Electric vehicle (EV) start-up Rivian made an impressive $86 billion IPO on November 10, once again putting the fast-growing EV market in the spotlight.
Just two months prior, Rivian produced the world’s first electric-powered pick-up truck—the R1T. It’s now available for preorder starting at $67,500.
The EV manufacturer has piqued the interest of not only the public but major investors like Amazon, who have invested $1.345 billion in the company and reported ordering 100,000 electric delivery vans to be supplied by 2030.
So what does this mean for the future of cars? Are gas-powered vehicles on their way out?
The State of US Fossil Fuels
One of the major forces behind developing EVs is an effort to reduce carbon emissions. Fossil fuels that produce carbon dioxide (CO2) are the largest driver of global climate change.
Crude oil, also known as petroleum, accounts for 43% of US fossil fuel consumption. It’s the oil that is refined into gasoline and diesel for powering cars.
In contrast, EVs produce zero tailpipe emissions. So naturally, they are seen as a beacon in the fight to reduce fossil fuel emissions.
However, the electricity that powers EVs must be produced by power plants, which often create their own carbon emissions.
Carbon pollution from power stations varies by location and how the electricity is generated. For example, many burn coal, natural gas, or nuclear energy, but others rely on renewable energies like wind and solar. But overall, EVs are still responsible for lower levels of greenhouse gases (GHG) than gasoline cars.
In 2020, fossil fuel consumption hit its lowest level in 30 years. This was in part due to the economic fallout from COVID-19 and warmer temperatures that reduced the amount of fuels burned for heating. But the drop in fossil fuel consumption may have also resulted in part from increased EV adoption.
The potential of EVs to impact net carbon emissions is gaining widespread attention. Some studies show that reaching a state of 100% zero-emission heavy-duty truck sales by 2050, for example, could lead to a total nation-wide reduction in emissions of 1% by 2035 and 2% by 2045.
Not surprisingly, nations are pulling together to collectively reduce our carbon footprint. In 2016, nearly all 195 countries, including the US and China, signed the Paris Agreement to reign in global warming. Though President Trump briefly withdrew the US from the agreement, President Biden has since reentered it and pledged to reach net zero carbon emissions by 2050.
The State of the US Electric Vehicle (EV) Market
As of 2020, there were almost 1.8 million registered electric vehicles in the US. About 231,000 were sold in 2020 alone. Though that still only accounts for about 2% of the U.S. new-car market, the sale of EVs is steadily growing.
Right now, electric vehicle and clean energy company Tesla dominates the EV market. Despite promising newcomers like Rivian, Tesla still made 79% of all new EVs in 2020. Its popular Tesla Model 3 was introduced in 2017 and holds the record for the overall best-selling EV in the world.
Many legacy automakers like General Motors, Ford, and Volkswagen are following suit by pledging to introduce new EVs to the market and even retire old gas-powered models.
Much of the growth of the EV market can be attributed to state support. For example, the federal government subsidizes EV purchases by offering tax credits of up to $7,500. California also introduced the popular California Clean Vehicle Rebate Program (CVRP) for EV purchase rebates of up to $4,500.
With both the state and private corporations backing the transition to EV, we are seeing electrification start to disrupt the auto industry as we know it. Many predict that the EV market is at the edge of the S-Curve of innovation, about to accelerate toward major growth.
Ultimately, a combination of changes in technology, state regulation, and self-reinforcing consumer behavior have driven the electric transformation. As EVs go mainstream, more drivers will be drawn toward sustainable driving options.
The Challenges of Widespread EV Adoption
Despite its bright future, the EV market still faces some critical challenges.
Even if we reach a point of total car sales consisting of only EVs, there will be a slow fleet turnover. Traditional gas vehicles last for about 200,000 miles, or around 12 years. To turn over the entire vehicle fleet to EV would take about 15 years.
Car dealerships also have less incentive to sell electric vehicles because EVs don’t require as many auto repairs, a main source of dealer income.
In addition, buying EVs directly from auto manufacturers is illegal in most states. And dealers lobby hard to keep it that way. That’s why Tesla had to negotiate with many state governments to get special authorization to sell their vehicles to consumers directly.
Finally, a major obstacle to widespread EV adoption is developing a supportive charging network. At most, EVs can cover 350 miles on one charge. To support a full fleet of EVs will require a massive infrastructure overhaul to install charging stations across the nation. Transitioning away from traditional gas stations will take time.
Though we still have a long way to go before reaching a net-zero transportation landscape, the EV market is still growing rapidly and shows promising signs of accelerating the much needed global energy transition.