The high cost to purchase an electric vehicle is slowing EVs’ uptake among U.S. consumers, setting back the anticipated adoption curve by a year or more, according to analysts at Bank of America.
“EV demand growth has slowed sharply in 2024, likely due in part to affordability,” according to a BofA Global Research report published Monday. Only 3% of EVs in the U.S. are priced at less than $37,000, according to the research, compared with more than half of gas-powered or hybrid vehicles.
BofA’s analysis is based on the assumption that most U.S. consumers will buy an EV if the price is competitive with an internal combustion engine vehicle. However, manufacturers “are unlikely to achieve ICE-comparable costs on EVs until 2028+,” analysts said. “This means OEMs have little incentive to ramp EV production, despite what might be higher levels of demand at lower prices. ... As such, we expect EV penetration to inch higher from 2024 to 2027, but after 2027 it could start to accelerate.”
The EV penetration rate has averaged 6.8% so far this year, down from 7.5% in 2023, according to the research note. BofA analysts say they now expect EVs to make up about 8% of vehicle sales in 2024, 14% in 2027 and 29% in 2030.
President Biden set a goal for 50% of all new vehicle sales in the U.S. to be electric by 2030.
Earlier this year, BofA Global Research forecast an approximately 10% penetration for 2024, 18% in 2027 and about 33% in 2030, a spokesperson for the firm said in an email.
“The trajectory of EV adoption has been pushed back by a year or more,” analysts said.
Analysts at Bloomberg reached a similar conclusion in a June 12 report.
Electric vehicle markets around the world “are not all traveling in the same direction or at the same speed in 2024,” BloombergNEF said. “Sales of EVs continue to rise globally, but some markets are experiencing a significant slowdown and many automakers have pushed back their EV targets. ... the growth rate is visibly slower than before.”
Developing economies such as like Thailand, India and Brazil are “experiencing record sales as more low-cost electric models are targeted at local buyers,” BloombergNEF noted. And China is the only large market “that has reached the point of consumer-led takeoff for EV sales.”
Policy support for EVs “looks less certain than it did a year ago,” BloombergNEF added. “In the US, EV market jitters inflamed by the upcoming presidential elections helped slow down adoption this year, and by 2027 only 29% of cars sold in the country [will be] electric.”
Despite a potential slowdown, U.S. utilities are expecting the shift to electric transportation to drive significant load growth, as will the electrification of building systems, including heating and cooling; hydrogen production; the growth of data centers and other sources. Reports filed last year with the Federal Energy Regulatory Commission show grid planners expect nationwide electricity demand to grow 4.7 % over the next five years, while 2022 estimates called for just 2.6% growth.
In New England, transportation is expected to be the single largest contributor to electricity demand growth in the coming years, according to a May report from the region’s grid operator. EVs make up only about 2% of all vehicles in New England but by 2033 are expected to constitute 26% of the region’s personal vehicles.
Annual power consumption from EVs in New England is expected to grow from 325 GWh this year to more than 15,000 GWh by 2033, according to the “2023–2032 Forecast Report of Capacity, Energy, Loads, and Transmission” from ISO New England.
