US electric vehicle market expected to cool on legislative, trade obstacles

View Full Transcript

The US electric vehicle market has seen explosive growth in recent years, but two notable market-moving events have likely changed its course. 

Our analysts at Energy steeply lowered their EV sales outlook. They say reduced investments and big-picture trade drama are likely to have long-term effects on demand.

So what exactly is causing this market to hit the brakes?

Well for starters, Republicans in Congress gave a short deadline for EV tax credits and charger incentives. 

Also, California’s ban on internal combustion engine vehicles was repealed, standards that were adopted at varying levels across 17 states.

Potentially even more consequential is China’s new export restrictions on key battery metals that the US EV market heavily relies on.

The export cuts caused lithium prices to spike in July. That plus China shutting down some production means 10% of global lithium supply at risk.

But of course, everything is still in motion here. The lithium market is very oversupplied. meaning producers are still operating at a loss despite the price spike.

Also, US states still have varying levels of EV incentives in place, which may cause a polarization of sales going forward.