Joint forecast says EVs will make up 30% of car sales by 2030

LAS VEGAS—Electric vehicles are expected to account for about 30 percent of new car sales and 9 percent of vehicles in operation in the U.S. by 2030, numbers that are expected to increase rapidly thereafter, according to a new study commissioned by the Auto Care Association (ACA) and the Automotive Aftermarket Suppliers Association (AASA).

The report, the "2022 Joint EV Trends and Outlook Forecast," is an update of a study released in 2021 by consulting firm PWC Strategy&.

The previous report predicted EVs would account for 6 percent of vehicles in operation (VIO) in 2030; researchers now are projecting they will account for 9 percent by 2030.

While EVs are beginning to penetrate the U.S. car parc, the traditional internal combustion engine vehicles will maintain the majority share through 2040.

Hybrid-electric vehicles (HEVs), meanwhile, will only account for less than 5 percent of the car parc going forward.

The associations noted that the growth of EVs presents vehicle repair shops with two challenges: Maximizing returns on their existing businesses,while in parallel growing new innovative businesses and preparing to take advantage of the new opportunities of electrification and technology.

Repair shops need to start to invest in the future, Carlos Thimann, a Strategy& partner, told attendees at the recent AAPEX in Las Vegas. "Not only in tools and equipment but training technicians to make sure they have the ability to service the EVs."

Independent repair shops also need to build consumer awareness of their abilities to competently service EVs, as EV owners tend to take their vehicles to a car dealership first for maintenance, he noted.

Shops need to market the their capabilities to the consumer to increase traffic to their bays, he said.

In the U.S., auto service shops have started investing in upgrading their tools and capabilities in states mandating sales of zero-emission vehicles (ZEV).

About 40 percent of the aftermarket service providers have started investing in EV capabilities, with larger shops leading the way, according to the report.

A majority of independent repair shops surveyed have seen an increase in the number of those vehicles coming to their shops for service. But overall, there are mixed opinions among independent shops as to the timing of BEV/HEV impact on the aftermarket, the report said.

In 2021, about 57 percent of non-warranty DIFM service for EVs involved tires and wheels.

About 39 percent of the EV non-warranty DIFM repairs were performed at new car dealerships, the report said, with 20 percent taken to tire dealer/auto repair shops, 15 percent to discount stores/mass merchandisers and 12 percent to independent repair shops.

"Though consumer awareness of HEVs/BEVs serviceability at repair shops is a critical component, small shop owners have not showcased a strong trend to invest in marketing efforts," the report said.

On average, EVs account for about 3 percent of customers for businesses with one to three bays versus 5.4 percent for businesses with eight or more bays.

In 2022, U.S. light vehicle aftermarket sales is expected to reach $357 billion—$112 billion of which can be attributed to the parts market, according to the report.

The service/labor market contributes 22 percent of the total aftermarket size.

Aftermarket sales are predicted to grow at a compound annual growth rate (CAGR) of 1.7 percent until it reaches about $520 billion by 2045.

In the short term, the size of the aftermarket is bolstered by inflation that is affecting both part prices and service rates, the report said.

But mainly, growth will come from an aging and ever-growing car parc, as well as the introduction of new EV-related parts with higher prices and repair expertise.

New car sales have dropped from 17 million in 2019 to under 15 million in 2022, and may rebound to pre-pandemic levels by 2025.

This gap in new vehicle sales has prompted vehicle owners to retain and maintain their older vehicles, thus increasing the average vehicle age beyond 12 years.

In the end, the U.S. car parc, estimated at 284 million in 2022, is expected to continue growing, albeit at a slower pace than the last seven years, the report said, and reach 325 million vehicles by 2045.

By 2045, EVs are predicted to account for 42 percent of vehicles on the road.

EV adoption has been increasing as these vehicles inch closer to parity in a three-year total cost of ownership with ICEs.

The report estimated EVs will grow to about 30 percent of new car sales in the U.S. by 2030, and increase rapidly thereafter.

"The long-term trend for EV battery prices has been declining, but recent supply shortages in battery raw materials, paired with lackluster EV production volumes, have begun to drive prices back up – this is expected to be a short-term trend," the report said.

EV adoption is driven by vehicle economics, availability of charging infrastructure and consumer behavior.

Most consumers evaluate total-cost-of-ownership parity with conventional ICE vehicles, and parity without incentives will be the tipping point for large EV adoption, the report said.

EV adoption is also impacted by so-called "EV range anxiety," consumer familiarity with charging providers and their networks, and access to more "away-from-home" charging.

Battery prices continue to decline in the U.S., which will help EVs reach parity with ICE vehicles in the next two to four years, the report said.

Advancements in battery technology will continue to lower battery costs but, in the short term, supply shortages in battery raw materials may slow the trend of price declines.

By 2030, as battery prices continue to drop, the cost of ownership for EVs will likely be more consumer-friendly as compared to ICEs, the report said.

Approximately 100 BEV models are expected to be introduced in North America between 2022 to 2026, however, the ramp-up has been impacted by the recent decline in new car sales due to supply-chain issues, the report noted.

There will be a higher penetration of EV car parts in the next decade as EV penetration continues to increase, the report predicted.

Although service providers are equipped to service all types of vehicles, the "one-size-fits-all" approach won't work, the report warned: Shops will need to be equipped to handle differences in weight, voltage, tooling, etc.

With the increased average age of ICE vehicles along with the high rate of EV adoption, the aftermarket will need to build parts and service strategies for both ICE and EV vehicles, the report said.