U.S. EV Market to Notch Fivefold Growth by 2025

Incentives and subsidies will drive EV ownership and create new sales opportunities.

November 25, 2020

SANTA CLARA, Calif.—The electric vehicle (EV) market in the United States is expected to flourish with government incentives driving EV ownership, according to Frost & Sullivan’s recent analysis, “Transitory Trends in the Electric Vehicle Ecosystem in the United States, 2025.” The U.S. electric vehicle market is estimated to register a nearly fivefold growth, reaching almost seven million unit sales by 2025 from 1.4 million unit sales in 2020.

“Over 90% of states offer incentives for setting up EV charging infrastructure,” said Prajyot Sathe, industry manager of mobility practice at Frost & Sullivan, in a press release. “Only a few states offer the usage of high-occupancy vehicle lanes. However, meaningful quality of life incentives and exemptions are offered across 39 states in the United States, including easier payment plans for the purchase of EVs, limited-time incentives to accelerate EV adoption/conversion and lack of requirements for emission inspections across several states.”

Market participants should focus on the following trends for success:

  • Battery-operated Electric Vehicles (BEVs): EV ownership incentives such as being exempt from state motor vehicle emissions inspections in Massachusetts and Colorado are among the primary reasons BEVs are expected to witness increased demand by 2025.
  • Plug-in Hybrid Electric Vehicles (PHEVs): Although PHEV sales are expected to almost double by 2025, they will be the slowest-growing EV segment. This is unlikely to change unless better incentives are offered.
  • Mild Hybrid Electric Vehicles (MHEVs): Since their launch in 2018, MHEVs have gained popularity in the U.S. market, primarily due to their 48V architecture. OEMs should launch models on the 48V MHEV platform to gain significant market share in a competitive market, the report recommends.
  • Fully Hybrid Electric Vehicles (FHEVs): FHEVs are expected to remain the most popular HEV model. They accounted for 41.7% of all EV sales in 2020 and are expected to climb to 44.6% by 2025, boosted by changes in the charging infrastructure and state incentives. 

“Mild hybrid electric vehicles (MHEVs) and full hybrid electric vehicles (FHEVs) will account for the maximum market share of 89.6% combined in the xEV market by 2025, with an almost equal split between them. Additionally, battery electric vehicles (BEVs) will witness impressive sales, followed by plug-in hybrid electric vehicles (PHEV) sales over the forecast period,” Sathe said.

Retailers looking to gain a better understanding of how to enter the EV market should be sure to watch the education session “How to Succeed in the EV Market,” part of the NACS Crack the Code Experience. There’s still time to register for the NACS Crack the Code Experience to gain on-demand access to this session and many more. Crack the Code runs through December 4 and features 24/7 access to forward-looking ideas and insights, plus innovative new-to-channel products and strategic connections.