Source: AutoCount data from Experian; California New Car Dealers Association.
Analysis by Beacon Economics
Highlight
- In 2022, battery electric vehicle (BEV) registrations as percent of total new light vehicles saw a significant increase of 61.7 percent from the previous year. As a result, EVs achieved their highest-ever market share, accounting for 17.1 percent of the total new light vehicle registrations. In contrast, plug-in hybrid electric vehicles (PHEV) decreased in 2022 by 18.3 percent. As a consequence, the PHEV market experienced a contraction of 3.0 percent, a decrease from its peak of 3.3 percent in 2021. While the global semiconductor shortage and disruptions in the supply chain impacted the production and availability of plug-in hybrid vehicles, a study from the American Chemical Society (ACS) found that self-charging hybrid and plug-in hybrid vehicles have twice the raw material cost vulnerability to supply chain disruptions.78 The higher registrations in battery EVs denotes that there is a growing segment of consumers who prioritize fully electric, zero-emission vehicles over PHEVs.
78 American Chemical Society. Hybrid cars are twice as vulnerable to supply chain issues as gas-powered models. July 28, 2021. Available at: https://www.acs.org/pressroom/presspacs/2021/acs-presspac-july-28-2021/hybrid-cars-are-twice-as-vulnerable-to-supply-chain-issues-as-gas-powered-models.html
Opportunities
- Adequate supplies of batteries and the requisite materials will be crucial for continued EV adoption. To that end, the 2022 Federal Inflation Reduction Act (IRA) provided new incentives for domestic battery manufacturing. In the wake of that legislation, 17 new EV battery facilities across the country have been announced. The facilities, with construction start dates between 2020 and 2024, represent $52 billion total investment with an estimated $31 billion expected between 2022 and 2031.79 On January 10, 2023, the U.S. Department of Energy (DOE) announced $42 million in funding for 12 Electric Vehicles for American Low-Carbon Living (EVs4ALL) projects to strengthen the domestic supply chain for advanced batteries that power EVs. As part of this program, three projects80 in California received significant funding, totaling over $8.5 million, which represents approximately 20 percent of the funds allocated within the state.
- In a remarkable achievement, California reached its ambitious goal for electric cars two years earlier than expected, with consumers in the state having purchased 1.5 million electric vehicles since 2011, which accounts for 40 percent of all EV registrations in the United States.81 In 2022, 13.6 billion gallons of gasoline were sold, according to the California Department of Tax and Fee Administration, a 0.2 billion gallons decrease from 2021.82 Anticipated market growth is expected to persist in 2023 due to several factors, including enhanced federal support for electrification, following the enactment of the Inflation Reduction Act, cost-cutting battery technology initiatives implemented by automakers,83 and the imminent expansion of charging infrastructure with $81 million estimated FY 2023 funding supported by the National Electric Vehicle Infrastructure Program.84
79 Walton, Robert. “Federal incentives help drive $52B of investments in 17 EV battery production facilities: BofA.” Utility Dive. February 23, 2023. Available at: https://www.utilitydive.com/news/federal-incentives-ev-battery-production-report/643370/
80 Three companies based in California received significant funding- Project K (Palo Alto, CA); South 8 Technologies (San Diego, CA), Tyfast Energy (San Diego, CA). January 10, 2023. Assessed July 06, 2023. Full-Text available at: https://www.energy.gov/articles/doe-announces-42-million-develop-more-affordable-and-efficient-advanced-electric-vehicle
81 Office of Governor GAVIN NEWSOM. California Surpasses 1.5 Million ZEVs Goal Two Years Ahead of Schedule. April 21, 2023. Assessed July 06, 2023. Available at: https://www.gov.ca.gov/2023/04/21/california-surpasses-1-5-million-zevs-goal-two-years-ahead-of-schedule/CA.gov
82 California Gasoline Data, Facts, and Statistics. California Energy Commission. Available at: https://www.energy.ca.gov/data-reports/energy-almanac/transportation-energy/california-gasoline-data-facts-and-statistics
83 Redwood Materials. Redwood Materials creates the first pathways for end-of-life electric vehicles in California. “Annually, 6 GWh of lithium-ion batteries or the equivalent of 60,000 EVs, come through Redwood’s doors”. February 17, 2022. Assessed July 06, 2023. Full text available at: https://www.redwoodmaterials.com/news/electric-vehicle-and-hybrid-battery-recycling-california
84 U.S. Department of Transportation, Federal Highway Administration. National Electric Vehicle Infrastructure Formula Program. Assessed July 06, 2023. Available at: https://driveelectric.gov/state-plans/
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