A record number of Americans are choosing electric vehicles. Some states have temporarily suspended EV adoption-promoting incentives due to excessive demand.
Electric vehicles were a bright spot in the industry last year despite overall auto sales declining. Cox Automotive figures show that whereas total US vehicle sales decreased by 8% YoY from 2021, EV sales increased by 65%, surpassing 800,000 for the first time.
This year, the pattern is continuing unabated. According to the most recent figures, EV sales in Q1 surpassed 250,000 and set a new record, accounting for almost 7% of all US vehicle sales.
The increased availability of EVs is just one of many factors driving up demand. In the first three months of 2023, Tesla produced over 440,000 electric vehicles, a record-high quantity (up 44% YoY).
What’s more, a slew of new EVs is becoming more widely accessible and hitting all the market sweet spots, including electric trucks (like the Ford F-150 Lightning and Rivian R1T), electric SUVs/crossovers (like the Ford Mustang Mach-E, Hyundai IONIQ 5, Volkswagen ID.4), and more affordable options (like the Chevy Bolt EV, which starts at $26,500).
For example, the EV tax credit extension from the Inflation Reduction Act offers up to $7,500 for new purchases and $4,000 for used vehicles as federal incentives.
A few hundred dollars to several thousand dollars in additional incentives are offered by states and a number of utility companies (the majority are in the $1,500–$3,000 range).
However, numerous governments have had to stop the programs because they are overburdened due to the surge in demand for electric vehicles.
As EV demand climbs, states stop offering incentives.
This week, AP News reported that New Jersey has become the most recent state to temporarily suspend its rebate program due to a lack of funding as a result of the program’s popularity.
Residents can receive up to $4,000 in incentives through the state’s “Charge Up New Jersey” program when they buy or lease a new electric vehicle.
On April 17, Charge Up New Jersey ceased taking new requests for EV subsidies after having distributed nearly $35 million for the fiscal year that ends in July.
In order to disburse funding based on the current rate of application approvals, the board announced it was stopping the program. Approximately 10,000 EVs will be purchased or leased with the $35 million in funding, according to projections from the New Jersey utility board.
The program has contributed more than $90 million in subsidies to the adoption of more than 25,000 EVs since it began over three years ago.
There is a great deal of demand for the EV incentives that some states, including New Jersey, are providing. For instance, Oregon is also stopping a well-liked incentive program because more buyers are switching to electricity than anticipated.
The temporary suspension of the EV incentive program was announced by the Oregon Department of Environmental Quality in March. 2018 saw the launch of Oregon’s Clean Vehicle Rebate program, which offers qualified households up to $7,500. Senior advisor Rachel Sakata for DEQ stated: