Key Takeaways
- Electric vehicles are gaining popularity and market share. In Q2 2022, EV sales accounted for 5.6% of the total auto market (up from 2.7% in Q2 of 2021).
- Clean energy and improved performance are driving people to make the switch to electric.
- Government incentives continue to buttress the future of all things electric.
As the cost of gasoline soared this summer, it only helped to underscore the potential of electric vehicles, still the primary consumer bulkhead for the new electric economy in the U.S. Although gasoline prices are trending back downward, more consumers, businesses, and municipalities are looking to electric power as the future of transportation.
To understand why Electric vehicles (EVs) are gaining popularity, let’s take a deeper dive into the sector.
Electric Vehicles: Gaining Ground
As a consumer, it’s easy to believe that electric vehicles are a relatively new thing. After all, they’ve only started gaining popularity in the last decade or so.
You might be shocked to learn that the first electric car in the U.S. hit the open road in 1890. Although William Morrison’s electric vehicle only hit a top speed of 14 miles per hour, this electrified ride jumpstarted America’s interest in EVs.
For a while, electric cars and gas-powered cars competed for market share in a big way. But when Henry Ford released the Model T in 1908, the tide turned in favor of gasoline-powered cars, and with that scale came even greater affordability.
Our modern interest in electric vehicles stems from the 1997 release of the Toyota Prius. As the first mass-produced hybrid electric vehicle, the car market started to get excited about modern electric vehicles.
As automakers create more cost-effective options for getting from point A to point B in EVs, more consumers are making the switch. As of the second quarter of 2022, EV sales accounted for 5.6% of the total auto market. That’s up from 2.7% in the second quarter of 2021.
Advantages and Disadvantages of EVs
Since the Prius hit the market, EVs have significantly improved to compete with the gasoline-powered vehicles that are the current industry standard. Over time, EVs have become more cost-efficient to operate. Plus, improving technology has helped EVs drive longer ranges on a single charge.
However, there are still some clear pros and cons when it comes to electric vehicles. Here’s a closer look at both sides of the coin.
Benefits of Electric Vehicles
Let’s start with the advantages.
Energy efficiency (and cost)
According to the U.S. Department of Energy, electric vehicles are more energy efficient because they convert over 77% of electrical energy into power at the wheel.
That’s a big contrast to gasoline-powered vehicles, which convert 12% to 30% of the energy stored in gasoline to kinetic power.
Environmentally friendly
A significant draw of electric vehicles is the ability to limit your environmental impact while driving.
If the electricity consumed by your vehicle is produced by a nuclear, hydro, solar, or wind source, then your ride emits no pollutants. But if you are charging up from fossil fuel-powered electricity sources, there are still pollutants caused by your drive.
Improved performance
According to the U.S. Department of Energy, electric motors create a smoother ride with stronger acceleration - simply put, we buy for horsepower but we drive for torque. EVs are all torque and they are quick off the line. Additionally, EV owners enjoy more limited maintenance requirements than owners of gas-powered vehicles.
Challenges facing Electric Vehicles
Of course, there are also some challenges that current EV owners deal with:
Driving range
When compared to gas-powered vehicles, EVs tend to have a more limited range. For example, most EVs can travel at least 100 miles on a single charge. While some can travel over 200 or 300 miles per charge, it’s usually a bit more limited than a gas-powered option.
The limited range of EVs can significantly impact consumers’ vehicle choices. Many customers cite a limited driving range as a reason for passing on EV purchases. According to the 2022 Global Automotive Consumer Study conducted by Deloitte, 20% of U.S consumers aren’t considering an EV due to concerns about the driving range. Since U.S. consumers reported an expectation for EVs to have a driving range of at least 500 miles, this limitation may be an issue for years to come.
Recharging infrastructure
Although charging infrastructure is growing, it’s not fully scaled still. Many would-be EV buyers will hold off on this purchase until they are comfortable with the availability of public charging stations.
According to the 2022 Global Automotive Consumer Study conducted by Deloitte, 14% of U.S consumers aren’t considering an EV due to concerns about the lack of available charging infrastructure.
Recharge time
Even if the charging infrastructure was sufficient for the growing demand, it takes significantly longer to recharge your EV than it would to fill up your gas tank.
Depending on the vehicle, it could take between 3 to 12 hours to fully recharge the battery. Even the quicker option to an 80% charge often takes at least 30 minutes. With that, EV drivers need to factor this extra time into their drive time calculations.
The changing landscape for electric vehicle production
As the technology powering electric vehicles improves, there are other factors at play in the industry. Although 13% of U.S. consumers reported that they do not consider purchasing an EV due to the cost, recent changes to the tax code could help to eliminate that burden.
When the Inflation Reduction Act of 2022 was passed in August 2022, it included provisions for tax credits for qualifying EV purchases. Those who purchase an EV that meets the requirements will receive a tax credit of $7,500. The U.S. Department of Energy has compiled a list of EVs that may qualify.
The tax credit is part of an incentive plan to meet the Biden administration’s ambitious goal of hitting a 50% EV target of sales shares in the U.S. by 2030. As governments continue to incentivize EVs, it’s possible consumers will start to adopt this newer technology.
Clean tech companies to watch
As electric vehicles gain popularity, other areas of the clean tech industry are also growing. Here’s a look at some clean tech companies to watch:
- Tesla: No discussion of electric vehicles would be complete without Tesla, which is constantly pushing the technology and performance capabilities of this market forward.
- Wolfspeed Inc: Wolfspeed is a producer of semiconductors, which many vehicles rely on.
- ChargePoint: This is the largest independently owned producer of charging stations, operating in 14 countries.
- Soluna Computing: Soluna Computing is working on a way to efficiently sell every megawatt produced by solar or wind farms.
Of course, there are countless companies in this space. But as consumers and governments prioritize clean energy, the industry will grow in importance.
How to expose your investment portfolio to the EV economy
The main draw of an electric vehicle is the potential for a more environmentally-friendly lifestyle. With fewer trips to the gas station, less maintenance, and the possibility of emission free driving, it’s easy to see why many are making the switch to electric vehicles.
You might not be ready for a new car purchase just yet, but it’s still possible to easily invest in a greener future with the help of Q.ai’s Clean Tech Kit, which makes investing in the electric vehicle economy easy (among other eco-conscious sectors). You’ll invest in an industry you believe in without the need to constantly monitor this rapidly evolving marketplace and the sentiment that too often drives stock prices.
Download Q.ai today for access to AI-powered investment strategies. When you deposit $100, we’ll add an additional $100 to your account.
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Growth Sector: Electric Vehicles Sales And The New Electric Economy Have Arrived - Forbes
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