The Near-Term Future of EVs in America

2025 will be the tipping point

Thomas Edison introduced his first electric car in 1912 to America. Ninety-six years later, Tesla brought its first model, the roadster to market. During that time, the internal combustion engine (ICE) ruled triumphant. After 100 years of market dominance, it is only now, in the 2020s, that a scalable EV market is emerging.

The problem with any new technology is that it almost always takes longer to become established than expected. First, the new technology needs to have a reason to grow, then it needs to become price competitive with the current technology. The “why do I need this” question is immediately followed by “why does this new technology cost so much more?”

A clear case in point is the flat-screen TV. I remember attending international TV conferences in the early 1990s, at the tail end of “Japan Inc.” where the coolest thing was a 42-inch flat screen TV by Sony that was priced at $10,000 [$21,000 in 2022 inflation adjusted]. First, the price was excessive, as any new technology can be. Second, there was only limited programming from the Japanese network NHK that was High Def, so why bother buying an HD screen?

So high price and no programming. There was no consumer market. Then competition and technological scaling occurred, and the prices dropped dramatically over the subsequent 20 years. By 2010 the prices had dropped so that a flat-screen TV cost the same or less than the CRT TVs they replaced. Around this time, most programming was shot in HD, so getting an HD screen made sense.

Today the price of a 42-inch smart television is between $200-300 and a 65-inch screen is before $400+. The quality far surpasses the early flat screens of the 1990s So the price is 3-4% of what it was 30 years ago, and the technology is far superior. Most of the programming today is HD, so having a smart HD, flat-screen TV is now essential.

I take the time to profile the TV flat screen history of the last 30 years as we have all lived through it. The parallels to the EV market are clear.

The programming for the TV equals the ability to charge an EV. No charging stations, no way an EV can be used

The technological improvements to the EV – range, and speed to charge- make them practical to consumers as have the smartness and brilliant pictures of TVs.

Competition drives down the price.

There is one big difference that bodes well for EVs, and that is the huge bill passed last year by Congress. The Inflation Reduction Act commits to hundreds of thousands of charging stations, renewed and improved $7,500 credits for purchasing EVs and finally, federally funded further discounts of the car or battery pack is made in America.

The American EV marketplace's recent past, present and future.

Since 2008, the EV market in America has been Tesla. The market share of course started out at 100%, and now, 14 years later, it is only down to 65%. There have been a few other EVs that have generated sales, such as the Chevy Bolt, but it hasn’t been until the 2020s that automotive companies started to roll out EV models. Usually, a single model per company.

Every single major automotive company has stated goals to convert to majority EV sales going forward. The massive downstroke costs are being paid now for a ramping up of the entire industry by 2025.

So now there are multiple alignments for the EV industry in America:

-The Federal Government has stepped up with necessary legislation for both the infrastructure and consumer price-reduction parts of the economic equation.

-California has banned ICE vehicles from being sold starting in 2035. Several states such as Washington, Oregon, Massachusetts, New York and Vermont are expected to do the same

-Tesla, with their 65% market share, just lowered prices both to prompt sales and to lower prices to align with the new federal guidelines. This of course triggered other automotive companies to lower prices as well. EV prices are beginning to be competitive with ICE vehicles.

-every major automotive company in the world has announced multiple model line-ups for 2025. The competition and the competition in price will be brutal. The media will wonder who will win and who will lose in this new realignment of the entire automotive industry. First impressions are lasting, and those that are out of the gate with solid sales will be perceived as leaders in this new market. Companies may initially forgo profits to gain short- and long-term market share.

-the key to the entire industry is the battery pack. It is the most expensive component of an EV, it is the heaviest part of the vehicle – limiting range – and it is the determinate of the range of the vehicle. Billions of dollars are pouring into the battery industry as it is the key to both EV prices and range and also any mode of variable clean energy such as wind and solar. The breakthroughs are inevitable.

Why 2025?

In less than two years, every auto company in the world that sells in the US will have several model EVs for sale. This obviously will spur price competition. In addition, with multiple models, auto companies can break even on the lower-priced models and make it back on the high-end luxury models, which will drive total unit sales.

The economies of scale will kick in as most models sold in 2025 will have been made in new EV-only factories.

All the federal subsidies will help some of the lower-priced models to be lower in price relative to ICE models.

Battery breakthroughs are to be expected.

Manufacturers will be producing some EVs at a lower cost than comparable ICE models

The hockey-stick part of the sales graph has begun. In 2022 the increase over 2021 unit sales was 66% to 810,00 cars sold. This leads me to make the following forecast:

-2023 sales increase over 2022 will be 100% or 1.6 million cars -new and used

-2024 sales increase will again be 100% or 3.2 million cars sold

-2025 sales increase 125% for an annual total of 8 million new and used vehicles sold or 15-20% of total unit sales

2025 is the year I will buy an EV. I drive an ICE car that gets 32/mpg in the city and 36/mpg on the highway. I work from home, so I fill up my tank once a month. From an environmental point of view, it is better for me to drive my current car until 2025 when my current car will only have some 70,000 miles.

So I will be part of that tipping point. It is a good chance that you will be as well.