The Fuse

Q1 EV Sales Signpost Electrification Acceleration

by Alex Adams | @alexjhadams | April 06, 2021

Early electric vehicle (EV) sales figures for the first quarter of 2021 suggest that the sector’s better-than-expected performance last year was not a fluke—and this year’s results point toward even bigger sales for the rest of 2021.

A note from Morgan Stanley reported in Axios calculated that more than 181,000 fully electric vehicles were sold worldwide in February—an increase of 138 percent compared to February 2020. Ford managed to sell 6,614 of its Mustang Mach-E EVs in the United States in the first quarter of this year. GM also reported its Bolt EV had its best first-quarter sales ever, 60 percent up on the same period last year.

Tesla reported deliveries of almost 185,000 vehicles in Q1 2021, a total that not only exceeded analyst expectations of 168,000 but was also more than double the amount delivered in the first quarter of 2020.

“It’s clear EV sales, both in the U.S. and globally, are increasing on a percentage basis faster than traditional internal combustion vehicles,” analyst Karl Brauer told Axios, adding that “multiple automakers have introduced high-volume models in the past 12 months.”

Building on 2020

The encouraging sales figures follow a surprising 2020, in which EVs bucked the auto industry trend of falling sales to post a slight increase for the year even as conventional vehicle sales contracted 14 percent, according to the International Energy Agency (IEA).

More work must be done to reach the inflection point

Yet while the Q1 2021 figures are promising for the U.S. EV industry, the wider context suggests more work must be done to reach the inflection point.

To begin, the EV sales themselves still represent a small percentage of overall vehicle sales—and continue to show the United States as the global laggard in the EV transition. According to the Morgan Stanley note, EVs accounted for just 2.3 percent of U.S. sales in February, compared to 6.3 percent in Europe and 7.9 percent in China.

Avoiding Chipageddon

Moreover, the American EV supply chain still struggles with a number of fragilities and bottlenecks, from Chinese dominance of the extraction and processing of critical minerals fundamental to the production of EVs and batteries, to the worldwide shortage of computer chips that has stunted the auto industry’s post-pandemic recovery. IHS Markit estimates that the chip shortage has reduced North American auto production by around 100,000 vehicles.

The chip shortage, in particular, highlights the vulnerabilities of the U.S. EV supply chain. In a January op-ed in The Detroit News, SAFE President and CEO Robbie Diamond, noted that “Chipageddon” must be a wake-up call to secure the supply chains for tomorrow’s connected, electric vehicles—rather than the canary in the coalmine for future disruption.

The White House has also noted these vulnerabilities in a February 24 Executive Order calling for a swift, comprehensive assessment of the supply chains for semiconductors, critical minerals and high-capacity batteries. And as SAFE has also found, competing aggressively with China across every aspect of the EV and battery supply chains not only promises to enhance U.S. economic and national security, but also to be a net creator of 647,000 jobs.

For the inflection point to truly take hold, and for rising U.S. EV sales to lift U.S. energy security with it, the United States must take a minerals-to-markets approach to securing the supply chains for tomorrow’s transportation. If we do not, we risk a future dependent on Chinese domestic policy for the minerals, components and vehicles that will power our economy in the 21st century.