Public and Private Sector Alignment
The global policy shift to decarbonization provides increasing momentum for the scale of electric vehicles and the energy transition. President Biden signed an executive order on August 5, 2021 that set a 50 percent vehicle electrification goal for sales by 2030. U.S. automakers have shown support for President Biden’s push toward electrification with Ford, General Motors and Stellantis sharing voluntary pledges to achieve 40 to 50 percent of annual U.S. electric vehicle sales by 2030. With alignment from both the public and private sectors, the question is no longer if, but when will EVs become ubiquitous in the U.S.?
Looking at both the growth and limiting factors of electric vehicles in the current state paints a clearer picture of what to expect in the next 10 to 15 years. Although cost is always a major factor to consumers, the lack of electric vehicle infrastructure remains a barrier to convenience, which has slowed adoption. Reaching critical mass to achieve carbon goals will require a transition to renewable energy sources to power them.
Effectively increasing and deploying the level of variable renewable energy (VRE) needed to power the shift to EVs requires the development of large utility-scale batteries. The batteries will provide flexible electricity storage and use for intermittent energy sources like wind and solar. The declining cost of the lithium-ion (Li-ion) battery is advancing utility scale electric storage options. As it stands today with falling Li-ion battery costs, we can expect a significant increase in expected global adoption of EVs by 2030.
The latest predictions show that by 2028 EV sales in Europe will surpass those of other powertrains, a trend that will be repeated in China by 2033 and in the U.S. by 2036, according to a report by Ernst & Young. By 2023, the cost of Li-ion batteries is expected to fall to around $100/kWh—the price point at which EVs are cost comparative to gas-powered cars. By 2025, the price of a 350-mile range EV is projected to drop by 53 percent, making it $8,000 cheaper than the Toyota Camry.
While the $1 trillion bipartisan infrastructure bill passed by the Senate falls way short of President Biden’s original proposal, it lays the groundwork for the EV transition. As it currently stands, this bill is said to be the single largest federal investment in power transmission in history. Details of the bill include: $73 billion to modernize the nation’s electricity grid so it can carry more renewable energy and $7.5 billion to develop electric vehicle charging stations across the country.