Many forecasts agree that electric vehicles (EVs) will quickly grow as a portion of new car sales, but a report this week from the Conference Board points out that they will still constitute just a fraction of total cars on the road for decades to come, since drivers tend to hold onto their gas-burning automobiles for an average of 12 years.
The report says that even if the share of EVs sold in the U.S. rises from its 2022 mark of 6% of new car sales to 100% by 2040, 40% of all cars and trucks on the road in 2040 might still be powered by fossil fuels. That means that businesses must be prepared to manage their operations in a bifurcated market environment, the think tank said in a paper titled “The Future of US Vehicle Electrification and GHG Emissions.”
"EV adoption is set to surge in the coming decade, but new vehicle sales tell only part of the story," Alex Heil, senior economist at The Conference Board, said in a release. "Americans are holding on to their cars longer than they once did, with the average age of light vehicles exceeding 12 years in 2022. As a result, the U.S. may need to support both a rapid ramp-up in EV charging and continued operation of fossil fuel infrastructure for decades to come—unless private investment, policy incentives, and consumer demand can spur even faster EV adoption and vehicle replacement."
Because those old cars will still be cruising U.S. highways, they will keep emitting pollution. Even if EV sales of cars and trucks reach 100% by 2040, annual greenhouse gas (GHG) emissions from fossil fuel vehicles would fall by 51% based on current performance standards—a dramatic drop, but still far off the U.S. goal of net zero in 2050.
In turn, businesses will face a transition risk in coming decades since investments in fossil fuel infrastructure—such as refineries, storage tanks, and fueling stations—would still be necessary, despite the decline of the gasoline and diesel sales markets and of revenue generated by motor fuel taxes.
At the same time, that uncertain transition will also affect providers of the expanded electricity that will be increasingly needed to charge all those new EVs. A new study by National Grid and Hitachi Energy, titled "The Road to Transportation Decarbonization: Readying the Grid for Electric Fleets," cites a need for proactive planning and strategic investment to ensure the grid is primed for electrification of medium and heavy-duty vehicles (MHDVs) like buses, trucks, and vans.
In response, the study calls for a coordinated response including utilities, regulators, businesses, communities, and others to meet the forthcoming challenges. The study suggests that regulatory and planning structures must evolve to accommodate MHDV electrification, and new partnerships must arise to support the electrification journey.