Biden’s climate spending will kick-start the electric vehicle market, according to a new forecast from BloombergNEF.
According to a report by BloombergNEF, just over half of passenger cars sold in the US will be electric vehicles by 2030, thanks in part to consumer incentives included in the $374 billion in new climate spending enacted by President Joe Biden.
Those incentives, including a point-of-sale tax credit of up to $7,500 on a new EV purchase, are likely to accelerate the pace of adoption, BloombergNEF analysts found in the report. Prior to the passage of the Inflation Reduction Act (IRA) in August, EV sales forecasts for 2030 to 2030 were 43% of the U.S. market. With the climate spending measure, that estimate was revised upwards to 52%.
According to BloombergNEF’s latest forecast, the US is on track to meet a key target Biden set last year, which is to have half of all cars sold in the US by the end of the decade.
In 2021, electric vehicles accounted for less than 5% of sales in the US, below the global rate of nearly 9% and well below the adoption rate in countries like China, where plug-ins currently account for about 24% of sales of new cars. Norway was the first country to surpass sales of combustion-engine electric vehicles last year. According to BloombergNEF’s revised forecast, the US will surpass the global average in 2026 instead of 2028.
The three automakers with the most domestic battery production coming online in the near term — Tesla, GM and Ford — will benefit the most from the new law, according to the report. At the urging of West Virginia Senator Joe Manchin, the IRA is limiting the entire $7,500 credit to vehicles assembled in North America, with additional phased thresholds for battery production in North America.
In the new report, analysts noted that these requirements “take time to adjust,” especially as automakers struggle with critical mineral and battery regulations. But those challenges are expected to diminish over time, a shift that could also bring more electric cars into an affordable price range.
“In a year or so there shouldn’t be too much of a difference” [in sales]BloombergNEF electric car analyst Corey Cantor said. “Later in the decade, we expect not only the tax credit for electric vehicles, but also the tax credit for battery production for a stronger reduction in the cost of electric vehicles.”