The Biden Effect: Electric Vehicle Sales skyrocket 79% in US in Q1

Ann Arbor (Informed Comment) – Laws have consequences. The Inflation Reduction Act passed by the Biden administration and the Democrats in Congress (with no Republican support at all) is already beginning to green and turbocharge the American economy.

Abhik Mukherjee at Counterpoint Research calculates that if we look at both battery electric vehicle (BEV) and plug-in hybrid (PHEV) sales in the first three months of 2023, they are up 79% year over year.

Mark Kane at Inside EVs says that if we focus only on the battery electric vehicles, the news is still spectacular. Nationwide there were 257,000 new BEV registrations, 64% more than in the first quarter of 2022. That is 7% of the market, whereas in the first three months of the previous year they made up only 4.6% of purchases.

The Tesla Y is still the most popular such purchase, and Tesla sales were up 36% year over year. But Chevrolet, Ford, Volkswagen, Rivian, Mercedes-Benz, and BMW all expanded their market share. Tesla, Ford, Rivian, Volkswagen and Chevrolet benefit from the IRA’s $7500 tax credit, which requires that a certain percentage of the battery have been produced in the US and that the vehicle was assembled in the US.

Mukherjee predicts that 1.5 million BEVs and PHEVs could be sold this year in the US, and he thinks this will be a higher number than such sales in Germany, previously the second biggest EV market after China. I’m not so sure. As far as I can tell Germans bought 1,302,559 BEVs and PHEVs in 2022, so if their market grows only 15% they still beat us. Well, it is not that kind of competition — it is all good news.

The deals inked by Chevrolet and Ford with Tesla allowing their consumers to use Tesla’s nationwide network of fast-charging stations will likely also be a fillip to EV sales. Volkswagen is building out its own network, Electrify America, which now has 3,500 fast charging outlets. As fast charging stations multiply, taking EVs on road trips will become easier and easier.

There are also tens of billions of dollars worth of battery plants in the pipeline, encouraged by IRA incentives, and batteries are likely to improve significantly over the next 5 years with regard both to range and to speed of recharge.

Bringing back industries like computer chips and solar panels to the US along with foreign direct investment created 364,000 new manufacturing jobs in the US in 2022, according to Assembly.

The United States is in the midst of a domestic manufacturing boom, the like of which it has not seen for decades. Batteries, EVs and computer chips, all supported by Biden’s legislative initiatives, are the leading edge of this second industrial revolution.