What Drives Electric Vehicle Sales?

In March 2019, the United Nations Intergovernmental Panel on Climate Change (IPCC) released a report describing the critical importance of the next decade in mitigating the effects of climate change. From a consumer perspective, the most impactful method of reducing greenhouse gas emissions is by altering and/or reducing usage of personal and public transportation. Despite the significant technological advances in vehicle electrification, vehicle mileage, and hybrid technology, there is a gap in analysis performed about the relationship between oil prices and electric vehicle sales. This can be largely attributed to the large variation in oil and gas prices within the last decade and the short timeframe in which electric vehicles have been available to the average consumer. In addition to oil prices, significant driving factors of consumer electric vehicle purchases include battery range, availability and accessibly of charging infrastructure, and tax incentives. While consumers clearly have a significant role to play in driving electric vehicle sales, by virtue of the time commitment required to research and develop these emerging technologies, manufacturers have an arguably greater role in determining the market share EVs possess. The concept of “market disruption” versus “market replacement” is an intriguing explanation for the failure of electric vehicles, which as of early 2019 held a market share of less than 2%, to become the primary mode of transportation for most Americans, despite their wide-ranging financial and societal benefits, which will be a key challenge for the industry to overcome in the years to come.