US Electric Car Industry Stalls as Global Leaders Pull Ahead
The United States' electric car industry has stalled, with sales plummeting after a government subsidy expired at the end of September, leaving the country lagging behind global leaders in the electric vehicle (EV) market. While US companies like General Motors and Ford reported record electric sales over the past three months, analysts say this momentum was short-lived and driven by a last-minute rush to take advantage of the tax credit.
According to data from SP Global Mobility, battery-powered cars accounted for 10% of overall sales in August, a new high. However, with the subsidy gone, carmakers are bracing for a decline in demand. "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 told investors this week.
The US has been slow to adopt electric vehicles compared to other countries. In Norway, EVs account for over 80% of new car sales, while in China, the government has set a target of having 50% of new cars be electric by 2025. Even Europe, which had lagged behind the US in EV adoption, is now surpassing American sales.
The expiration of the tax credit was expected, but its impact on the industry has been more pronounced than anticipated. The credit allowed buyers to knock as much as $7,500 off the price of certain battery electric, plug-in hybrid or fuel cell vehicles. With it gone, carmakers are expecting a significant decline in sales.
"We're seeing a lot of uncertainty in the market right now," said Michelle Krebs, an automotive analyst at Cox Automotive. "Buyers are on edge about inflation, tariffs, and the wider economy, and that's making them hesitant to make big purchases."
The US government has been criticized for its slow response to the growing demand for electric vehicles. While other countries have implemented policies to encourage EV adoption, such as tax credits, rebates, and investments in charging infrastructure, the US has been slower to follow suit.
As the industry adjusts to the loss of the subsidy, carmakers are looking to other incentives to drive sales. Tesla, which has long been a leader in electric vehicle sales, is offering discounts on its Model 3 and Model Y cars. General Motors is also offering rebates on its Bolt EV.
Despite the challenges facing the US electric car industry, analysts remain optimistic about its long-term prospects. "The shift to electric vehicles is inevitable," said Krebs. "It's just a matter of when and how quickly it happens."
Background:
The US government has been providing tax credits for electric vehicle buyers since 2008 as part of the Energy Policy Act. The credit was set to expire at the end of 2019, but was extended through 2020 and then again in 2021. However, with the latest extension expiring on September 30, carmakers are bracing for a decline in sales.
Global Context:
The US is not alone in its struggles to adopt electric vehicles. Many countries have faced challenges in transitioning to EVs, including Norway, which has struggled with high prices and limited charging infrastructure. However, the country's government has implemented policies to encourage adoption, such as tax credits and rebates.
In contrast, China has been a leader in EV adoption, with many companies investing heavily in electric vehicle production. The Chinese government has set a target of having 50% of new cars be electric by 2025, and has implemented policies to support the industry, including investments in charging infrastructure.
Additional Perspectives:
Industry experts say that the US needs to implement more aggressive policies to encourage EV adoption, such as tax credits, rebates, and investments in charging infrastructure. "The government needs to step up its game," said Krebs. "We need a comprehensive plan to support the industry."
As the industry adjusts to the loss of the subsidy, carmakers are looking to other incentives to drive sales. Tesla is offering discounts on its Model 3 and Model Y cars, while General Motors is offering rebates on its Bolt EV.
Current Status:
The US electric car industry is facing a significant decline in sales after the expiration of a government subsidy. Car makers are bracing for a drop in demand, but analysts remain optimistic about the long-term prospects of the industry.
Next Developments:
As the industry adjusts to the loss of the subsidy, carmakers will be looking to other incentives to drive sales. The US government is also expected to implement new policies to support the industry, including investments in charging infrastructure and tax credits for EV buyers.
*Reporting by Bbc.*
