The Future of Battery Electric Vehicles (BEVs) in the U.S. Market

The adoption of Battery Electric Vehicles (BEVs) in the U.S. has been growing steadily since 2019, with a Compound Annual Growth Rate (CAGR) of 25%, noted the Auto Care Association and MEMA Aftermarket Suppliers 2024 Joint EV Trends and Outlook Forecast released during AAPEX. This growth has largely been driven by California, where favorable policies and a strong eco-conscious consumer base have accelerated the shift. However, in the past two years, BEV adoption has plateaued, signaling that while the initial surge was significant, broader market adoption faces challenges ahead.

Affordability and Consumer Barriers

One of the primary barriers to widespread BEV adoption is cost. On average, BEVs remain at least 15% more expensive than internal combustion engine (ICE) vehicles. While transaction activity is picking up in 2024, the higher price tag continues to deter many consumers, especially as BEVs’ residual values are being impacted by discounts and price cuts, reducing their long-term value, the Joint EV Trends and Outlook Forecast noted.

Additionally, the Total Cost of Ownership (TCO) for BEVs is 20-30% higher across various vehicle classes compared to ICE vehicles. This pricing disparity underscores the need for more affordable models to reach the mass market. Notably, 45% of U.S. consumers are looking for vehicles priced under $45,000, but only 14% of BEVs currently fit that budget. Meanwhile, a significant portion of BEVs—32%—are priced at $80,000 or more, catering primarily to premium buyers.

Regulatory Push and OEM Strategy

The regulatory environment plays a significant role in shaping BEV adoption. The U.S. Environmental Protection Agency (EPA) has set ambitious emissions standards, with a target of 31% BEV adoption by 2030 under the slowest adoption scenario. Moreover, the 100% Zero Emissions Vehicle (ZEV) mandate by 2035 further pressures automakers to accelerate their electrification strategies.

In response, OEMs are increasingly focusing on BEVs, the Joint EV Trends and Outlook Forecast noted, with projections suggesting that 160 BEV models will be available by 2030. However, hybrids will continue to be a critical part of OEM portfolios through 2030, serving as a bridge for consumers not yet ready to commit fully to electric vehicles.

Charging Infrastructure and Consumer Experience

Another significant challenge for BEV adoption is the charging infrastructure. Although the number of BEVs on the road is growing, the availability of charging stations has not kept pace, particularly in more rural and underserved areas. This lag in infrastructure is a notable deterrent, alongside concerns about long charging times and the perceived limited range of electric vehicles.

As more BEVs hit the road, service opportunities will increase, especially for older vehicles. By 2030, it’s expected that 15% of the BEV fleet will be over six years old, creating a need for specialized maintenance and repairs. This will also require service providers to invest in equipment and training to address new hardware and software demands specific to BEVs.

Market Outlook

Looking forward, BEVs are projected to account for 30% of new vehicle sales by 2030 and 59% by 2035, in the best-case scenario. However, this growth will depend on overcoming affordability challenges, expanding charging networks, and addressing consumer concerns about range and service. In the meantime, hybrid vehicles will remain a substantial part of the portfolio mix as OEMs continue to balance the transition toward fully electric models. You can read the entire report put out jointly by the Auto Care Association and MEMA.