Consumer Anxiety and Infrastructure Limitations Hinder EV Adoption

• As governments and industry strive to decarbonize the transportation sector, the role of biofuels will continue to expand.
• Looking ahead to 2035, the US is expected to dominate production of both ethanol and diesel, as well as advanced biofuels.
• Rystad Energy research predicts biofuel production in the US will increase by about 53% by the middle of next decade

Following years of investment in electric vehicles (EV) from major automakers and innovative new startups, over the last year, sales have faltered, causing many industry players to reassess their previously optimistic forecasts. Many big manufacturers have scaled back operations for fear of an oversupply of EVs before demand for environmentally friendly vehicles increases sufficiently. However, U.S. Treasury Secretary Janet Yellen recently stated that the Biden administration’s Inflation Reduction Act (IRA) has created a “boom” in the EV sector, which is expected to spur uptake.

This month, U.S. Treasury Secretary Janet Yellen said that the Biden administration’s investment in EVs has led to the acceleration of a sectoral expansion in recent years. She highlighted a major investment in a new $49 million EV battery factory in Kentucky, supported by tax credits from the IRA. Yellen stated, “It’s part of a boom in EV-related investments in Kentucky… The Biden Administration’s policies and federal funds are fuelling private sector investments.”

Her statement seems overly ambitious to many in the sector given the recent downturn in EV sales forecasts. Many automakers have lowered their expectations for EV sales in the coming years following a less-than-successful year. This has led many in the industry to take a wait-and-see approach.

To date, the consumer demand for EVs and hybrids has been lower than anticipated, following several years of growth. Although governments worldwide are encouraging consumers to shift from internal combustion engine (ICE) vehicles to greener electric alternatives, many are waiting until automakers can offer EVs at a cheaper price, with a longer range, more power and other competitive attributes. In addition, the U.S. has been slow to roll out its EV charging infrastructure, meaning there is a dearth of charging equipment in several regions of the country.

The Biden administration plans to invest $7.5 billion from the Bipartisan Infrastructure Law in the development of a national EV charging network, with high-speed chargers, spaced no less than every 50 miles along U.S. major roads, freeways, and interstates, through the National Electric Vehicle Infrastructure (NEVI) programme. Biden aims to develop a network of at least 500,000 public chargers by 2030. It is hoped that the rapid development of a major charging network will assuage automakers’ c