The news: The US is the latest country to pass the critical EV tipping point of 5% of new car sales, signaling the start of mass EV adoption that could be accelerated by greater market variety and recent oil shortages, per Bloomberg.
By the numbers: The US joins the other two largest car markets—Europe and China—in moving beyond the 5% threshold.
- To date, 19 countries have reached the 5% tipping point. Other car markets approaching the threshold include Canada, Australia, and Spain.
- EV sales grew 160% YoY in 2021 and are expected to grow exponentially in 2022.
- If the US continues its aggressive shift to EVs, approximately a quarter of new car sales could be EVs by 2025, beating forecasts by two years.
- In context, EV sales in the EU and the UK are surging and on track to overtake gas and diesel vehicles by 2025.
Variety and pricing mix: EVs are at an inflection point now that a greater variety of model types and a range in pricing are within more consumers’ reach.
- Tesla is expected to continue to dominate the luxury sedan and crossover EV space, but other car makers can race to the bottom in pricing for compact EVs, or develop the market for electric trucks or vans.
- EVs are also viable options for commercial and military applications.
A bright future for electric: We’re seeing various late entrants into the EV space.
- Honda and Toyota, which were previously leaning on their hybrid models, are fully committed to pure EV strategies.
- The global gasoline shortages and rise in pricing have accelerated EV plans for consumers previously debating on the merits of electric vehicles.
- Various plans to grow EV charging networks were revealed this year, with the government and car manufacturers taking the initiative to improve charging infrastructure.
- 2022 saw ride-sharing autonomous vehicles, which are all EVs, begin service in large cities.
What’s next? The EV market will likely parallel smartphone adoption. Tesla, like the Apple iPhone, is the innovator in the space, and will likely focus on the premium end of the market. This opens opportunities for other carmakers to take Google Android’s approach of competing on price and variety to suit a wider range of consumers.