What will be the tipping point in the electric vehicle market?

The U.S. automotive market is far from mass adoption of electric vehicles (EVs). However, as the vehicles become cheaper and charging infrastructure becomes more widespread, we know that we’re fast approaching a tipping point.

The big question is: when will that tipping point happen?

This was one of the big questions that Alex Yurchenko, Senior Vice President of Data Science at Black Book, addressed during our inaugural EV Summit. This blog will walk through some of his observations, including when we can expect this tipping point to occur.

Electric vehicles are part of a wider onslaught of new trends in the vehicle market. These trends include digital retailing, digital wholesaling, advanced telematics, and more.

So if there’s one thing we can predict with certainty, it’s that the market tomorrow will look very different from the market today.

EVs, specifically, have only come into the market over the past ten years. Until 2017, there were only 100,000 EV sales per year. That may seem like a lot, until you realize that there are 16 to 17 million new vehicles sold each year.

In 2018, the success of Tesla started to change the trend; EV sales tripled that year, although most of that success is exclusively Tesla’s. However, this signaled to the broader market that EVs presented lots of opportunity, so investments in EV development grew drastically.

Now, there are over 300 EV model types, and by 2023 every major OEM will have some entrance into the EV market. That’s a massive shift over a relatively short period.

Although OEMs are ramping up EV production very quickly, Black Book predicts a more gradual growth in market sales. This is because of several key limitations:

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  Limited charging infrastructure that will likely not be built up until 2025
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  Lack of robust government support (although that has changed with the most recent administration)
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  Lack of commercial investments, as most EV sales are going to retail and consumer purchases rather than corporate fleets
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  Price differences between EVs and ICE vehicles (although that gap is closing fast)
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  Technological limitations, like battery life and range, which cause anxiety among consumers

These limitations impact both the consumer market and corporate fleets.

Based on this information, the tipping point of the EV market will be a two-fold event:

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  Infrastructure will become more widely developed
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  Consumers will no longer have to pay a premium to purchase an EV

Looking at trends in both areas, it’s clear that we’re on our way to that tipping point, just not yet.

This is actually a good sign for your fleet. If you wait until EVs are in the market in bulk to get started, you’re going to end up playing catch up. By starting now, you can stay ahead of the change and prepare yourself for the inevitable market shift.