The Future of Electric Vehicles: 7 Factors Driving EV Growth

Electric vehicles (EVs) are no longer a distant future vision but a dynamic and rapidly evolving present. Today, EVs are charging into the mainstream, powered by advancements that promise to transform our roads, cities, and way of life.

The movement of EVs from niche to necessity results from a record-breaking leap in adoption. The Edison Electric Institute projects that EVs on U.S. roads will grow to 26.4 million by 2030, making up over 10% of vehicles on the road. Such numbers indicate a society on the brink of a transportation electrification transformation.

However, this transition comes with challenges. Against a backdrop of growing demand, the future of electric vehicles requires significant investment, innovation, and collaboration.

A Decade of Strong EV Market Growth

The past decade has seen a remarkable rise in U.S. electric vehicle adoption. Starting from 97,102 vehicles sold in 2013, the market for EVs has expanded significantly, reaching over 320,000 electric vehicles sold in the first quarter of 2023, a 60% increase from the same period in the previous year.

These numbers reflect a decade of increasing consumer confidence in EV technology and a broader acceptance of electric vehicles as a primary mode of transportation.

Economic and Societal Factors Driving EV Market Growth

Electric cars are gaining traction. Economic factors driving EV adoption include:

• More savings over the long term: EV drivers spend less money on fuel because they can charge at home instead of paying for gas. Additionally, electric cars don’t need oil changes or have as many parts that can break down, reducing maintenance costs over time.
• Tax breaks and deals: The government offers special incentives, such as tax credits, to make buying an electric car more affordable.
• More affordable batteries: The heart of an electric car is its battery, and just as electronics become more affordable over time, so do these batteries. This makes the cars themselves less expensive as the technology evolves.

Societal factors contributing to EV adoption include:

• Beneficial for the planet: Driving an electric car reduces gas emissions and improves local air quality, providing both climate and health benefits.
• Everyone’s doing it: People consider electric cars upon seeing neighbors and friends adopt EVs. EV adoption among celebrities and influencers has also led consumers to view electric rides as cool and trendy.
• State mandates: Some states are passing laws preventing the sale of new gas cars only electric cars to be sold in the future. This is pushing car companies to improve and expand available EV options.As of the first quarter of 2023, states such as California, Washington, and New York are at the forefront of electric vehicle adoption in the United States, showcasing higher market shares of EVs compared to the national average. California continues to lead due to state incentives, a comprehensive charging infrastructure, and environmental awareness among its residents.On the other end of the spectrum, states such as Mississippi, West Virginia, and North Dakota lag in EV adoption. Limited charging infrastructure, lower levels of consumer awareness, and fewer state-level incentives to encourage the transition to electric mobility have led to slower uptake in these states.

Challenges to Widespread Electric Vehicle Adoption

As we look toward EV adoption, we must focus on actionable solutions that pave the way for broader EV adoption. Here’s a closer look at the challenges and the opportunities that come with them:

This journey requires innovation, community engagement, and supportive policies to ensure EVs become a staple of sustainable transportation worldwide.

How Utilities Can Prepare for an EV Future

As electric vehicles gain popularity, utility companies have a significant job ahead. They must ensure our energy systems can handle a high number of charging EVs, especially as more people choose electric over gas.

Here’s a breakdown of what needs to be done:

Making the Grid EV-ready

1. Forecast new load growth and update capacity maps: For developers and fleet managers, understanding where the utility can most easily and cost-effectively serve new EV loads is an important consideration for their project plans. Utilities can update publicly available load forecasts to proactively support these charging plans. See our report, “Preparing for Customer Fleet Electrification: A Utility Framework” to learn more.
2. Upgrade the grid: Utility companies can’t simply make grid upgrades affordable on a whim However, by proactively planning and investing for the long term and coordinating with commercial customers, utilities can help make the adoption of EV charging infrastructure more affordable. This approach ensures optimal use of existing grid capacity and aligns demand growth plans with customers’ needs, facilitating a sustainable expansion of EV charging support.
3. Develop smart grids and promote grid-friendly charging: Smart grids can manage where, when, and how much electricity goes toward EV charging. This avoids putting too much stress on the electric grid. Utilities can create managed charging programs that encourage customers to charge during off-peak hours, which reduces strain on the grid and can promote customer savings. Managed charging includes utility programs such as time-of-use (TOU) charging, demand response, dynamic charging, and bidirectional charging programs.
4. Provide customer education: Customer education is a crucial component of creating a positive transition to electric vehicle adoption. Utilities can support education efforts by supplying EV ownership 101 materials. This would include information on public charging, options for home and workplace charging, utility and local incentives for owning and leasing an EV, and relevant utility rates.
5. Incorporate equity considerations into EV planning: Utilities can proactively incorporate equity frameworks into their planning and program processes, and they should prioritize historically overlooked and overburdened communities when designing programs. This includes supporting multi-unit dwelling charging infrastructure, creating incentives for low-income households, and ensuring that the benefits of EV adoption are accessible to all segments of society. Additionally, utilities can support public transit systems to help those dependent on public transportation, ensuring a more inclusive and equitable approach to electrifying transportation.

Advancing EV Adoption Through Fleet and Bidirectional Charging Initiatives

Beyond preparing the grid, businesses and municipalities can help accelerate EV adoption and enhance grid resilience through initiatives and strategic fleet transitions.

Leading with Municipal EV Fleets

Cities and towns are transitioning their municipal service vehicles — including buses and maintenance trucks — to electric, reducing air pollution and operational costs over time. By adopting EVs, cities demonstrate environmental leadership and encourage local businesses and residents to consider making the switch, thus fostering a community-wide shift towards cleaner transportation.

Fleets Driving EV Adoption

Fleet owners are organizations that manage collections of vehicles, such as delivery companies, taxi services, and government agencies. Under the right circumstances, these entities can significantly reduce operating costs by adopting EVs and setting up efficient charging solutions.

Power Both Ways: Bidirectional Charging

Bidirectional charging technology allows EVs to not only draw energy from the grid to charge their batteries but also to send power back to the grid when needed. Bidirectional-capable EVs can charge during beneficial grid conditions such as off-peak times or during high renewable energy generation and discharge energy locally to reduce peak load during grid outages, and to the broader grid system to support ancillary services and peak demand events. Through all of these services, bidirectional-capable EVs can help customers weather grid outages, support peak demand savings, and earn incentives for returning electricity to the grid. For fleet operators, this means their vehicles contribute to energy stability and resilience, adding value beyond transportation.

Looking Ahead

EVs offer consumers and businesses significant opportunities to save on costs and reduce environmental impact. Yet, fully realizing these benefits requires careful planning and active involvement from vehicle manufacturers, utility companies, government entities, and consumers.

As we look to the future of electric vehicles, it’s clear that they will play a major role in transportation. Ensuring that the necessary infrastructure and support systems are in place is critical for this transition to succeed. Collaboration across all sectors is essential to develop a comprehensive approach that addresses the challenges and maximizes the advantages of EV adoption.

For more information on creating an equitable transition to electric transportation see our report, Benchmarking Equitable Transportation Electrification.