USA Bets on E-Mobility: A Growth Boost with Obstacles

In a decisive move to combat suspected trade irregularities, the Biden administration has begun implementing a series of tariffs on Chinese goods traded in the U.S., starting in 2024. The electric vehicle (EV) sector is particularly affected, providing U.S.-based automotive companies in this area with a significant competitive advantage. In the third quarter of 2024, electric vehicle sales in the U.S. reached a new record. Driven by attractive leasing offers and financing conditions, the number of EVs sold rose to an estimated 346,309 vehicles, according to leading market research firm Cox Automotive. This represents a 5% increase compared to the previous quarter. During this period, electric vehicles accounted for 8.9% of total vehicle sales, the highest share ever achieved. Supported by federal government backing, EV leasing agreements also saw a significant increase. Lease users benefit from the full federal tax credit for EVs, regardless of production location, cost, or income. In July 2024, the leasing share in the auto industry averaged 22.2%, while 42.7% of EV sales were attributed to leasing agreements. Despite the growth, purchasing an electric vehicle remains expensive, with the average transaction price exceeding $57,000, compared to an industry average of $48,000. This explains why more buyers are opting for leasing and financing options. Companies such as Tesla, Ford, and General Motors benefit particularly from this favorable business climate, with Tesla being rated with a Zacks Rank #2 (Buy). Although Tesla's market share is declining and is below 50%, the company remains by far the leading EV manufacturer in the U.S. It is followed by General Motors, which recorded a sales increase of 60% in the quarter, with Hyundai and Ford ranking fourth. Although year-over-year growth has slowed, EV sales in the U.S. continue their upward trajectory. Encouraged by incentives and discounts, as well as access to more affordable EVs and improvements in infrastructure, even greater shifts toward electric vehicles are expected in the coming years. With the government on a mission to promote production facilities in the U.S., EV manufacturing remains an exciting area to watch.