The New York Times reported that electric vehicles were 5.6 percent of new car sales from April through June—twice the share a year ago. During those months, new car sales declined 20 percent as fewer vehicles were available for sale due to shortages of semiconductors, which are needed in greater quantity for electric cars than for gasoline vehicles. New vehicle prices skyrocketed to record levels –over $66,000 for electric and luxury vehicles.  Prices also soared for lithium and other raw materials needed for electric vehicle batteries. According to Bloomberg’s analysis of 19 countries that have made the EV pivot, once 5 percent of new-car sales go fully electric, a tipping point has been reached for mass adoption. But is this measure an anomaly here in the United States because of the huge decline in total sales or is it a representative finding of the other countries? Time will tell.

The EV Market

Ford sold 15,300 electric cars from April through June, a 140 percent increase from a year earlier. The switch to electric vehicles requires automakers to fundamentally remake their factory and supply networks. To make that transition, they have begun underwriting makers of advanced batteries and are dealing directly with mining companies to secure scarce raw materials that are becoming more expensive and require years of investment to develop their supply chains. Ford, for example, is planning a $5.6 billion complex near Memphis to build electric vehicles. Carmakers and suppliers announced plans to invest more than $500 billion worldwide through 2026 to upgrade their factory networks and supply chains. It will take several years for manufacturing capacity to meet demand if these trends continue.

Still, the rising cost of electric cars and the availability of charging stations are impediments to electric vehicle penetration. Electric cars are more expensive than their gasoline counterparts and are out of reach for many buyers, even when fuel savings are factored in. The average price for an electric vehicle in the United States is about $66,000, compared with $46,000 for all new cars, partly because the cost of batteries increased in price due to shortages of raw materials.  Lack of public chargers, especially for apartment residents who do not have garages or private driveways where they can plug in, is a huge impediment. While numerous companies are competing to build networks and the Biden administration is providing funding, the number of stations is less than desirable. Vehicle range and the time it takes to charge are also factors to adoption.

U.S. Lags Europe and China in EV Sales

Battery-powered vehicles account for more than 10 percent of new cars sold in Europe and around 20 percent in China. In those countries, sales are impacted by government quotas and subsidies and there is a greater selection of lower-priced models. In fact, China’s best-selling EV is priced at around $5,000.  In the United States, government policy also plays a large role in that federal tax credits of $7,500 have been offered to EV buyers, 50 percent more than the entire cost of China’s entry level EV.  However, the Biden administration’s attempt to offer electric car buyers tax credits worth up to $12,500 has not been approved by Congress. Senator Joe Manchin recently announced that he was not in favor of spending on Biden’s climate and tax proposals, given rapidly increasing energy costs and the highest inflation in 40 years.

In California, manufacturers are required to sell a certain number of zero-emission vehicles, or buy credits from those that exceed their quotas, which shifts the burden to purchasers of internal combustion engine vehicles.  California has nearly 40 percent of the electric cars on the road in the United States due to this policy and the fact that gasoline prices are over a dollar more than in the rest of the nation due to their unique formulation of fuel required, limited refineries and tax structure.

Tesla is a Leader in the EV Market

Tesla delivered more than 254,000 vehicles in the second quarter, down from 310,000 in the first quarter because of shutdowns and supply chain problems that affected its factory in Shanghai. Tesla sales in the second quarter were up 26 percent from a year earlier. The company built more cars in June than ever in its history, which may be a sign that supply problems are easing. But, Tesla faces intensifying competition in China, which has the world’s largest car market. BYD, a Chinese automaker that also produces batteries, sold 70,000 pure electric vehicles worldwide in June alone. In Europe, Tesla trailed Volkswagen, Stellantis and Hyundai/Kia in electric vehicle sales during the first five months of 2022 despite Tesla’s Model 3 and Model Y remaining the most popular electric cars in Europe. It is expected that Tesla’s share of the market will decline as more electric models come on the market. Bank of America predicts that Tesla’s share of electric car sales worldwide would drop to 11 percent by 2025, from 70 percent last year.

The Nissan Leaf was one of the first electric vehicles to be mass produced, but the model’s U.S. sales totaled only 3,300 during the second quarter, a 30 percent decline from a year earlier. Nissan is replacing the Leaf with the Ariya, an electric S.U.V. that will go on sale in the fall. General Motors had to recall all of its electric Bolts last year due to a risk that the batteries could catch on fire. G.M. sold fewer than 500 Bolts in the first quarter of 2022, but sales rebounded in the second quarter to 7,300—still 20 percent less than the second quarter of 2021.

Are EVs “Cleaner” Than Gasoline Cars?

Using a model that calculates the lifetime emissions of vehicles developed by the Argonne National Laboratory, it was determined that a driver would need to travel 13,500 miles before the EV was “cleaner” than a gasoline vehicle. The model includes thousands of parameters from the type of metals in an electric vehicle battery to the amount of aluminum or plastic in a car. The manufacturing of EVs generates more carbon than combustion engine cars, mainly due to the extraction and processing of minerals in EV batteries and production of the power cells. The payback period depends on factors such as the size of the EV battery, the fuel economy of a gasoline car and how the power used to charge an EV is generated.

The 13,500 mile figure was based on a Tesla model 3 driving in the United States, where 23 percent of electricity comes from coal-fired plants, with a 54 kilowatt-hour battery and a cathode made of nickel, cobalt and aluminum compared to a gasoline-fueled Toyota Corolla weighing 2,955 pounds with a fuel efficiency of 33 miles per gallon. It was assumed both vehicles would travel 173,151 miles during their lifetimes.

If the same Tesla was being driven in Norway, which generates almost all its electricity from hydropower, the break-even point would come after just 8,400 miles. If the electricity to recharge the EV comes entirely from coal, which generates the majority of the power in countries such as China and India and even Poland, the break-even point would be at 78,700 miles to reach carbon parity with the Corolla, according to Argonne’s Greenhouse Gases, Regulated Emissions and Energy Use in Technologies (GREET) model.


It is questionable whether the EV market in the United States is at a tipping point due to the huge impediments inherent in the EV market, including cost of the vehicle, range, charging time and charging station availability. It is quite possible that escalating costs for all vehicles is shrinking the market of available buyers, and this will be made worse by rising interest rates. Further, the Argonne model shows that EVs are not cleaner in manufacture and travel if fossil fuels are fueling the power sector until a huge number of miles have been recorded. China and India both generate a majority of their electricity with coal as do some other nations such as Poland. With the cost differential being a sizable amount and Biden’s tax credit of $12,500 unavailable, the impediments to EV penetration still seem to be a major issue to achieving a tipping point that truly matters.

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