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Electric Vehicles Will Reach 29 Percent of New Vehicle Sales by 2050, EIA Says

Electric vehicles of all types will account for as much as 29 percent of new light duty vehicle sales in the United States by 2050, according to the Energy Information Administration.

The driving forces behind the growth in electric vehicles, which includes both battery electric vehicles and plug-in hybrid electric vehicles, are declines in electric vehicle component costs, as well as federal and state policies that provide incentives for electric vehicle purchases or require minimum sales, according to the EIA’s Annual Energy Outlook 2023.  

The AEO projects that electric vehicles will account for between 13 percent and 29 ercent of new light-duty vehicle sales in 2050 and between 11 percent and 26 percent of on-road light-duty vehicle stocks.

EIA’s energy outlook assumes that the costs of battery materials, primarily critical minerals, will remain constant through 2050, but projected manufacturing cost declines will increase driving range and lower electric vehicle EV purchase prices through 2050.

The Annual Energy Outlook projects that by 2050 battery costs will drop 51 percent to 56 percent below 2022 prices, settling at a retail price equivalent of between $105 per kilowatt hour and $118/kWh in 2050. Most of the cost decline occurs before 2040 when battery production grows more quickly, the EIA said. Non-battery costs, such as for electric motors, power electronics, and wiring, will continue to decline through 2050, the agency said.

The Annual Energy Outlook’s model divides the light-duty passenger vehicle market into 16 size classes, eight for cars and eight for light trucks, and estimates average purchase prices for each.

The model projects that electric vehicle purchase prices will continue to decrease and that most electric vehicles with less than a 150-mile driving range could reach purchase price parity with conventional gasoline-powered vehicles by 2029. Electric vehicles with between 151 miles and 250 miles of driving range would reach price parity across most car size classes by 2038, while among light trucks, only small van and small crossover utility vehicle size classes reach cost parity, the EIA said.

Electric vehicles with over 250 miles of range do not reach price parity in any size class but approach it in the 2040s, EIA’s models project.

The Annual Energy Outlook also assumes that current Corporate Average Fuel Economy standards, which apply to model years 2023–2026, will result in increased electric vehicle adoption because of favorable fuel economy credits, even as CAFÉ standards drive increases in fuel economy for conventional gasoline-powered vehicles.

The report also assumes that legally enforceable state minimum electric vehicle sales requirements, such as California’s Advanced Clean Cars rule, are met. The authors noted that 15 states have adopted electric vehicle mandates like California’s.

The EIA cautioned that “significant uncertainties” are inherent to projecting the rate at which electric vehicles will become more common in the light-duty vehicle market, including future policies such as emissions and fuel economy regulations and vehicle sale mandates or combustion engine bans, disruptive technological advancements, availability and access to refueling infrastructure, changes in consumer attitudes and behavior, and critical mineral supply chains.