Electric vehicle sales have made a leap this year in the United States.

From January to September, U.S. consumers bought 305,324 all-electric vehicles, an increase of 83 percent from the same period in 2020, according to Kelley Blue Book.

With this bump in sales, all-electric vehicles are now 2.6 percent of all new light duty cars and trucks sold in the country, up from 1.6 percent at this time last year.

Those are huge gains. But when I spoke with auto analysts this week, they said 2021 is only an appetizer for what is coming in 2022.

The increase in sales this year came despite major challenges, including a short-term shortage of computer chips that has led to production delays, and long-term regional differences that mean the EV market barely exists in much of the country.

In fact, when we’re talking about the United States EV market, we’re mainly talking about one company—Tesla—and one state—California. Teslas accounted for about 70 percent of new all-electric vehicle sales this year, and California had about 40 percent of the country’s EV registrations, which include sales this year and vehicles sold in previous years. 

But the market is shifting to include many more big players competing in more places. Automakers are expanding their EV lineups and they are doing so with products, like the upcoming Ford F-150 Lightning pickup, that could win over customers who would never buy a Tesla.

“By this time next year, we’re going to have so much more,” said Ed Kim, vice president for industry analysis at AutoPacific, an auto industry consulting firm. “We’re going to see another big jump.”

His firm is projecting that there will be 140 EV models available in the U.S. market by the end of 2026, up from about 20 today. Almost as important as the number is the variety, which will include SUVs, pickups, large cars and small ones.

Automakers are introducing new models as the range of batteries is increasing and battery costs are decreasing. For new EVs, a battery range of 200 miles is expected, and ranges of more than 300 miles are increasingly common. This is a big shift from a decade ago when the Nissan Leaf was introduced with a range of less than 80 miles.

The increase in EV models and battery range should contribute to the vehicles making inroads in markets outside the East and West coasts, Kim said.

Illinois is a prime example of how different the EV market is in the center of the country. The state’s population is about one-third of California’s, but its EV registrations are one-sixteenth of California’s, according to federal government data. State policy plays a key role, with California having long supported EVs. Illinois is playing catch-up to reduce emissions from transportation, including through a law signed this summer that provides a $4,000 rebate for the purchase of new or used EVs.

“For EVs ultimately to become the dominant powertrain in the market, it’s going to require all 50 states to get there,” Kim said. “It’s not going to be just California getting there. It’s going to be everyone.”

Matt DeLorenzo, senior managing editor for Kelley Blue Book, told me the rise in the EV market share is moving toward a significant turning point.

“If this gets to 10 or 15 percent, it’ll be like an overnight success that has taken a decade,” he said. “I think we’re nearing an inflection point, and part of that inflection point is the basic availability of electric vehicles at a price people are willing to pay.”

DeLorenzo said his best guess is that the EV market share will reach that point in 2025 or 2026.

An essential ingredient for getting there is a decrease in the cost of EVs to the point that they cost the same, or even less, than equivalent gasoline vehicles. Researchers disagree about when this will happen, but there is mounting evidence that it’s only a few years away. 

EV sales also are surging in other markets, like China and Europe, as reported by EV-Volumes.com, although January-September figures are not yet available. Global sales for the first half of the year were more than double from the same period in 2020.

But there are some caveats in comparing across continents, among them the fact that plug-in hybrids constitute about half the European market and are included in the EV-Volumes’ figures. Hybrids, which can run on gasoline and electricity, represent a much smaller part—less than 1 percent—of the U.S. market, and are not part of the numbers cited earlier in this column for U.S. sales.

The shift to EVs is a crucial part of the transition to clean energy. The transportation sector was responsible for 29 percent of U.S. greenhouse gas emissions in 2019, more than any other sector. Ideally, the nation’s vehicle fleet would switch to EVs at the same time that the electricity grid, another major source of emissions, also moves away from fossil fuels.

One of the big unknowns in the U.S. market is the role of government policies, like the rules in some states that require a certain share of vehicles to have zero emissions, and federal tax credits.

Congress is now considering a $12,500 tax credit for consumers who buy new EVs. The proposal is part of Democrats’ spending bill that is the subject of intense debate between factions within the party.

The EV incentive would be an increase over the $7,500 credit that already exists for the first 200,000 EVs a manufacturer sells. The proposed benefit would only apply to vehicles assembled in the United States by union labor, and would exclude imported models like the Audi e-tron and nonunion automakers like Tesla.

But all these details are subject to change.

Tesla is heading toward the end of 2021 with a commanding lead in the market. The Model Y SUV, which began sales last year, has been a hit, with 118,107 vehicles sold in 2021, which was close to 40 percent of all EV sales from all brands this year. (The company is also succeeding financially, reporting record sales and profit for the third quarter.)

For some perspective, the Ford Mustang Mach-E, a high-profile EV that went on sale in December 2020, has sold 18,855 units, which Ford has touted as a success. Ford said in July the Mach-E outsold the gasoline version of the Mustang during the previous month.

The market to come will be shaped by competition, as Tesla tries to maintain its lead, and other major automakers, fueled by billions of dollars in investment in their EV development, take their best shots.

Other stories about the energy transition to take note of this week:

West Virginia’s Reliance on Coal is Getting More Expensive: A few days after U.S. Sen. Joe Manchin, D-West Virginia, indicated he would not support the major clean energy provision in Democrats’ spending bill, Ella Nilsen of CNN reports on how his state’s heavy reliance on coal is a financial hardship for residents. West Virginia gets a larger share of its electricity generation from coal than any other state. At one time, coal power was the least expensive option, but that’s changed and the state’s consumers are paying for it. “It does feel wrong when your electric bill is more than your mortgage,” said Felisha Chase, a West Virginia resident, about the situation in her household.

Penalties Are Essential for Clean Energy Plan to Work: Thanks to Manchin’s opposition, the clean energy proposal in Congress is unlikely to pass. But it’s still important to understand the policy, something that the think tank Energy Innovation is doing through a new report. The findings are stark, showing the projected benefits in terms of emissions reductions that would happen with the bill, and how those gains would vanish if the clean energy plan was removed. The policy, called the Clean Electricity Performance Program, would give incentives to utilities that meet annual targets for adding carbon-free electricity sources, and penalties for falling short. The report finds that the penalties are essential for the plan to succeed in changing the actions of utilities, as Jeff St. John reports for Canary Media. This helps to rebut the suggestion by some observers that Congress could compromise by removing the penalties.

Biden Administration Ramps Up Offshore Wind Plans: The Biden administration has released a plan to allow development of offshore wind farms along much of the coastline of the United States. Interior Secretary Deb Haaland said that her agency is working to identify and lease federal waters for wind development by 2025 off the East Coast, West Coast and Gulf of Mexico, as Coral Davenport reports for The New York Times. This would be in addition to the areas that already are part of the lease process or have been leased, like where the Vineyard Wind 1 project will soon begin construction off the coast of Massachusetts. “The Interior Department is laying out an ambitious road map as we advance the administration’s plans to confront climate change, create good-paying jobs, and accelerate the nation’s transition to a cleaner energy future,” Haaland said.

Environmental Groups Don’t Like New Clean Energy Law in North Carolina: North Carolina Gov. Roy Cooper signed a bill into law last week that sets a goal for the state to cut emissions from the electricity sector by 70 percent from 2005 levels by 2030, and get to carbon neutrality by 2050. This sounds like something environmental groups would be ecstatic about, but most are giving the measure faint praise or criticizing it, as I wrote for ICN last week. The problem, some groups say, is that the bill appears to have been designed mainly to allow electric utilities more leeway to raise their rates, with the climate provisions as an add-on. And the climate goals have some potential loopholes that may undermine their effectiveness.