US electric vehicles market saw record sales in 2016

Reading time: 5 minutes
23 February 2017

NEW YORK: The plug-in electric vehicle (PEV) market in the US achieved record sales in 2016 and is set to continue that growth this year with government support, business uptake, and consumer demand, as electric mobility continues to be a driving force of global climate action. 

This growth marks a significant opportunity for US business leaders, state governments, and consumers to take a leadership role in clean energy technology proliferation moving forward.

EV uptake will be an important piece of the US energy transition to meet climate targets and decarbonize the economy in the coming years. The US is one of the largest automotive markets in the world, as well as the second largest vehicle producer in the world.

The US is also currently the second largest market for EVs. This strong economic potential puts the US in the position to take on a strong leadership role in shaping this crucial growth market.

Record sales

The PEV industry closed out 2016 with record overall sales, including a 37% increase in total sales from 2015, and the highest ever sales in a single month in December. This dramatic growth is expected to continue in the next few years, and in such a large vehicle production base and consumer market, this will help to facilitate greater transition to EVs globally. A recent study conducted by Navigant Research projects that the American PEV market will grow by 60% in 2017.

The increasing market demand has in turn spurred greater diversification within the industry over the past few years, with over 31 models on the market in the US in 2016 from 18 different brands, including RE100 members BMW and General Motors.

As the battery range of vehicles increases, and prices come down, EVs are becoming more attractive to consumers: in 2016, a study by the Massachusetts Institute of Technology (MIT) based on GPS data and a transportation survey of American households found that “roughly 90% of the personal vehicles on the road daily could be replaced by a low-cost electric vehicle available on the market today”. Additionally, “…the overall cost to owners transitioning to EVs - both purchase and operating costs - would be no higher than vehicles with combustible engines”.

Further growth will likely be aided by positive feedback among American consumers who already own EVs. In last year’s Consumer Reports ratings, three EV cars - the Tesla Model S, the Chevy Volt and the Nissan LEAF- topped the list for most satisfying consumer car.

Corporate commitment

Many companies are also supporting EV uptake by their staff by offering workplace charging. Over 72 other companies - including current RE100 members Bank of America, Biogen, Bloomberg LP, Facebook, GM and Kaiser Permanente - have demonstrated their commitment to EV proliferation by joining the US Department of Energy’s Workplace Charging program.

Reactions from employees have been overwhelmingly positive; when installed PEV charging stations, for example, they were full within a year and 60% of employees indicated an interest in purchasing a PEV. Employees with PEVs cited Zappos’ efforts to install charging stations as the reason they decided to purchase one.

Beyond growing demand for PEVs among private individuals, companies are also taking bold steps to transition their fleets to EVs. For example, Coca-Cola’s delivery fleet already includes over 650 hybrid trucks.

With one of the largest alternative fuel fleets in the US, UPS currently deploys over 600 electric and hybrid electric delivery trucks. Through a partnership with the US Department of Energy, UPS is focusing on new vehicle deployments in targeted areas of the US (such as Houston, Texas) with an emphasis on improving air quality in these areas.

Health implications

Considerations around air pollution and public health are an important driver for EV uptake: health impacts from road transport emissions are estimated to cost OECD countries almost US$1 trillion annually.

In US cities such as New York, where particulate matter from vehicle exhaust leads to around 2,700 premature deaths per year, EV use has become an important solution in both health and transportation policy. The city plans to add 2,000 EVs to its municipal fleet by 2025 - which would be the largest EV fleet of any US city - and has plans for a one-third electric taxi fleet by 2020. Similarly, the mayors of Los Angeles, San Francisco, Portland and Seattle announced a new goal of purchasing a total of 24,000 EVs together for their public fleets in January.

New York has also already taken steps to limit emissions from charbroilers, food trucks and refrigeration vehicles through air regulations requiring use of only natural gas or renewable fuel. The city may eventually follow the example that has been set by the mayors of Paris, Madrid, Mexico City and Athens, who have made commitments to cut pollution by banning diesel vehicles from city centers by 2025.

Leadership at state level

Strong leadership on EV uptake is also evident at the state level, with the State of California pursuing a target of putting 1.5 million zero-emission vehicles on its roads by 2025. The state also has a comprehensive action plan which includes substantial subsidies for EV purchases and charging infrastructure installation by individuals and companies, as well as a range of other incentives such as lower utility rates, discounted or free parking, tolls and High Occupancy Vehicle lane incentives.

California has also led the way in supporting industry growth from the manufacturing side. The California Air Resources Board’s (CARB) Advanced Clean Cars program has produced Zero Emission Vehicle (ZEV) regulations requiring manufacturers to produce increasing numbers of battery electric and fuel cell electric vehicles, as well as plug-in hybrids, through 2025. Many other US states - including Connecticut, Maine, Maryland, Massachusetts, New Jersey, New York, Oregon, Rhode Island, and Vermont - are following CARB’s example and initiating similar programs.

by Rachel Harrington-Abrams

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