Advanced Energy United is looking at macro trends impacting the electricity system in 2023 and beyond. This is the third in a seven-part series looking at what lies ahead – part of a broader look at what lies ahead for policymakers, customers, and utilities following government incentives and market shifts in 2022. Read the rest of the series here. 

Transportation electrification is gaining momentum as the light duty vehicle market approaches an inflection point.

The Inflation Reduction Act (IRA) includes billions in incentives to electrify two major areas of American life: transportation and buildings. But these funds go beyond addressing light-duty vehicles and single-family homes. In 2023, Advanced Energy United sees the potential for an accelerated shift towards electrifying medium- and heavy-duty vehicles and industrial and commercial buildings as well.

Transportation electrification is speeding ahead.

No sector of the advanced energy industry is transforming as quickly as transportation. States, vehicle manufacturers and drivers are all buying into the promises of an all-electric future. In the largest U.S. market, California, sales data shows the market share of light-duty electric vehicles (EVs) (including plug-in hybrids) reached 14% in 2021. Though the country as a whole trails the Golden State (with a 6% market share by Q3 of 2022), California’s share is falling, indicating more widespread adoption in other states. Notably, even as total light-duty vehicle sales plummeted in 2020 due to the pandemic, EV sales held steady and market share grew.

Medium- and heavy-duty EV markets are smaller, but momentum is growing, driven by compelling total cost of ownership (TCO) savings. While car buyers rarely consider overall costs in purchase decisions, fleet owners are more attuned to TCO. In December, the United States Postal Service committed to purchasing 66,000 electric delivery vehicles, and Rivian’s Amazon delivery vans are scheduled to hit the road soon.  

 2022 also showed that policy remains an important driver of EV market growth. California continues to lead the charge with its adoption of regulations such as Advanced Clean Cars II (to phase out the sale of internal combustion engine light-duty vehicles after 2035) and Advanced Clean Trucks (to require manufacturers to accelerate sales of zero-emissions trucks from 2024 to 2035). At the end of 2022, Vermont, New York, Washington, Oregon, Massachusetts, Delaware, and Colorado had adopted or announced intentions to adopt, in full or in part, California’s light-duty vehicle sales standard.

Federal incentives, including the National Electric Vehicle Infrastructure Program, and utility transportation electrification plans to invest in EV charging (like that of NV Energy), continue to drive investment in charging infrastructure to ensure that our highways, rest stops, depots, destinations and homes are ready to support easy and convenient electric travel.

 Looking ahead: 2023 is expected to be a big year for infrastructure program implementation and vehicle adoption. States, utilities and private developers will be furiously building charging stations to support growth in the light-, medium- and heavy-duty sectors. Schools will forge ahead with plans to introduce electric school buses into their fleets, and drivers will continue discovering the quiet thrill of ditching gasoline with the help of new IRA tax credits.

Advanced Energy United Managing Director Hannah Polikov and Policy Principal Angela Kent contributed to this series.    

Next up: Part 4: Buildings Transform, Too: Turning toward clean heating and building electrification.