In a world beset by economic and political uncertainty, it is remarkable to note the strong growth of electric cars, at least in the larger economies. Battery electric vehicles (BEVs) are rapidly emerging as a real alternative to gasoline and diesel in markets such as Europe, China, and the United States.
All show great growth rates and great potential for the coming years. But if you look at the detail by state (in the US) or by country (in Europe), the story can take on different perspectives.
Data collected by JATO show that demand for electric vehicles is “charging” at different rates depending on the market. How big is the gap?
We all know that Norway is a paradise for electric vehicles, which accounted for 77 percent of total registrations in September. The incentives, benefits, and convenience of buying electric explain this result. In Norway, it is cheaper to buy an electric car than a gasoline or diesel car. Further behind are the neighboring Scandinavian countries, where, too, demand is strong partly because of incentives and, in general, because the population has higher purchasing power than in other European states.
Northern Europe, along with other solid economies in the region, is what I call the fast-charging Europe. These are the four Scandinavian countries, Germany, Austria, and Switzerland; France, Benelux, the United Kingdom, Ireland, and Iceland. Together, they account for a little over two-thirds of the volume of car sales in Europe.
Low-speed Europe is generally composed of economies with lower per capita income. It includes all Mediterranean countries except France, Portugal, Central Europe up to Poland, and the three Baltic states.
While the former group of countries is rapidly adopting electric vehicles, the latter is lagging behind. For example, in the third quarter of 2022, the market share of electric cars in fast-charging countries was 15 percent. In contrast, the share drops to 3.8 percent in slow-charging markets.
Other factors that explain the gap, in addition to consumer income, are lack of infrastructure, lower incentives, and gasoline prices.
ZEV States Ahead In The US
As in Europe, there are many of the same differences between states in the US. California has led the electrification race by far, thanks to strict regulation, attractive incentives, and the role of new technology companies, including Tesla.
The Zero Emission Vehicle (ZEV) program was designed to meet California’s long-term emissions reduction goals by requiring automakers to offer for sale a specific number of the cleanest cars available.
As of August 2022, 14 states have adopted both California’s ZEV program and Low-Emission Vehicle (LEV) standards: Colorado, Connecticut, Maine, Maryland, Massachusetts, Minnesota, New Jersey, Nevada, New Mexico, New York, Oregon, Rhode Island, Vermont, Virginia, and Washington.
And guess what? Electric car adoption in these states is significantly higher than in the rest of the country. In the second quarter of 2022 (latest data available), the market share gap between ZEV and non-ZEV states was 8.7 percent versus 3.0 percent. Electric car sales in the 15 ZEV states accounted for 62 percent of the country’s total. In contrast, they accounted for 36 percent of the total light vehicle market in the US.
The author of the article, Felipe Munoz, is JATO Dynamics Automotive Industry Specialist