Transportation Electrification Trends for 2021
January 12, 2021
BY MADDIE SLIGH, D+R INTERNATIONAL
With 2020 securely in the rear-view, we are reflecting on the many challenges of the past year and looking forward to the possibilities on the horizon for electric vehicles and the energy industry as a whole. Over the past year, the compounding crises of COVID-19, climate change, and racial injustice have disrupted our lives and led us to think differently about many things we may have taken for granted. This year, as the U.S. begins emerging from pandemic-related restrictions and transitions to the policy priorities of the Biden administration, there are profound changes ahead for local utilities and the auto industry. Here are a few of the trends that we expect to see.
EV Sales Trends in 2021
One of the biggest disruptions of the past year was to everyday travelling and commuting. Because of this, personal vehicle usage and sales fell in 2020. April 2020 was the lowest point for seasonally adjusted annual sales of light-duty vehicles since 1976, according to the U.S. Bureau of Economic Analysis. Through November 2020, light-duty vehicle sales were down 16.7% compared with the same period last year. However, many analysts expect demand to rebound. According to CleanTechnica, U.S. EV sales are expected to increase in year-over-year sales in the U.S. by 70% in 2021 versus 2020.
Some of this growth may be driven by new EV models expected to hit the market in 2021. Supply-chain issues related to COVID-19 have caused some automobile manufacturers to delay the release of new EVs from 2020 into 2021. Because of this, 2021 is expected to be an especially busy year for PHEV and BEV releases. In fact, over 20 new EV models are expected to launch in 2021, including Toyota’s RAV4 Prime, Ford’s Mustang Mach-E, and the Audi’s Q4 e-tron. Notably, electric trucks will appear on the market for the first time in 2021 or 2022, including Tesla’s Cybertruck, GMC’s Hummer EV, Rivian’s R1T, and Lordstown Motor’s Endurance. Expansion of the EV market is an indicator of EV success in the coming years since new releases of EVs (such as the Tesla Model 3) have historically led to boosts in EV sales.
New Policies Ahead
The inauguration of Joe Biden as President could mark a significant change in the policy landscape for electric vehicles. Biden proposes to expand the existing, Obama-era tax credit for electric vehicles that is currently set to phase out once a manufacturer has sold 200,000 vehicles, and he proposes to build 500,000 public charging stations across the U.S. by the end of 2030. The cost of EVs and lack of charging infrastructure are often cited by consumers as key barriers to purchasing EVs, indicating these efforts will help to expand EV adoption across the U.S. The incoming administration’s clean energy page also mentions accelerating research and development of battery technology, investing in clean energy, and positioning the U.S. as a leader in EV production. While new legislation will be required for many of these proposals, these strategies are aimed to position the U.S. as a leader in clean energy and EV adoption. In addition to federal policies, we can expect to see continued expansion of policies at the state level. In 2020, we saw advancements on the state level such as Washington becoming the twelfth state to adopt California’s ZEV mandate. States like Minnesota, New Mexico, Colorado, and Ohio are expected to closely follow Washington’s lead.
Let’s Navigate this Together…
With all of these developments taking place, the question is not if EVs will come to dominate the automobile industry, but when. The revolution is underway, and everyone – including consumers, grid operators, regulators, and dealerships – will need to prepare for an electrified transportation future. EVs represent a compelling business opportunity for many non-regulated utilities that have been experiencing declining load. Utility investment in EVs is also an opportunity to benefit minority communities, which often face higher exposure to air pollution, if incentives and benefits are distributed with social justice in mind. The challenge ahead is how to plan effectively to ensure that transportation electrification is climate-positive, the benefits are equitably distributed, and the market is economically sustainable. At D+R, we have our finger on the pulse of the EV revolution and we will work this year to help you do the same.