Electric Vehicles (EV) Market – High Procurement from Federal Government Boosts Future Growth Prospects

Posted On December 31, 2020     

In the United States, on-road vehicles account for 24% of carbon emissions, and so there is an urgent need to electrify all of them except the heaviest of trucks. It is because electric propulsions have several benefits. However, American citizens have shown reluctance in using Electric Vehicles (EVs) as few EVs models are present in the market because of their cost.

The newly elected president of the U.S., Joe Biden, has shown promise in promoting EVs, and his efforts might boost the U.S. EV Industry. He has recently decided that there would be the electrification of numerous vehicles used by the federal government. With this, America would be taking a big step towards a clean energy economy.

The federal government operates about 420,000 vehicles (excluding the U.S. Postal Service Fleet) ; hence, has the power to promote the shift from fuel cars to EVS. However, to achieve this, the government will need to undertake a comprehensive and aggressive strategy.

In 2018, EV sales accounted for 358,000 and came down to only 329,000 in 2019. It is expected that once the Federal Government starts demanding EVs, its demand would augment as well as the competition in the market. Currently, the market is dominated by single-player, i.e., Tesla with only one product: it's Model 3. An increase in demand for EVs may provide incentives to foreign players to enter the market.

Moreover, as federal departments need 30% of the said vehicles to be fleet and another 19% to be SUVs, if these demands turn to the EV market, then, in that case, the government will be able to support and sustain a very critical segment of the EV market. These federal orders would also provide stability and assurance to stakeholders of the supply chain in the EV Market so that they would be more inclined to invest in labor and equipment. A 2016 task force on federal energy management has stated that federal demand for technologically advanced components and have less cost, like batteries, electric motors, etc., will come to be one of the significant drivers in battery technology and production.

It would be hard to accomplish the plan of electrifying the federal feet due to several reasons:

  1. Due to the limited availability of models in the market, those are electric.

  2. Due to the electric vehicle’s higher upfront cost.

  3. The cost of providing charging infrastructure for the EV as it is either unavailable or under-maintained at most federal bases.

Adopting EVs as a federal fleet is an essential yet ambitious step, wherein the government would encounter many hurdles. However, these hurdles will be worth the effort for America’s environment.

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