U.S. electric vehicle market continues to grow, according to IHS Markit

SOUTHFIELD, Mich. — Registrations of fully electric vehicles reached a record 208,000 in the U.S. in 2018, according to recent analysis by IHS Markit, which also noted a growing loyalty among EV buyers.

New registrations for EVs during 2018 more than doubled versus 2017, while the EV market share has increased exponentially over the past three years, according to the data analysis company.

Not surprisingly, 59 percent of EVs were registered in California and nine Section 177 states (Connecticut, Maine, Maryland, Massachusetts, New Jersey, New York, Oregon, Rhode Island and Vermont) that have adopted the same vehicle emission standards and hence are key markets for such vehicles, according to IHS.

California alone accounted for nearly 46 percent (95,000) of new EV registrations in 2018, according to IHS analysis.

Loyalty rates for EVs also increased, with nearly 55 percent of all new EV owners who returned to market during the fourth quarter of 2018 acquiring (purchasing or leasing) another EV, up from 42 percent in the prior quarter, according to IHS. The trend continued in January, with nearly 70 percent of EV owners returning to market for a new EV during that month.

"EV loyalty rates have been steadily increasing since their introduction by OEMs. This increase over such a short time frame demonstrates that a portion of the U.S. market is highly accepting of this new technology and has a growing comfort level with it," Tom Libby, IHS loyalty principal, said. "As more new models enter the market, we anticipate an even further increase in loyalty to these vehicles."

In addition, IHS forecasts a "considerable increase" in new fully electric models offered in the U.S. market over the next decade, with more than 350,000 new EVs to be sold in the U.S. in 2020, reflecting a 2-percent share of the total U.S. fleet.

By 2025, that figure is expected to increase to more than 1.1 million vehicles sold or a 7-percent share, according to recent IHS powertrain forecasts.

"A rapid increase in EV nameplates is the catalyst behind the projected growth throughout the next decade," Devin Lindsay, IHS powertrain analyst, said.

"While relatively successful models, such as the Tesla Model 3, mature in the market, other traditional auto makers will be rolling out not just one EV as we have seen in the past, but multiple models off dedicated EV platforms."

Combined with anticipated entries in the market from start-up auto makers like Rivian, Lucid and SF Motors, as well as traditional manufacturers, U.S. consumers are expected to have substantially more choice on the dealership floor over the short-term, IHS said.

The greatest headwind for EV sales in the U.S. soon may be any elimination or delay to California's Zero Emission Vehicles (ZEV) mandate by the federal government. The federal Environmental Protection Agency has proposed to withdraw the waiver and therefore the ability for California and the Section 177 states to regulate greenhouse gases separately from federal standards, according to IHS, predicting that if this happens, it could have a considerable impact on the EV market.

Meanwhile, despite the growing trend in the EV market, the internal combustion engine is not going away any time soon, with IHS forecasters anticipating the traditional vehicles to continue to dominate the global market until past 2030.