North America 2023 Outlook: Public and private push for EVs

While supply chain challenges remained throughout most of North America in 2022, GDP remains strong and the rising inflation rate this year looks to have subsided as the U.S. federal government approved its fourth interest rate hike in November. 

By Daniel Bland, Editor of the Americas, Global Fleet (pictured)

And now with the New Year around the corner, what can we expect in 2023 in terms of industry developments and challenges in the highly competitive market of the United States and Canada?

Public and Private sector pushing sustainability, EV transition

Although not a panacea, much of the new spending under the U.S. government’s multi-billion-dollar Inflation Reduction Act (IRA) - which I feel is more related to climate and energy than reducing inflation – will help push the transition to electric vehicles (EV) as it entails grants and loans aimed at supporting renewable energy-related manufacturing.

Besides earmarking $62bn to support the manufacturing of EVs, batteries, solar panels, and wind turbines, a tax credit of up to $7,500 on every new EV purchase ($4,000 for used ones) up until 2032 will help push the transition to electrification.  

And to curb China’s influence on the market, the U.S. government is also preparing $2.8 billion in grants for projects to expand local mineral production and the manufacturing of EV batteries. Approximately 75% of the EV battery market share worldwide is controlled by Chinese companies, a market I see as even more important than vehicle manufacturing.

With that said, the private sector is preparing to open several battery cell gigafactories in the United States in 2023. One is being built by General Motors and LG Energy Solution in Spring Hill, Tennessee and another by SK Innovation in Atlanta, Georgia.

Others seen coming to the United States thereafter are those being built by automakers Ford (Tennessee and Kentucky), Toyota (North Carolina), Volkswagen (Tennessee), Stellantis (TBA), and General Motors (TBA).

At the same time, Chinese EV battery giant Contemporary Amperex Technology Co. Ltd. (CATL) is planning to build a $5bn gigafactory in North America, either in the US or Mexico. It is part of the company’s expansion plan to increase its current production capacity of 145 GWh to 579 GWh by 2026.

Meanwhile, Canada’s first full-scale EV manufacturing factory known as CAMI is now producing E-vans. General Motors’ electric commercial vehicle subsidiary, BrightDrop, is producing the vehicles at its new facility in Ingersoll, Ontario.

BrightDrop intends to build 50,000 Zevo vans per year by 2025 at CAMI. While scaled production of the larger Zevo 600 will kick off at the beginning of 2023, the smaller Zevo 400 will start production in late 2023. First deliveries from the new facility will go to DHL Canada and they are seen in the earlier part of the year.

Key Players to keep an eye on

As Wheels Donlen and LeasePlan USA have completed their plan to create a unified fleet management and mobility company in the U.S., the newly created group is certainly one to keep an eye on in the region.

Managing more than 800,000 vehicles and $7 billion of assets in the U.S., Wheels Donlen LeasePlan will be led by CEO Shlomo Crandus while Matt Dyer, previously CEO of LeasePlan USA, will serve as President and a board member.

Among the other major players in the market are US-based Holman with some 2 million vehicles under management in the region and Canada-based Element Fleet Management with approximately 1.5 million vehicles.  Others worth noting are Enterprise Fleet Management and Merchants Fleet. 

Challenges and Public Policy

Fleet managers, choose your fleet models appropriately in North America as you will come across a few hurdles in 2023. 

Keep in mind that not all EVs will qualify for federal government rebates. For one, a domestic content requirement aimed at favoring North American production will disqualify some models. Moreover, sedans priced at more than $55,000 and SUVs and trucks at more than $80,000 are not eligible.

Another lingering challenge I see is being able to appropriately deal with the ongoing lack of semiconductors. Note that many new passenger cars in North America are filled with a plethora of semiconductors to control functions such as braking, cruise control, airbags, and entertainment systems, so prepare yourself for possible delays.

Although relief may not be fully accomplished in 2023, a new $52bn federal spending package in the U.S. to bolster domestic chip manufacturing should help in the coming years. Of this amount, $39bn has been earmarked for manufacturing incentives aimed at building and expanding semiconductor manufacturing plants. 

With that said, despite the occasional ebbs and flows in North America, the political and economic environment in the United States and Canada are quite stable compared to many countries around the world and interest rates and inflation are gradually coming under control. 

And as it is a business-friendly market which attracts many players, there are many options to choose from and this is certainly a good thing for consumers and fleet managers alike.

For networking with peers and learning through insights with fleet and mobility experts from around the world, register now for Global Fleet Conference 2023 taking place in the coastal region of Portugal in May. Register now to get the discounted early-bird rate.

Authored by: Daniel Bland