It is unlikely that gas-powered car sales will reach pre-pandemic levels again as the U.S. pushes for electric vehicle (EV) adoption.
- Gas-powered vehicle sales peaked in 2017 with 86 million internal combustion passenger vehicles sold.
- In the same year, battery-powered and plug-in hybrid cars sold for a little over 1 million vehicles combined.
- In 2022, gas-powered car sales were down almost 20% from the 2017 peak of 69 million, while plug-in vehicles jumped to 10.4 million in sales, according to Bloomberg data.
Why it’s news
EV adoption in the U.S. has hit a crucial tipping point where around 7.6% of all car sales are electric. Now that EVs are rapidly growing in America, it is unlikely that gas-powered car purchases will reach the 86 million peak from 2017.
Traditional combustion engine vehicles sharply declined after the pandemic due to supply-chain issues caused mainly by factory disruptions. Supply chains have slowly started returning to pre-2020 levels, but car sales are not.
In the last few years, the U.S. has become more accustomed to electric vehicles as more consumers have become more environmentally cautious and EV prices have lowered significantly.
Parts to manufacture EVs have become more abundant in the last few years as more manufacturers are boosting electric production. Another leading factor in the dropped price—the Inflation Reduction Act.
The act was introduced to boost America’s switch to EVs, lower carbon emissions, and ease reliance on China and other leading EV countries. With the Act, EVs made primarily in America would receive up to $7,500 in tax credits.
The promise of a tax credit made more Americans switch to EVs and forced other manufacturers to lower vehicle prices to receive the credit and get a significant boost in sales, including the leading EV maker Tesla which has dropped its prices twice this year.
Tesla’s price drops have brought the brand to undercut the average gas-powered car by nearly $5,000 in the U.S.—bringing Tesla prices to a record low and making it a cheaper EV option.
As EV sales continue to rise and some of the top models become cheaper than traditional gas-powered cars, many industry experts expect combustion engine sales to continue decreasing and possibly never reach the 2017 peak again.