US Electric Car Sales Stall as Global Market Accelerates
The United States has fallen behind in the global electric car market, with sales growth slowing to a crawl despite record-breaking numbers earlier this year. According to data from SP Global Mobility, battery-powered cars accounted for just 10% of overall sales in August, a new high but still far below the levels seen in other major markets.
The US boom was largely driven by a government subsidy that helped knock up to $7,500 off the price of certain electric vehicles. However, with the tax credit expiring at the end of September, carmakers are bracing for a sharp decline in sales. "It's going to be a vibrant industry, but it's going to be smaller, way smaller than we thought," Ford Chief Executive Jim Farley warned investors this week.
In contrast, other major markets such as China and Europe have seen rapid growth in electric vehicle sales. In Norway, for example, electric cars accounted for over 80% of new car sales last year, while in China, the government has set ambitious targets to phase out internal combustion engines entirely by 2035.
Analysts say that the US market is being held back by a combination of factors, including high interest rates and buyer uncertainty over inflation, tariffs, and the wider economy. "The US market is still very much driven by incentives, whereas in other parts of the world, there's a more fundamental shift towards electric vehicles," said Thilo Koslowski, an analyst at IDTechEx.
Despite the challenges facing the US market, carmakers are pressing on with plans to expand their electric vehicle offerings. General Motors, for example, has committed to launching 20 new electric models by 2025, while Tesla is investing heavily in its manufacturing capacity to meet growing demand.
As the global electric vehicle market continues to accelerate, the US risks being left behind unless policymakers can find a way to sustain momentum. "The US needs to get its act together and provide a clear roadmap for the transition to electric vehicles," said Koslowski. "If they don't, they'll be left in the dust."
Background
The US government's tax credit for electric vehicle buyers was introduced in 2007 as part of the Energy Policy Act. The credit was designed to encourage consumers to switch to cleaner, more energy-efficient vehicles. However, its impact has been limited by a complex system of phase-outs and caps that have made it difficult for carmakers to plan their production.
Global Context
The global electric vehicle market is expected to reach 14 million units by 2025, up from just over 2 million in 2019. China, Europe, and Norway are leading the charge, with other countries such as Japan and South Korea also making significant strides.
Additional Perspectives
In an interview with Reuters, Tesla CEO Elon Musk said that the US market was "still a bit of a mess" but that the company was confident it could continue to drive growth. "We're not just relying on incentives," he said. "We're building a sustainable business model."
The International Council on Clean Transportation (ICCT) has warned that the US needs to do more to support the transition to electric vehicles, including investing in charging infrastructure and providing clearer incentives for buyers.
Current Status
With the tax credit expired, carmakers are bracing for a sharp decline in sales. However, many are confident that the long-term trend is still towards electric vehicles. "We're not going back," said Farley. "We're just going to have to be more efficient and more competitive."
*Reporting by Bbc.*
