2022 was the year electric vehicles entered the mainstream. Not everyone has one, but buying an EV no longer makes it an outlier. Fueled by policy initiatives from governments and billions of dollars in investment from automakers, we can safely say that the electric vehicle industry has begun to take shape.
Over the next year, that picture will develop beyond the 2022 foundation. Here are some of our best guesses about what to expect.
There will be a race to sell US-made electric vehicles in the first quarter
The Inflation Reduction Act, which the Biden administration passed in August, has already had a big effect on the electric vehicle industry as automakers work to incorporate their supply chains and factories. But with certain aspects of the IRA's EV tax credit rules now set to be delayed until March 2023, we expect EV sales to take off in the first quarter of the year.
According to the bill, Eligible electric vehicles could qualify for a $7,500 tax credit if they meet the requirements of being built in North America and sourcing critical battery materials from the US or countries with free trade agreements. Those rules were supposed to go into effect on January 1, 2023, but the Treasury Department delayed guidance on the critical materials rule until March. And it's a good thing, too. While automakers in 2022 rushed to set up factories in the US, most critical materials still come from China, so it takes time (probably years) to establish new supply chains.
The delay means that a large number of North American-made cars will now be eligible for the full rebate, at least for the first three months of the year. The biggest winners will likely be Tesla and General Motors, whose sales limits under previous EV tax incentives will not apply in the new year. But others like Ford, Nissan, Rivian, and Volkswagen have a lineup of NA-built EVs that are ready to reap the benefits.
Even more electric vehicle models and sales
EV sales in 2022 were pretty much dominated by what you'd expect: Tesla's Model S, Y, and 3, Chevrolet's Bolt, and Ford's Mustang Mach-E. Against the backdrop, almost every automaker, whether legacy OEMs or a start-up, has unveiled a number of impressive EVs for the 2023 market, from the Alfa Romeo Tonale to the Indi One. Most of them, however, they were geared towards the luxury consumer. In the coming year, we will see more new models coming out which are much more affordable.
Also, expect the sheer number of new EVs on the market to increase as new factories come online. McKinsey predicts that legacy automakers and EV startups will produce up to 400 new models by 2023.
All the new models coming out will give Tesla a run for its money, he predicts Shahar Bin NunCEO Tactile Mobility, an AV sensor technology company. Bin-Nun says that he expected Tesla to still dominate the US EV market in 2023, but that Ford, Hyundai and Kia will follow closely as they increase their lineups and production capacities.
We can also expect the second-hand electric vehicle market to increase in 2023, which will make it much easier for people who are filthy rich to buy a zero emission vehicle.
The software-defined vehicle will really take hold
Every automaker has been talking about the “software-defined vehicle” throughout 2022 as a concept inherently linked to the electric vehicle. In 2023, we'll really have a chance to see what that means.
General MotorsEg will launch Ultifi at the beginning of the year, your end-to-end vehicle software platform that promises OTA software updates, cloud connectivity and vehicle-to-everything communication. Ultifi will be the place where drivers can buy apps, services and features; it is an example of how car manufacturers are increasingly trying to customize vehicles to individual needs.
This customization will likely lead to a rise in in-car subscription-based services, says Will White, co-founder of Mapbox, an online mapping provider.
We have to get used to saying Level 2+ ADAS
Car manufacturers in 2023 will invest a lot more in launching level 2+ and level 3 autonomous systems, which are basically really good advanced driver assistance systems. White says these systems will be a common expectation on top-trim models.
Of course, Tesla will continue to add new features to its Autopilot and so-called "full autonomous driving" software. But other automakers will come out with their own brands of awesome technology that will take on more and more automated driving tasks.
Earlier this year, the autonomous vehicle company Argo AI closed after Ford and Volkswagen divested. The IP was pretty much split between the two automakers, both of which said they were committed to looking for short-term gains like the L2+ and L3 systems. Rivian founder RJ Scaringe also said that his company will focus on getting its own ADAS right.
Meanwhile in China, XPeng is launching the G9 SUV with its XNGP softwarewhich the company describes as a “full scenario” ADAS that promises to automate highway driving, city driving and parking tasks.
More investment to load correctly
JD Power analysts expect the US EV market share to hit 12% next year, which is up from the current 7%. If you narrow the scope down to consumers who actually have access to EVs, that market share actually looks more like 20%.
Whatever the number, the fact remains that we will see millions more electric vehicles on the road in the US next year. That means all the ancillary services needed to keep them running will need to be stepped up.
In 2023, we can expect to see investment—from government, utility companies, and private companies—in charging infrastructure, energy storage, and energy transmission.
Ensuring that the transition to electric vehicles is smooth is not just about building more electric vehicle chargers, although we recognize that this is a really important piece. Next year the maintenance of the chargers will also be prioritized. A separate study from JD Power earlier this year found that not only is public charging availability still a hurdle, but often when it finds a charger, it's broken. We predict there will be some technology, either from start-ups or existing EV charging players, to help manage charger maintenance, service, and upgrades.
Along the same lines, throughout 2022, every few months we run into some start-up or utility company screaming that the power grid will never be able to handle all the electric vehicles we'll see in 2023. They're probably right. So along with the power management infrastructure, we expect to see more vehicle-to-grid software.
The rise of electric vehicle fleets
We've already seen many fleet operators start to adopt electric vehicles in 2022 as they aim to hit whatever carbon emissions targets they've set for themselves. Hertz, for example, plans to buy 65 Polestar, 000 Tesla and 100 General Motors vehicles over the next two years to reach its goal of having 000% of its fleet electric by the end of 175.
In 2023, those purchases will only increase, particularly as manufacturers of commercial electric vehicles get their production lines up and running.
GM BrightDropEg recently opened its CAMI assembly plant in Ontario, which is expected to produce 50 of its Zevo delivery vans by 000. BrightDrop has already secured more than 2025 reservations from customers including DHL and FedEx.
Another commercial electric vehicle company, Canoo plans to buy a vehicle manufacturing plant in Oklahoma City to increase production of its Lifestyle Delivery Vehicle and bring those electric vehicles to market next year for committed customers like NASA and Walmart.
