With the expansion of product offerings by automobile manufacturers and the enforcement of stricter state and federal emissions laws, electric vehicles (EVs) are slowly gaining traction in the United States. However, despite the growing EV market, most car buyers still have a high level of skepticism towards EV technology.
Due to stark differences in views on electric vehicles between the two major political parties in the United States, the outcome of the 2024 presidential election will determine whether the promotion of electric cars will be accelerated or delayed.
Over the past four years, the White House and the Democratic-controlled Congress have enacted new policies aimed at increasing adoption rates of EVs in the United States. The most impactful measure introduced in March requires U.S. automakers and dealers to achieve that half of new vehicle sales by 2032 must be pure EVs or hybrid vehicles. Currently, the vast majority of vehicles sold in the U.S. are powered by gasoline.
After experiencing relatively robust sales in 2020 and 2021, dealers are facing challenges in selling new EVs in 2024. Major automakers, including Ford, General Motors, and Toyota, are scaling back their battery-powered EV plans. Analysts interviewed by Da Ji Yuan Times believe this may be because these automakers have realized they overestimated the growth in demand for EVs in North America.
Meanwhile, other parts of the world are also accelerating the adoption of electric vehicles. Industry forecasts predict that as EVs become more affordable and automakers offer a wider range of EV models, global demand for electric cars will continue to rise in the coming years.
The Republican Party’s 2024 platform, led by former President Trump, promises to overturn the so-called “EV mandate” if Trump is elected and the GOP gains power in Congress. The Democratic Party, in its platform, indicates commitment to existing energy and climate policies. If their candidate, Vice President Harris, is elected president and the Democrats gain more seats in Congress, the party is likely to maintain this trajectory.
A global overview report of the automotive industry released by the financial services giant Allianz Group in March suggests that the 2024 presidential election “could be a pivotal moment for the U.S. automotive industry, deciding whether the trend towards electrification will continue or take a significant detour.”
According to the U.S. Energy Information Administration, demand for battery-powered electric vehicles, plug-in hybrids, and electric hybrids has sharply increased since 2019.
As of June, approximately 19% of all light vehicles sold in the U.S. were EVs or hybrids. Battery-powered vehicles currently account for around 7% of total vehicle sales in the U.S.
Stephanie Valdez Streaty, Industry Insights Director at Cox Automotive, stated that 2023 was a record-breaking year for EV sales with 1.2 million units sold. However, Cox predicts that 2024 will be a turbulent year.
“We still see demand for EVs, but the growth rate is not as strong as in the past few years,” Streaty told Da Ji Yuan Times.
Cox Automotive, a subsidiary of Cox Enterprises, is an automotive solutions company focusing on providing vehicle remarketing services to dealerships and digital and software solutions. Cox Automotive owns assets such as Kelley Blue Book and Autotrader.
Rebecca Lindland, Senior Director of Industry Data and Insights at Cars Commerce, told Da Ji Yuan Times that recent market activity indicates a normalization of the market.
Previously, eager EV buyers would start placing orders before the production of EVs began, but now EV sales are essentially the same as gasoline vehicle sales. Lindland said that to win over consumers, EVs need to compete with all other new and used vehicles in terms of price and practicality.
Karl Brauer, Executive Analyst at iSeeCars.com, a car search engine and price aggregator, told Da Ji Yuan Times that the decrease in prices of new EVs and longer time spent at dealerships mean that the EV market has reached a “saturation point.”
“Too much supply and not enough demand,” Brauer said. “Dealers are struggling with EVs stacking up on their lots and are requesting help from automakers to sell them.”
According to current research by analysts, the average price of new EVs in August ranged between $56,000 and $60,000. This price range is difficult for most Americans to afford, as their car budgets are around $30,000.
Brauer suggests that the auto industry may have been too optimistic about consumer interest in purchasing EVs in 2024, leading to an overcapacity situation. Currently, auto executives are cutting production, canceling plans for specific products, or altering EV expansion timetables.
In August, Ford announced the cancellation of plans to manufacture a new battery-powered three-row SUV to improve overall profitability. The automaker will reduce capital spending on pure EVs from 40% to 30% of total capital expenditure in the future.
In July, Tesla, the leader in market share for EVs, informed investors that its revenue in the first half of 2024 decreased by $3.975 billion compared to the same period in 2023. Tesla attributed the revenue decline to the “average selling price decrease” of its vehicles.
Among the Big Three automakers, only Ford disclosed the financial situation of its EV business. General Motors and Stellantis – the manufacturer of Chrysler, Dodge, Jeep, and Ram models – did not provide detailed data. Ford, based in Dearborn, Michigan, stated that the company’s share of EV sales is second only to Tesla.
Ford’s second-quarter financial report released in July showed that its “Model e” segment incurred a pre-tax loss of $2.46 billion in the first half of 2024. This was an increase from the $1.8 billion pre-tax loss incurred by Ford’s “Model e” segment in the first half of 2023. Overall, Ford and its subsidiaries achieved a profit of $3.16 billion in the first half of 2024.
In March, the Environmental Protection Agency announced new national emission standards requiring that the majority of new vehicles sold in the U.S. by 2032 must be pure EVs or hybrid vehicles. This emission rule will come into effect starting in the 2027 model year and will implement stricter standards in the following years.
The Democratic Party’s platform, passed during the National Convention, credits emission regulations and the 2022 Inflation Reduction Act to the Democrats, stating that the legislation’s tax incentives provide up to $7,500 in tax credits for the purchase of a new EV and $4,000 for the purchase of a used EV, leading to a doubling of EV sales.
The White House stated that the 2022 legislation allows the government to spend over $17 billion to establish a network of 500,000 EV charging stations and zero-emission vehicles and school buses, while ensuring that “domestic manufacturers have access to critical minerals and other necessary components to produce EV batteries.”
U.S. Transportation Secretary Pete Buttigieg stated in a May interview with CBS’s “Face the Nation” that there are very few charging stations currently being built. However, he mentioned that with the funding from the Inflation Reduction Act and other climate initiatives, the U.S. will achieve its goals by 2030.
In August, the U.S. Department of Transportation announced a $521 million allocation for the construction of over 9,200 EV charging stations. The funding announcement indicated that there are currently 192,000 public EV charging stations in the U.S.
Ammar Moussa, Rapid Response Director of Harris’ campaign team, shared a comment with the media in August stating that Harris “does not support the EV mandate.”
However, in the Senate, Harris was one of the co-sponsors with Senator Edward Markey of the 2019 Green New Deal legislation. The bill calls for massive adoption of EVs to reduce overall emissions. In an August interview with CNN, when asked about the Green New Deal, Harris stated that her “values have not changed.”
A policy statement released on Harris’ campaign website states that she “will continue to fight for clean air to breathe, clean water to drink, and to rid pollution that exacerbates the climate crisis.”
At the Republican National Convention, Trump stated that he would “terminate the ‘EV mandate’ on the first day in office, saving the U.S. auto industry from complete destruction (currently underway) and saving American consumers tens of thousands of dollars per vehicle.”
Brauer suggests that even if the Democrats win in November, he believes that policies aimed at promoting EV purchases will be reduced or delayed due to the lack of interest among ordinary drivers in EVs.
“If we really think about what the American citizens want, they clearly do not want to be mandated to buy electric vehicles to that degree,” Brauer said. “That’s undeniable.”
The Allianz report states that if Republicans win, Trump is likely to redirect funds currently used to expand EV adoption towards gasoline vehicle manufacturing.
“The momentum for international EV manufacturers and their battery production partners to invest in the U.S. will diminish, while domestic automakers will further abandon EV investment plans,” the Allianz report says.
Valdez Streaty and Lindland both say that incentives provided by the Inflation Reduction Act and similar policies are crucial for driving sales of electric vehicles for both buyers and automakers. Moreover, the U.S. manufacturing requirements written into the Inflation Reduction Act have been instrumental in prompting international automakers such as Kia and Hyundai to set up production facilities in the U.S.
Lindland notes that Tesla CEO Elon Musk’s support for Trump may soften the stance of a potential second Trump administration on EV regulations. Musk endorsed Trump on the social media platform X in July.
Valdez Streaty and Lindland both express that the withdrawal of public investments in charging stations will undoubtedly harm the future viability of electric vehicles.
All analysts agree that the biggest barrier to EV adoption is the lack of public confidence in the U.S. charging network. While the number of charging stations is increasing, most charging points are concentrated in urban areas. Compared to ubiquitous gas stations, public EV charging infrastructure is relatively sparse.
In June, McKinsey & Co., a consulting firm, released a global consumer survey report showing that 49% of U.S. EV owners plan to switch back to gas vehicles. Among global respondents, 35% cited incomplete public charging infrastructure as the reason for abandoning EVs; 24% said they couldn’t charge at home, and 21% expressed concern that charging issues are “too much of a hassle.”
Regardless of the outcome in November, for electric vehicles to truly compete with gas-powered cars, automakers must lower the cost of owning an EV, and improvements must be made to public charging infrastructure.
“EVs have to become affordable,” Valdez Streaty said. “Consumers need to get the right product and experience at the right price.”
Lindland stated that automakers have thus far fulfilled their promises regarding product portfolios. Manufacturers are rolling out battery-driven trucks, SUVs, and luxury cars and increasing range to meet consumer demand.
Most Americans are currently struggling to afford new or used vehicles, Brauer said, citing industry research that shows the typical EV driver is affluent, owning multiple vehicles, including a gas-powered car.
“You can’t tell average Americans who need value for their money to buy the most expensive, least-driven, and highest operating cost vehicle per mile,” Brauer added.