29 Mar 22

Ukraine war could slow America’s shift to EVs

Electric-vehicle (EV) sales grew to about 6% of the U.S. total in Q4 2021, a recent report says. So, is America finally catching up with Europe and China? Not so fast: the Ukraine war might put a dent in that upward trend.

About 187,500 EVs were sold in the United States in the fourth quarter of last year, according to figures released by the Alliance for Automotive Innovation.

  • Compared to the third quarter, that’s an 11% increase – even as overall sales went down by 9%.  
  • Compared to Q4 2020, EV sales increased by about 76,000 units, or 69%.
  • In Q4 2021, EVs represented about 6% of total new-vehicle sales, up 1.1 percentage point over Q3. 
  • For the full year, EV sales averaged 4.4%. 

Highest volume

On the other hand, sales of vehicles with internal combustion engines (ICEs) seem to have moved beyond their peak.

  • ICE sales in Q4 2021 decreased by 1.3% versus the previous quarter, and by nearly 6% year-on-year. 
  • For the full year, ICE sales decreased by 4.8% compared to 2020. 

The 6% average in Q4 2021 is the highest volume on record for EV sales in the U.S. Moreover, the monthly figures clearly mark the progress: 5.72% in October, 5.87% in November and 6.36% in December. In other words, EVs are well on their way to becoming mainstream in the United States. 

For context: the U.S. remains well behind the global average – and even further behind Europe and China, the world’s leaders in electrification. EVs represented about 9% of total global sales in 2021. In China, the EV share was 16%, while in Europe, it was 19%.

Steady tilt

Two major factors drive America’s steady tilt towards electrification: the Biden administration’s $7,500 tax credit for all new BEVs and PHEVs; and the increasing breadth of electric vehicle types available – now also including trucks, minivans, utility vehicles, SUVs, and especially pickups.

As in Europe, the electrification of mobility is proceeding at various speeds locally.  

  • California leads the nation, with EVs accounting for 16.9% of all new light-duty vehicle registrations in the state in Q4 2021. In absolute volume, that’s about 40% of the national total.
  • Other high-scorers are Washington DC (12.5%), Washington state (10.6%), Oregon (9.9%), Nevada (9.2%) and New Jersey (8%).
  • The scores for the most populous states (besides California) are 5.1% for Florida, 4.9% for New York, and 3.7% for Texas.
  • Among the worst performers are Louisiana and South Dakota (both 1.4%), Mississippi and West Virginia (both 1.3%), and North Dakota (0.8%).

To drive up the speed of the transition, president Biden recently unveiled a National EV Infrastructure Formula Program, which will provide $5 billion to individual states to expand their public EV charging network. The plan aims to establish a network of 500,000 charging stations. More charging should help Biden’s ambition to get EV sales up to 50% by 2030.

Expensive and vulnerable

However, the Ukraine war may have thrown up an obstacle to speedy electrification. Russia produces about 20% of the world’s high-grace Class 1 nickel, and other minerals needed to produce EV batteries. Other sources are available, but securing access to these commodities – increasingly desirable as EVs become more commonplace – may become more and more expensive. Not to mention vulnerable to price shocks, as with oil in the 1970s, when oil production was the near monopoly of the OPEC cartel.

In our recently reconfigured world, EV battery prices look set rise, delaying the TCO tipping point for many EVs (compared to ICEs). The financial newspaper Barron’s, which tracks the price of a basket of EV battery metals, reports that this price has already gone up by 64% in 2022 – which would translate into an average price increase of $2,000 per EV. 

Concerns about potential supply bottlenecks for EV battery materials have prompted the U.S. government – and other member nations of the International Energy Agency – to launch a critical minerals programme, to secure access to and if necessary to create stockpiles of critical raw materials for EV battery production. 

Some U.S. politicians, on the other hand, see those potential bottlenecks as strategic weaknesses, and would rather go slow on electrification. America is currently self-sufficient when it comes to hydrocarbons (i.e. oil and gas), so why give up that strategic advantage, they argue. 


Pictured: president Joe Biden test-driving a Hummer EV on a visit to a GM plant in Detroit in November 2021. 
Credit: The White House

Authored by: Frank Jacobs