US incentives boosting EV sales, despite slowdown

Analysis from three research groups show sales in line with post-IRA projections

US incentives boosting EV sales, despite slowdown
The Inflation Reduction act has had a significant impact on EV sales

EV sales in the US have hit the high end of the projected impact of the Inflation Reduction Act (IRA), according to a new report from a group of non-profit and research groups. 

The IRA was passed in 2022 and introduced a maximum of $7,500 in consumer tax credit for electric vehicle (EV) purchases.

Analysis at the time from Energy Innovation, Princeton’s Repeat project and the Rhodium group projected an 8.1pc - 9.4pc ZEV market share in 2023 as a result of the incentives.

The groups now estimate that sales reached a 9.2pc market share of total light-duty vehicle sales last year, up from 6.8pc in 2022 and 2.2pc in 2020. The figures show 1.43 million ZEVs were sold in the US in 2023 — the vast majority of which were BEVs.

“Over the past several months, there have been a number of news stories suggesting the US is experiencing a slow-down in electric vehicle sales, but sales in 2023 came in at the top end of the range of post-IRA projections,” says the Clean Energy Monitor report.

Sales grew by 43.5pc between 2021 and 2022, and 50pc between 2022 and 2023. This growth is unlikely to be repeated in 2024, the report says. 

“But sustained 50pc year-over-year sales growth was neither expected to occur as a result of the IRA, nor is it required to achieve the legislation’s goal of a 40pc reduction in net GHG emissions by 2030,” the report notes.

The projections from the group indicate a 30-44pc average annual growth in ZEV sales between 2024 and 2026 would be required to hit that target, slowing to 15-27pc between 2027 and 2030.

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“ZEV deployment can remain on a track consistent with the IRA’s 40pc emissions reduction objective — even if annual sales growth slows in 2024 — provided it stays in the 30-40pc range,” says the report.

The groups also noted that before the IRA was passed, projections of EV sales were significantly lower. In 2020 the Energy Information Administration projected 580,000 ZEV sales in 2023 — around a third of the actual total last year.

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