Continued Growth in the Sale of EV’s Predicted by EIA

A recently-published report, the “Annual Energy Outlook 2023,” from the U.S. Energy Information Administration (EIA), projects that electric vehicles (EVs), including both battery-electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs), will account for between 13 percent and 29 percent of new light-duty vehicle sales in the United States in 2050, and between 11 percent and 26 percent of on-road light-duty vehicle stocks.

“Declines in EV component costs, along with federal and state policies that provide incentives for EV purchases or require minimum sales, drive EV sales growth in our model projection,” said the report.

The report projects cost declines for EV battery manufacturing by using learning rates based on the historical relationship between cumulative production and price. “We assume that the costs of battery materials, primarily consisting of critical minerals, will remain constant through 2050,” said the report. “The projected manufacturing cost declines both increase driving range and lower EV purchase prices through 2050.” By 2050, according to report estimates, projected battery costs drop 51 percent to 56 percent below what they were in 2022, settling at a retail price equivalent of between $105 per kilowatthour (kWh) and $118/kWh in 2050. “Most of this cost decline occurs before 2040 when battery production grows more quickly. Non-battery costs—such as for electric motors, power electronics, and wiring—continue to decline through 2050,” said the report.

The report also projects that EV purchase prices will continue to decrease and that most EVs with less than a 150-mile driving range could reach purchase price parity with conventional gasoline-powered vehicles by 2029. “EVs with between 151 miles and 250 miles of driving range reach price parity across most car size classes by 2038, while among light trucks, only small van and small crossover utility vehicle (CUV) size classes reach cost parity. EVs with over 250 miles of range do not reach price parity in any size class, but approach it in the 2040s.”

As noted, the expectation for EV growth is largely a result of technological improvements, declining costs, and favorable fuel economy credits. These changes occur in parallel with continued increases in fuel economy for conventional gasoline-powered vehicles.

However, the report cautioned, significant uncertainties are inherent to projecting the rate at which EVs will become more common in the light-duty vehicle market. Some important variables include:

  • Future policies, including emissions and fuel economy regulations as well as vehicle sale mandates or combustion engine bans
  • Disruptive technological advancements
  • Availability and access to refueling infrastructure
  • Consumer attitudes and behavior
  • Critical mineral supply chains

“Given inherent interest in EVs and the role vehicle electrification could play in meeting greenhouse emission reductions, we expect near- and mid-term market dynamics, while uncertain at this time, will be critical to the rate of EV adoption,” the report added.


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