The Electric Vehicle Revolution Revs Up

While the total EV market share is still below 10 percent in the United States, that seemingly small number is a strong sign of their coming dominance, says Tony Seba, co-founder of RethinkX, a think tank focusing on tech-driven disruption. "Over the last few years, we have seen EVs go from 2 or 3 percent of new car sales globally to 10 percent, and we're probably going to hit 15 percent by the end of 2022," Seba says. "During most disruptions, the tipping point is actually 10 percent. Once the new market hits 10 percent, the adoption accelerates—not linearly, but as an S curve." Translation: Change happens gradually, then all at once.

"During most disruptions, the tipping point is actually 10 percent. Once the new market hits 10 percent, the adoption accelerates—not linearly, but as an S curve." Tony Seba, co-founder of RethinkX

While EVs can help the world lower emissions, that's not the driving force behind the move to electric. "Climate is an accelerator, but it's not the reason that this is happening," Seba says. "This is a disruption that is happening for purely economic reasons. A disruption from above is when a product that is superior—but more expensive—gets better, and also a lot cheaper, until it ruptures the market." As technology improves and competition increases, the cost premium is disappearing. For instance, a 2013 Tesla Model S base model cost $60,080, but a (sleeker, faster, range-ier) 2023 Tesla Model 3 starts at $46,990. "The median new car in America is $40,000, and now you can get EVs with a 200-mile range for less than that," Seba says. "That's what I call a rupture point, meaning that the new product becomes economically viable for the mainstream."

Not that it's all about Tesla anymore. New-for-2023 EVs include offerings from established players such as Cadillac, Chevrolet, Nissan, and Hyundai—along with fresh models from startups like Fisker and Indi. "Until recently, if you wanted an electric vehicle, really we're talking about cars," Allen says. "Now, for the first time, there are plausible lists of pickup trucks and SUVs and different kinds of vehicles. You're seeing a lot more options, and they're starting to get produced in serious numbers."

Indeed, the most difficult thing about driving an EV may be finding one to buy. In-demand vehicles such as the Hyundai Ioniq 5 and Kia EV6 are often spoken for before they hit the sales lot, and good luck if you've got your eye on the 2024 VW ID Buzz—so do the 12,500 people who've signed up for the wait list. 

Consumer interest, plus the Inflation Reduction Act's climate-conscious tax credits for new and used EVs, are shattering the belief that EVs are only for rich people. "[The price is] not as expensive as the oil industry wants you to believe," Allen says of EVs, pointing to the Chevrolet Bolt (MSRP $26,500) as an example of a new EV priced at nearly half the cost of the average new car. Add in the newly expanded federal $7,500 tax credit for EVs assembled in North America (thanks to the August 2022 passage of the Inflation Reduction Act) plus state credits, and driving electric becomes competitive—if not cheaper.  

Over time, EVs offer a significantly lower cost of ownership, too, since EV drivers never pay for oil changes, smog checks, or gas. "From a business standpoint, I realized that utilizing electric vehicles would be the most viable option," says Raven Hernandez, CEO of Earth Rides, an all-electric ride-sharing service whose fleet includes Teslas and Ford Mustang Mach-Es. "The savings with electricity as compared to gas are unparalleled. Most of our vehicles get about 300 miles, and to quote-unquote 'fill up' in Nashville, it costs us about $12 on average. I'm sure that's not how much it costs to drive 300 miles in a gas car." (At $3.89 per gallon, a Toyota RAV4 would cost just over $40 to drive the same distance.) 

These economic realities are motivating companies and municipalities to electrify their fleets—not one by one, but at scale. "For fleets, EVs make economic sense," Seba says. "Amazon is going all-in on EVs, and Hertz can't buy them fast enough." Indeed, in 2022, Amazon rolled out 1,000 Rivian delivery vans; by 2030, that number will leap to 100,000 nationwide. Hertz has hundreds of thousands of EVs on order, with the first cars arriving on rental lots next year; the company's electric vehicles will leap from 5 percent of its overall fleet to 25 percent by 2024. (And in a few years, Hertz's used EVs will move to the resale market.) PepsiCo's Tesla Semi trucks start hitting the road in early 2023. And thanks to the Environmental Protection Agency's Clean School Bus Program, funded with a $5 billion investment by the Bipartisan Infrastructure Law of 2021, students will climb aboard nearly 2,300 electric school buses in 2023—with school districts in low-income, rural, and Tribal communities receiving priority. 

Simultaneously, the nation's private and public charging infrastructure is quickly improving. All 50 states are rolling out charging stations along 75,000 miles of highways, and even BP—yes, the oil company—is investing in fast charging hubs with a focus on ride-share vehicles and taxis. That's easing driver anxiety about plugging in to recharge. "If you look at the history of disruptions, building the infrastructure has never been an issue," Seba says. "If the market is there, companies will build the infrastructure." Besides, he notes, most people will just plug in at home.

Demand for EVs is high; prices are coming down. Meanwhile, automotive companies are pouring R&D money into EV and battery development as the internal combustion engine begins to become obsolete. "When governments start setting dates for the end of the gasoline or diesel vehicle, that's what's called a loss of social license," Seba says. "There are cities that have started essentially saying, 'No new gasoline gas stations in this city,' meaning that they feel comfortable [with EVs]. That's another accelerator of the disruption." In 2022, California, Washington, Massachusetts, and New York announced bans on the sale of new gas-powered cars and light trucks by 2035. "That's in the neighborhood of half the U.S. car market, committed with legally binding rules—not just aspirational targets, but legally enforceable regulatory standards," Allen says. "That's huge."

As the EV revolution continues, people like Hernandez and Allen are focused on making the transition an equitable one. Organizations like Forth and Chicago-based Community Charging are rolling out pilot programs to improve affordability and ensure universal access to EVs. "This needs to work for people in rural areas. It's got to work for low-income communities of color. It's got to work for people who rent apartments and don't have assigned parking spaces," Allen says. "The amount of attention and investment that's going into solving those problems is pretty dramatic. We don't have them all solved yet, but there's a lot more focus on it." No doubt, the shift from gas guzzlers to plug-ins won't be without a few bumps in the road—but EVs are rapidly leaving the internal combustion engine in the dust. ✙

Hero Photo Credit: Stocksy/Bonninstudio, Opening Photo Credit: Stocksy/Irina Efremova