The electric vehicle (EV) space is constantly changing, powered by developments, innovations, and policy shifts worldwide. This news update brought to you by Ideal Power offers a round-up of just some of the most eye-catching headlines around electric vehicles and the market opportunities associated with them.
This month, our news update includes information about the increasing demand for EV batteries, the Biden administration’s plan to direct $3 billion to EV battery production, Lexus’s announcement that it has completed an 800-volt electrical architecture, and a review of Q1 2022 sales of EVs in the U.S.
EV battery demand is growing rapidly
The demand for EV batteries is on the rise, a strong signal that EV production is increasing and mass adoption is expected to be right around the corner. Demand in the U.S., Europe, and Japan are already particularly strong, according to a market report from Meticulous Market Research, and emerging economies are driving additional demand. The market research group projects that the EV battery market will grow to $175.11 billion by 2028, up from $34.73 billion in 2021.
There are some headwinds facing the growth of the EV battery space, however, including limited access to raw minerals, such as nickel, which are required in the manufacture of EV batteries. According to Meticulous Market Research, significant government investment and public policy shifts are critical to overcoming these challenges.
Biden administration unveils funding to boost battery production
To help meet the surging demand for EV batteries, the Biden administration announced on May 2 that it would invest $3.1 billion to expand domestic production of EV batteries and support the production and adoption of electric vehicles. The funding plan would establish grants for businesses manufacturing EV batteries or components used in EV batteries, as well as the development of EV battery recycling facilities.
The grants would be funded by the federal government’s $1 trillion infrastructure plan passed earlier this year. They would also serve as part of a broader effort to support the nation’s EV battery supply chain, following the Biden administration’s announcement it would invoke the Defense Production Act to incentivize the extraction of minerals needed for EV battery production, including cobalt, graphite, lithium, manganese, and nickel. Supply chains for these minerals have been adversely impacted since Russia, a major exporter of these natural resources, invaded Ukraine and triggered a series of sanctions from Western nations.
The step serves to help meet the White House’s stated goal that EVs make up 50% of all auto sales in the country by 2030 and to replace the entire federal fleet of 600,000 vehicles with EVs by 2035. The administration has also announced plans to support the construction of a nationwide EV charging infrastructure and tax incentives for motorists who purchase EVs.
Lexus announces development of 800-volt electrical architecture
In an interview with Green Car Reports, Lexus Chief Engineer Takashi Watanabe announced the manufacturer had successfully developed an 800-volt electrical architecture that would be used in future EV models created by the company. This architecture is key to supporting faster charging rates, which can be limited by the EV itself as well as the charging station it is plugged into.
An 800-volt architecture is not yet commonplace in the industry, though some EVs on the market do offer it already. Lexus, which has not been involved in the EV market previously, makes its intent to grow into the space clear with this announcement. However, Lexus’s 800-volt architecture will not be released just yet. The manufacturer's upcoming EV model, the Lexus RZ 450e (which is the first EV Lexus will release), runs at 400 volts and will feature a maximum charge rate of 150 kW, which is roughly industry standard. The best EVs on the market currently, for comparison, support about 350 kW charging.
Q1 2022 EV sales break records in the U.S., California
The first quarter of 2022 was the strongest ever in the U.S. and in California, marking a high point for the EV industry and spurring hopes that mass adoption is no longer a distant hope but a near-term reality. Nationally, motorists purchased 208,000 electric vehicles in the first three months of the year, 81,292 of which were purchased by California drivers.
Total U.S. sales in Q1 surpassed even Q4 2021, the previous strongest quarter on record for EV sales. According to Veloz, an EV advocacy group, cumulative EV sales nationwide since 2011 have now reached 2.642 million, 1.135 million of which were sold to California motorists who are leading the way in American adoption of EVs.
Leading the way was Tesla, with the Model 3, Model Y, and Model S topping the charts, in that order, according to Green Car Reports. Tesla was followed at a distance by the Hyundai Ioniq 5 and the Ford Mustang Mach-E. Also cracking the top 10 were the Toyota Prius Prime, Tesla Model X, Jeep Wrangler 4xe, Nissan Leaf, and Volvo XC90 Recharge, the report states.
The good news keeps coming for the EV space
More news out of Washington, D.C. suggests the federal government’s commitment to investing in the expansion of the EV space is here to stay, while the demand for EV batteries continues to grow and shows that manufacturers are aggressively investing in the production of new vehicles. With more manufacturers like Lexus entering the space and quarter-over-quarter sales growing by leaps and bounds, there is clear hope that mass adoption is inching ever closer.
For investors, the market opportunity in electric vehicles remains immense. With more sales than ever slated for 2022 and a growing market expected to reach $1 trillion in value by 2026 (up from $260 billion in 2020), EVs are here to stay, especially as technological innovation strengthens the industry’s value propositions. While consumer spending increases, manufacturers target lower price points, and the federal government gets serious about expanding the electric vehicle grid, we could finally be witnessing electric vehicles preparing to go mainstream.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Dan Brdar
Dan Brdar is the President, CEO and a Director of Ideal Power. He has over 30 years of experience in the power systems and energy industries and has held a variety of leadership positions during his career. In addition to his role at Ideal Power, Dan previously served as President and CEO of FuelCell Energy Inc., a Nasdaq-listed company with a market cap of over $250 million.
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