Never mind the mixed signals—electric vehicles are going strong

In spite of some apparent bumps in the road, electric cars will continue to gain market share and consumer acceptance.

In the news

In recent months, multiple automakers have slowed their roll on the electric vehicle front—even as they reported record US sales in 2023.

Just recently, Akio Toyoda, chairman of Toyota Motor Co. and a longtime EV skeptic, said, “One billion people around the world live in areas without electricity. We also supply vehicles to these regions, so a single EV option cannot provide transportation for everyone." Toyoda’s thrust was that both EVs and fuel cell vehicles demand an infrastructure nowhere close to being built out.

EVs have suffered plenty of other body blows recently. GM, Ford and even Tesla—the latter synonymous with EVs to many people—cut back on models, investments or expectations.

Why? Toyoda’s worries about lagging infrastructure apparently ring true to many consumers, at least in the US. According to some experts, the easy sales to evangelists and gadget-heads have been made. The next hurdle is the mainstream consumer—and these are folks who need an EV that’s no more burdensome than the internal combustion cars they’ve known all their lives. A winter cold snap in much of the US, which highlighted problems some EVs have in frosty weather, did not help.

But despite a few months of rough publicity, US EV sales hit a record 1.2 million units in 2023, with electrics accounting for 7.6% of all auto sales, up from 5.9% in 2022. Those records are almost certain to be usurped again this year. Many analysts believe the ascent of the EV remains highly likely in North America, as elsewhere.

The Cognizant take

Aditya Pathak, VP and Head of Automotive, Transportation and Logistics at Cognizant, is bullish on EVs and points to several factors causing recent disgruntlement. For starters, there are macro-economic factors (the average interest rate for new-car loans hovers around 10%) that make all vehicles less affordable. “When you compare EV sedans to internal combustion sedans, we’re 20% to 25% away from price parity,” Pathak notes. “So, the EV becomes a luxury product, and sales take a hit.”

Moreover, many buyers in this price range have come to prefer SUVs and crossovers to sedans. Manufacturers have adjusted their product mix accordingly where internal combustion vehicles are concerned; electric crossovers and SUVs are relatively rare and significantly pricier.

The existing battery-charging infrastructure in the US is another limiting factor. “Early adopters have been people who own houses and have charging access there,” Pathak says. But “in the US, for non-Teslas, charging is quite limited,” he notes.

Finally, the cost today of charging an EV at a DC Fast Charger is about the same as fueling a traditional car. “There’s no economic incentive making the EV more appealing,” Pathak points out.

Despite these hurdles, Pathak believes EVs will continue to gain market share, likely by 25% to 30% this year. The reasons: timeframe and popular expectations. Some people seem disappointed, he notes, that the world hasn’t already transitioned to 100% EVs.

Not that those expectations are realistic. “There will always be alternative powertrains—internal combustion, hydrogen, fuel cells,” he says. But the core use cases—commuting and personal driving—will evolve toward EVs.

A notable trend is the strides being made outside of traditional passenger vehicles, including several showcased at the recent CES 2024 by Kia Purpose Built Vehicles. These include electric motorcycles from Verge and Horwin and even electric boats from Brunswick.

A more realistic EV adoption timeframe, Pathak says, is EVs owning 60% of the vehicle marketplace over the next 12 to 15 years. “It simply makes sense,” he concludes—despite a few inevitable speed bumps.