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Global EV Transportation Review

Key Regional Markets

United States

The US electric vehicle market stands to reap significant benefits from federal policy incentives rolled out for the industry. Under the provisions of the Inflation Reduction Act, there are incentives available for the entire electric vehicle ecosystem which makes for a favorable outlook for attracting investments in the industry. The investment announcements indicate a bullish outlook shaping for the battery manufacturing and vehicle manufacturing, though the capacities are far from commissioning. A strong demand and sales momentum in the electric vehicles helps maintain the favorable outlook.

GDP (Current Prices) USD (2021)

22,996.08 bn

GDP Growth Forecast (constant prices) (2021-2025)


EV Penetration

5.6% of the total new passenger vehicle sales in 2022

EV Target

50% share of electric vehicles in total new passenger vehicle sales by 2030

Planned Year of Phasing Out ICE Vehicles

No federal-level targets

GDP Source: IMF, World Economic Outlook

EV Penetration and Trend

Source: Experian Information Systems

The US market for passenger electric vehicles is gradually inching towards a tipping point. While estimates vary across the industry research reports tracking the sales, there is a convergence in insight – pointing to an acceleration. By end-2022, electric vehicle penetration for passenger segment stood at 5.6% (Kelly Blue Book), marking a sharp contrast against 1.9% in 2019. The demand for such vehicles is already established even as the supply-side seeks to get its act together in terms of the models, price points, and components among others. Over 60% of the sales continues to be skewed to one make of electric vehicle (i.e. Tesla).


While the short-term macroeconomic challenges of rising interest rates and inflation may slow down the growth momentum, the sale of electric vehicles are likely to find a greater thrust from the rapid product launches across automakers. The impact of Inflation Reduction Act however is yet to be assessed for the specific models which qualify for the available incentives. Once clarified, the incentives could catalyze the already high demand.

An equally steady demand-led growth could be found in the electric bus segment. So far, the electric bus adoption has been at a nascent stage, especially in public transit. The situation appears to be changing. It shows in the rise in absolute number of units in the public transit fleet (24% rise by end-2021), and the rise in penetration of such buses over the years. 

Source: American Public Transportation Association

While the recent federal incentives help, a bigger role is that of the cities and municipalities propelling the shift to a decarbonized public transportation network.

Micromobility is another segment where battery-based platforms have an increasingly important role. In this regard, the growth in various platforms such as docking or dockless bikeshare and e-scooter systems has been varied. According to the US Bureau of Transportation Systems, as of July 2022, there were 45 dockless bikeshare systems serving 35 cities. The e-scooter systems have had significant growth – reaching 300 in 2022 (158 cities), as compared to 135 in 2018 (58 cities).

Charging Infrastructure

Note: Data point shown for 2022 was sourced as of mid-January 2023
Source: Alternative Fuels Data Center

The trend confirms a rapid growth in US electric vehicle charging infrastructure, as the number of stations rose at a CAGR of 24% during 2018-2022. Yet, an even faster growth is warranted to support the emerging electric vehicle adoption across the country. Further the required growth must be spread out more evenly than the current levels. The state of California has the largest number of charging stations, with more than the combined capacity of the next three states in the ranking (New York, Florida, and Texas). Most of the country’s charging infrastructure is placed in the West and East coast regions. The capacity is also skewed due to the concentration of the public charging facilities in high-income urban areas.

The charging infrastructure supply in the US is currently a mix of facilities available through automakers’ proprietary charging units, standalone charging facilities, residential and public facilities. Progressively the skew will need to be addressed. The US government’s IRA (Inflation Reduction Act) is one important step in this regard due to the emphasis on equitable provision and standardization in technology and equipment. Standardization in the prices and charging speeds are other areas where there is significant scope of standardization.

The battery industry is meanwhile finding significant traction with the slew of investments announced in the recent times. The federal policy incentives combined with those of the respective states helped build the momentum. The existing battery manufacturing capacity (about 44GWh) is largely led by Panasonic whose manufacturing is undertaken in conjunction with that of Tesla for the latter’s capacity demand.

Policy Regulation

The Bipartisan Infrastructure Law, (or the Inflation Reduction Act (IRA)) is the most significant change in the policy framework impacting electric vehicles and its related sectors (such as battery supply). There are other significant policy steps aimed at promoting the indigenous industrial base which potentially impacts the electric vehicle ecosystem. A common thread across such recent policy pronouncements has been the need to incentivize investments in the face of global competition.

The IRA offers a package of incentives. From 2023, the electric vehicle manufacturers won’t be subject to the 200,000 units cap on sales to avail the clean vehicle tax credit. This eases the constraint for many of the leading automakers such as Tesla and GM which had met the mark ahead of schedule last year. Also, the cap helps restore some of the relative competitiveness against the imported vehicles. Furthermore, the new vehicles will be eligible for a $7,500 tax credit at the point-of-sale. This credit is bifurcated in two parts, namely the critical mineral and battery components – both of which need to be fulfilled in terms of their sourcing requirements.

IRA’s local sourcing requirements are the most notable, for the larger ramifications it has on the industry. The norms require indigenous sourcing of battery components for the vehicles manufactured after 2023. Also, over 50% of the battery component manufacturing and assembly should be in North America starting 2023, with this share rising by 10% every year through 2028. As a corollary to these regulations, all the vehicles’ final assembly is to be in North American facilities.

The IRA provisions also include the commercial electric vehicles in the tax benefits. Starting 2024, clean commercial vehicles will be eligible for tax credit equivalent to 30% of the vehicle cost or the difference between the cost of such vehicle and its conventional engine counterpart.

Five-year (FY 2022-26) National Electric Vehicle Infrastructure Funding by State (USD million)

The federal policy framework devotes notable attention towards the charging infrastructure. This not only involves funding the infrastructure build-up, but also incentivizing the direction of such a growth. In June 2022, the US Department of Transportation (DoT) proposed minimum standards and requirements for the charging projects’ funding.

DoT’s $5 billion National Electric Vehicle Infrastructure (NEVI) Formula program makes funding available to states for development of charging stations and the related interconnected network for data collection, access, and reliability. Up to 80% of the project costs are covered through the budgeted allocation. The funds are distributed through the Federal Highway Administration (FHWA) based on the outlay of each fiscal year till 2026. The charging stations funded under such a scheme are required to meet certain criteria such as non-proprietary technology, amenable to open access payment methods, be publicly available or available to the authorized commercial motor vehicle operators from more than one company and to be located at FHWA- designated alternative fuel corridors.

At the state-level, as of April 2022, there were at least 45 states and the District of Columbia offering an incentive for electric vehicles either through a specific utility or through legislation. The incentives include either tax benefits or rebates for meeting fleet acquisition targets, exemptions from emission testing or reduction in the utility time-of-use rates.

Another important federal legislation that adds fillip to the overall industry landscape is the enactment of $280 billion Creating Helpful Incentives to Produce Semiconductors and Science (CHIPS) Act of 2022. The CHIPS Act is aimed at enabling investments in the US domestic semiconductor industry. While this is still in the longer-term, the enabling provisions stand to potentially impact the electric vehicle industry due to the significant technology spillovers involved in the process.

Market Opportunity

The demand across the electric vehicle manufacturing chain is driving investments from global players. The planned investments are led by the incumbent original equipment manufacturers, automakers, technology providers, startups, and strategic joint- ventures between the automakers and battery manufacturers. The traditional automakers stand out for the scale of investment commitments made. Ford Motors has a $35 billion investment plan through 2026 to expand the electric vehicle production, while GM and LG together will avail of a $2.5 billion Department of Energy loan for three production units.

Source: NPR

The most important development to note in the planned or announced investments is the emerging pipeline of Gigafactories, many of which are clustered in the Midwestern and Southern parts (aligned to major automakers’ production base). The geographical concentration of upcoming Gigafactories (and their related ancillary units) is also being increasingly referred to as the ‘battery belt’. Besides proximity to the automakers’ units, some of the key factors driving the Gigafactory capacity locations include energy costs, workforce availability and liveability. The hosting states are, at the same time, extending benefits to competitively attract the investments. An example in point is Tennessee’s $884 million incentive package for Ford Motor’s planned capacity.

There is a spike in the planned investments for batteries and electric vehicles. The reason is the Inflation Reduction Act’s tax credits for indigenous electric vehicle components. The policy objective of attracting investments in the country has also effectively meant a competitive posture against the similar investment destinations in European and other countries. Since IRA’s enactment, capacity announcements rose 35% year-on-year (as of December 2022) in the US, against 17% in Europe for the same period. A related point of note is that IRA discourages Chinese investments, with the result that the South Korean and Japanese origin companies are seeking to avail of the benefits.

Policy support is also propelling select sub-segments in the overall electric bus segment. There is federal and the state level push to decarbonize the school bus fleet. The US Environmental Protection Agency’s (EPA) Clean School Bus Program enables adoption of low-emission or zero-emission buses. It has a $5 billion outlay for 2022-2026, under the federal infrastructure law (IRA). About $965 million was allocated for the budget year starting October 1, 2022. Independently, states have enacted legislations for school bus electrification. As of July 2022, there were 38 states placing clear commitments for electric school bus procurement. New York was the first state (as of April 2022) to target 100% zero-emission school buses by 2027. Since then, notable examples are of Connecticut, Maryland, and Maine with targets defined in fleet replacement. For many suppliers/ manufacturers, this has opened a significant market opportunity. In May 2022, Blue Bird Corporation reported its largest ever order size of electric school buses.

Partnerships and Commercial Arrangements for Charging Infrastructure (Illustrative)

Partnership Entities Description
Hertz and BP MoU signed in September 2022 for a national network of charging stations under the BP Pulse brand.
Daimler Truck North America, Nextera Energy Resources, and BlackRock Renewable Power MoU in January 2022 for fast-charging network to cater to freight transportation. Initial funding was about $650 million.
Volvo Group and Pilot Letter of Intent signed in November 2022 for medium- and heavy-duty electric trucks’ charging infrastructure.
Enelx and Hion Distribution Partnership agreement as of August 2022 for the construction and rollout of smart EV charging stations across the US.
Nikola Corp. and Chargepoint Partnership announced in November 2022 that will enable Nikola customers’ access to ChargePoint locations.

Note: MoU: Memorandum of Understanding
Source: Press releases and news reports

Similar massively sized orders are in line for the commercial electric vehicle segment. In December 2022, the US Postal Service announced plans to acquire at least 66,000 electric delivery vehicles. The planned acquisition, to be undertaken through 2028, is part of the overall scheme of ageing vehicle fleet renewal. The total investment is expected to reach $9.6 billion, including $3 billion from the IRA funding.

A policy push is similarly behind augmenting the critical charging infrastructure needed to accommodate the upcoming transition in drivetrain. The Infrastructure Law’s budgeted outlay sets the base. The demand for capital expenditure is much higher than this and necessitates mobilizing private investments. Beyond the large-scale federal investments, companies are formalizing joint ventures and partnerships to tap into this segment.

Proprietary charging is another segment in the US electric vehicle ecosystem. The automaker Tesla has had an early mover advantage in this regard. A few other companies joined the fray to match the network coverage. The trend may however face other counteractive forces, such as the standardization of charging network protocols (as planned in the US government funded schemes).

Proprietary Charging Networks of Automakers

Company Charging network (existing / planned)
Tesla A DC-based fast-charging network (branded as ‘Superchargers’) of 1,400 stations across the US. The company is considering opening this network up to other electric vehicles.
Rivian A two-fold approach involving an ongoing rollout of DC-based fast-charging stations (branded ‘Rivian Adventure Network’) and Level-2 charging network (‘Rivian Waypoint Network’).
Porsche In May 2022, the company announced its plans to build its branded proprietary charging infrastructure. This will be undertaken even as the company already has partnerships with third-party charging entities for the provision of infrastructure.
Mercedes-Benz North American region. The company will be partnering ChargePoint and MN8 Energy for the planned rollout.

Source: Press releases, company websites


The US federal government’s policy incentives drastically changed the outlook for the electric vehicles in the country. Most of the leading industry reports revised their respective estimates upwards, to reflect the boost in adoption of electric vehicles, especially in passenger vehicle sales. The projections appear to concur with the US government’s stated goal of achieving electric vehicles sales share of 50% by 2030. At the same time, it is also notable that the US government stopped short of banning the sale of new internal combustion engine vehicle sales. This may hinder the targeted net-zero emission of 2050. Overall, the US market’s progress is likely to lag behind that of the European markets due to the latter’s aggressive steps in effecting the transition.

The charging infrastructure will come into a sharper focus than before, as rising number of vehicles could exert pressure on the charging network density. NREL’s projections suggest a sharp decline in the density of the fast-charging infrastructure, which is otherwise considered critical in the public charging segment.

Source: BNEF (reported in Bloomberg News)

Key issues such as standardization of the technical standards, infrastructure sharing and access, public-private partnership and the timeliness of capacities will determine growth contours of this segment. It is notable that most of the projected charging infrastructure investments in the US market is in the private / residential segment. The public charging segment however may be crucial for the electric vehicle sub-segments in freight, public transit and related heavy-duty platforms.

Macroeconomic uncertainties could act as a potential dampener. The electric vehicle industry, for all its strong fundamentals, is in infancy. By early 2023, overall auto sales in the country were reported at their lowest levels in a decade and reflected partly the challenges arising from a recessionary demand pressure. A persistent demand slowdown could act as a stressor on the electric vehicle industry.

Charging Infrastructure Density Projected by 2030 (ports per 1,000 vehicles)

Charging Port Level Existing Ratio By 2030
DC fast-charging 9.5 1.8
Level-2 41.5 40.1

Note: The projected ratio is based on NREL’s estimate of 15 million electric vehicles by 2030
Source: NREL