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US electric vehicle market set for sustained growth despite stricter subsidy rules

US electric vehicle market set for sustained growth despite stricter subsidy rules

For consumers, some EV models may not be as tempting without tax incentives. A more fundamental challenge is the stickiness of consumer preferences. According to a recent poll conducted by the Associated Press and the University of Chicago on US consumers, just 19% of the respondents indicated that they are ‘very likely’ or ‘extremely likely’ to buy an EV, with 22% saying they are ‘somewhat likely’ to do so. A lowered level of tax credits could mean a slower switch to EV purchasing.

And importantly, EV costs are generally still not on par with those of internal combustion engines, and tax incentives have historically helped supercharge demand. In the US, the average price of an EV is $58,000, compared to an average of $46,000 for vehicles in general. This means more affordable models will have to be introduced to the market for wider adoption.

On a positive note, with at least some tax credits available, we should see a shift in the profiles of EV buyers. EVs are traditionally sought by premium buyers, and there are adoption hurdles in charging infrastructure and driving range. But the tax credits can open EV purchasing opportunities to more people across more demographic and income groups.