negative feedback loop is created by the diminishing car sales causing the number of charging stations to fall, thus making new electric cars less desirable.

In this example, some new car buyers are interested, but there aren’t enough electric cars to make charging stations profitable, nor enough charging stations for drivers to realize the potential utility of owning an electric car.

Scenario 2

What if there were more charging stations?

In this scenario, consumers still have a choice between gas or electric models. They also receive the same $10,000 purchase incentive for five years.

However, policymakers decided on a robust infrastructure package that will install 100,000 charging stations, or twice as many.

5 years later…
New car sales
gas
electric
Charging stations

Sales of EVs increase as expected, though at nearly double the rate at this point than in Scenario 1. Will the charging infrastructure be enough for sales to continue to grow?

10 years later…
New car sales
gas
electric
Charging stations

Sales of electric cars dip, but do not disappear as before. Again, some unprofitable charging stations are removed but greater demand for charging due to more EVs on the road means other charging stations are profitable and remain.

25 years later…
New car sales
gas
electric
Charging stations

Electric car sales continue to grow. With more electric cars on the road, charging stations are in high demand and the total number of stations grows as well.

In the real world

These simple scenarios allow us to explore the dynamics at play in transitioning America’s consumer auto fleet.

While electric cars have grown more popular over the past decade, their adoption has been uneven. Critics of purchase incentives, like tax credits or rebates, say these policies only support consumers already able to afford the high cost of a new electric vehicle.

About two-thirds of households who own electric or plug-in hybrid vehicles earn more than $100,000.

Income of owners of electric or hybrid cars

Meanwhile, there are about 104,000 public charging plugs available in the U.S. and, according to a report by Mobilyze.ai, that is simply not enough.

The infrastructure bill that passed Congress in November 2021 includes a $7.5 billion investment to install a half million new charging stations across the U.S. The details are unclear as to where these stations will be installed, or if they will be distributed in underserved areas.

California - the U.S. state with the largest number of EVs and the most advanced charging infrastructure - is an example of how challenging that will be.

Lower-income areas in largely Black and Hispanic neighborhoods in California continue to be significantly less likely to have access to public chargers, a study by researchers at California's Humboldt State University found.

The infrastructure bill’s investment in charging infrastructure could be the turning point in the deployment of electric vehicles in the U.S. There were about 18.5 EVs per charger, but international benchmakers suggest that at least one charger is needed for every 10-15 EVs in addition to home charging.

What about hybrids?

While there’s been a lot of talk from automakers about plans for an all-electric future, some major manufacturers will continue producing hybrid models that operate at least partially gasoline.

For example, Toyota has said that it sees electrified vehicles making up 70% of sales by 2030 with a majority of those being hybrid models.

Honda plans to achieve 100% zero-emission vehicle sales in North America by 2040, though the company plans to add hybrid-electric systems to more U.S. models in the nearterm.

To see how hybrids will slow the transition to a zero-emissions fleet, let’s add a hybrid to the model.

Scenario 3

Gas, electric and hybrids

Car buyers wandering new car lots have more choices in this final scenario: gas, electric and now hybrid cars.

Policymakers authorize $10,000 purchase incentives for five years, but only for all-electric vehicles. Robust infrastructure support installs 100,000 charging stations.

10 years later…
New car sales
gas
electric
hybrid
Charging stations

Advancements in battery technology benefit both EVs and hybrid vehicles. Hybrids remain the more popular option as consumers are reluctant to switch to the new electric technology.

In 2021, hybrids jumped to 5% of light vehicle sales while EVs accounted for only 3%, according to analytics firm Wards Intelligence.

Manufacturers ultimately see the sale of hybrids and plug-in hybrids as a bridge to help transition consumers to battery electric EVs.

So far 14 states and Washington, D.C., have adopted California’s regulations that require the sales of a certain number of zero-emissions vehicles per year and for all cars sold to be zero emission by 2035.

Where California’s emissions standards are adopted

A slow journey

Transitioning the U.S. auto fleet is likely to be a slow process because modern cars last a long time, about 16 years on average.

Existing cars on the road today including new gas-powered and hybrid cars will likely be around for a long time. Meanwhile, electric vehicles are still under a period of iterative development with an unproven lifespan.

Age of vehicles by percent of total cars

While there are many aspects of consumer behavior in regard to EVs that aren’t well understood, these simulations provide some insight into the challenges ahead in the electric vehicle transition and policy measures can help realize a future with mostly electric cars.

To accelerate the use of zero-emissions vehicles, policymakers may need to consider other measures to improve access to EVs such as vehicle sharing or used car trade-in programs.

Methodology

Projection estimates are based on a simplified four-cohort model of gas and electric cars, treating the lifespan of cars, SUVs and light-duty trucks equally. Base fleet does not include enterprise or government-owned auto fleets.

Simulations are based on a model originally published in the Journal of Simulation using parameters styled after characteristics of the U.S. auto fleet. Each emerging alternative fuel vehicle is supported by a significant five-year marketing campaign to educate consumers about the new powertrain. Considerations not factored into this analysis include the effect of other powertrains or the rise of other modes of public transport that could impact the relative size of the auto fleet.

Edited by

Sarah Slobin, Joe White and Lisa Shumaker

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