USA’ pace toward the era of BEVs needs to be accelerated

By Jeff Lee / Mike Song 2022-09-01

People who are familiar with the car market of USA know that local consumers there prefer driving big cars, especially SUV or full-sized utility pickups; In the early stage of the transformation to the era of BEVs, it’s a big challenge for the range of battery. When the frequency of recharging increases due to the range is shorter than that of ICE cars, then the obstacle of purchase emerges. The chicken-and-egg conundrum of “buying BEVs and the deployment of charging ports” ultimately need the government departments to help accelerate the deployment of charging ports and ensure the profitable operating model, otherwise in countries with a vast territory such as USA will have the risk of becoming a desert of BEV world.

As the biggest economic-scale country and the second largest car market in the world, US car market delivered the 400,000 EVs (including BEVs and PHEVs) in H1 this year, which equals to 6.2% of market share; In comparison with the 3.6% YOY, it has significant growth indeed. However, Californian market accounts for 1/3 out of them, which means the acceptance of BEVs in other regions need to be improved. Moreover, take China or Europe for comparison, the 6.2% share of H1 has way fallen behind (China: 24.3%; Q1 in Europe: 19%). The global BEV industry led by Tesla nowadays should have the most profound and overwhelming influences to the domestic market of USA; however, the fact isn’t like this obviously. Do American consumers have no interest in BEVs, the government incentive is insufficient, the deployment of charging infrastructures is slow, or the unbalance between production and sales?

Since last year, the fuel price in USA has increased by 60%, which might be the best timing for BEVs to expand their market opportunities, but it isn’t, actually, and the root causes are quite diversified…

  • Prices are too high. In the era of ICE cars in the past, the local content rate of domestic cars in USA is almost 100%, and the supply is stable without that many custom issues so the car price is lower than many countries. However, the key component of BEVs – batteries are mostly relying on the technological assistance or supply from Asian countries, and the establishment of domestic battery factory isn’t fast enough, so that the prices of BEVs are significantly higher than ICE cars. In addition, there are not that many reasonably-priced self-owned brand BEVs for customers to choose in USA compared to China, so that the threshold of purchasing BEVs isn’t easy for the mass to get over.
  • The deployment of charging infrastructures is slow. Most public charging stations are located in the east and west coast, and the central area is extremely lack of charging facilities. Moreover, people in USA used to long-distance drive (the long-distance public transportation is insufficient at the same time), and in the situation of insufficient range and the lack of public charging stations, the convenience of driving BEVs just can’t meet the actual demand. Although the US President Biden announced the plan to establish 500,000 charging stations in 5 years, before that, the home charging at garages can’t let the American, who likes to drive, to replace their cars with BEVs.
  • The federal regulation enacted many years ago about the US$ 7,500 tax incentive of purchasing BEVs, added more conditions a few weeks ago to review… imported cars are excluded, the materials and assembly of batteries must be sourced from the production supply chain in USA, high-income customers are excluded; According to an estimation, about 70% of the sales of BEVs will no longer be applicable to this tax reduction scheme, and it will also stumble the development of the BEV industry of the USA.
  • Supply chain issues. In addition to the supply issue of battery, the supply of chips is another “Achilles’s heel” for BEVs… Because the demand is stronger than ICE cars that the supply of BEV chips will involve in the competition among the semiconductor industry of Taiwan, China, South Korea, Japan, etc., The Chip 4 Alliance formed by USA is preparing for operation, which is an integration of chip supply chain based on the benefits of USA. In the past two years, the production volume of carmakers in Europe and USA has been affected the most by chip shortage.
  • The relationship between USA and China is far weaker than the relationship between Europe and China. The self-owned BEV brands in China rose up rapidly in recent years that the technology and production capacity of batteries are also in the world-leading position. Furthermore, USA’s policy of ruling out imported cars and overseas supply chains, the BEVs and batteries from China won’t enter the USA market like the European market with comprehensive deployment; Certainly, the American market will be lack of the self-growing atmosphere forced by stiff competition, and highly possible to degenerate gradually.

There are just 6,000 public charging stations in USA currently, and let’s assume that there are 10 charging ports in each station, then the total volume will be just 60,000. It’s beyond comparison that China has 3.58 million public charging ports as of the end of June! If we view from the ratio of the scale of USA car market in recent years that it’s about 70% of China’s, then there should be 2.5 million public charging ports in USA so that it can have the same popularity level of BEVs and charging ports in China. USA used to be the leader of global automotive industry and car market is now deficient in key technologies, supply chain, the deployment of charging infrastructures, and even the incentive of purchasing BEVs, so that there are lots of challenges in the future. I hope that the currently leading autonomous driving technology of USA shouldn’t be also losing along with the BEV sales competition due to the challenges mentioned above.