The Fuse

EV Sales Skyrocketing, But Not Fast Enough

by Nick Cunningham | January 07, 2022

Some of the largest automakers unveiled a slew of new commitments and spending plans to scale up their electric vehicle lineups at the start of the year.

The pace of EV adoption is accelerating, a hopeful trend for the energy transition. At the same time, decarbonizing the transportation sector is not occurring anywhere close to what is needed to address the climate emergency.

More EVs, more manufacturing, larger commitments

The recent history in the automotive sector has been dizzying. EVs have gone from a bit part in automakers’ portfolios to the defining pathway in short order. Tesla has dominated the market for years, with legacy companies only dipping their toes into the electric segment. But over the past 18 months or so, the largest automakers in the world have done an about-face, with commitments from many to go fully electric, although the timing varies.

The recent history in the automotive sector has been dizzying. EVs have gone from a bit part in automakers’ portfolios to the defining pathway in short order.

The latest was Toyota, a global giant in the auto market. While its rivals pivoted to EVs, Toyota dragged its feet for a long time. As recently as a few months ago, Toyota said that it didn’t want to commit to electric vehicles, and the Japanese automaker was promoting hydrogen concepts. “We don’t want to tie ourselves to just one option,” CEO Akio Toyoda, the grandson of Toyota’s founder, said during a Nov. 13 news conference.

A month later, the company followed its competitors, making a pivot to electrification. Toyota announced in December a plan to spend $70 billion over the next decade, rolling out 30 different EV models by 2030. “As policies became clear we thought about our own policies and came up with this new figure,” Toyoda said, explaining why the company changed direction, citing new climate commitments made at the COP26 conference in Glasgow.

Toyota is late to the competition, but now sees the writing on the wall, and is hoping to catch up with Tesla and the legacy automakers. Its stock price rallied on the news, another example of financial markets rewarding the companies that are moving aggressively on the energy transition.

But Toyota’s competition is not sitting idle. At the start of 2022, several American automakers made some new announcements. Stellantis, which owns Chrysler, said the entire Chrysler lineup will be fully electric by 2028.

In addition, one of the notable news items was Chevy’s plans to build an electric version of the Equinox, a small SUV that GM CEO Mary Barra said would list at $30,000 when it debuts in 2023, which would be one of the cheapest electric SUVs to hit the market.

GM also unveiled the Chevy Silverado EV pickup truck, a rival to the Ford F-150 Lightning. How quickly owners of pickup trucks make the switch to electric models is a pivotal piece of the electrification puzzle.

Anecdotally, enthusiasm for the Ford F-150 Lightning is strong. “People are extremely, extremely excited about it,” one car dealer in the suburbs of Dallas, TX told Inside Climate News.

Ford announced in recent days that it would double production of the Lightning to 150,000 vehicles per year in 2023 due to high demand. Along with other EV models, Ford is aiming to produce 600,000 electric vehicles per year over the next 24 months.

The flurry of announcements from the largest global automakers to step up their EV ambition led to a plunge in the stock price of Rivian, the builder of the R1T electric pickup that debuted last year. Rivian went public in 2021, but has a production capacity that is smaller than legacy automakers. With the likes of Ford, Toyota, GM and others scaling up their electrification plans, the competition is getting fiercer.

“Rivian investors need to keep near-term expectations managed,” Morgan Stanley wrote in a note to clients. “Tesla has shown us the extremely difficult path to ramping EV manufacturing. You can’t have the reward without the pain.” The investment bank rated Rivian’s stock as “overweight.”

Other analysts agreed. “(Rivian) investors are probably getting a little spooked by the legacy industry making a comeback,” said Guidehouse Insights analyst Sam Abuelsamid, according to Reuters. Rivian’s leadership said that at this point the company is prioritizing growth over profits.

GM also talked up its expanding sales for its Brightdrop EV600 electric cargo van. FedEx has 500 of them on the roads and recently ordered another 2,000.

Meanwhile, the heavy-duty trucking segment is also starting to push for decarbonization. Several states, including Oregon, Washington, New York, New Jersey, and Massachusetts are drawing up regulations to require a rising share of heavy-duty trucks to have zero-emissions technologies. By 2030, zero-emissions trucks need to make up between 30 and 50 percent of total sales in some states.

EVs are quickly capturing a larger and larger share of overall sales in key markets. In Norway, a world leader, EVs took 65 percent of the market in 2021. In December, EVs accounted for 60 percent of sales in Sweden, up from 49 percent a year earlier. In the UK, Tesla’s Model 3 was the second most sold car in the country. Across much of Europe, EV sales are skyrocketing.

EVs are quickly capturing a larger and larger share of overall sales in key markets.

Still too slow

EVs may only account for about half of auto sales in major markets by 2030, although that threshold could easily be reached in Europe before that time.

But overall, the U.S. and the world remain badly off track in slashing greenhouse gas emissions. The U.S. needs to cut emissions at a rate of 5 percent per year through the end of the decade to hit President Biden’s goal of halving emissions from 2005 levels. But last year, emissions were heading in the wrong direction, rising by 7 percent, although that figure is skewed from pandemic-related shutdowns in 2020.

Even in the EV sector, there are problems, despite the hopeful trajectory. In order to meet President Biden’s goal of having 500,000 chargers installed along American highways by 2030, the pace of installation needs to triple. A December study from the National Renewable Energy Laboratory says that the U.S. needs to install nearly 15,000 chargers each quarter between now and the end of the decade, three times more than the current pace of around 5,300 per quarter.

Toyota just dethroned GM as the largest seller of cars in the U.S., the first time GM did not lead in sales since 1931. Toyota sold 2.3 million cars in the U.S. in 2021, the vast majority of which runs on gasoline.

“Toyota is on top in sales in the US, but the automaker remains stalled on electric vehicles while it continues to manufacture and market gas guzzlers in its largest market,” the Sierra Club said, criticizing the automaker. The environmental group called on Toyota to commit to a 100 percent EV sales by 2035, in line with other major companies.

The U.S. remains far behind Europe and China. Sales of EVs in the U.S. soared by 83 percent in 2021, but still only made up 3 percent of the auto market.