Electric vehicles (EVs) are becoming more common throughout the U.S., with millions now cruising on roadways alongside their gas-powered counterparts. As more companies join EV giants like Tesla, competition for the burgeoning EV market share is likely to intensify. For many domestic and foreign automotive manufacturers, there’s more at stake in pursuing alternative fuels than just breaking technological ground.

We at the MarketWatch Guides team will uncover striking insights into the EV market, from competition among the most prominent stakeholders to the increasing market share. 

Our findings highlight the factors contributing to growing EV popularity and explore whether making the move away from gas-powered vehicles is a worthwhile investment.

Key Findings

• EV sales in the U.S. saw an increase of 60% year over year from 1 million in 2022 to 1.6 million in 2023.
• The U.S., Europe and China represent the three largest global markets in EV sales.
• Although there are many myths about how eco-friendly EVs really are, the overall carbon footprint of EVs is still smaller than those of gas-powered cars — even accounting for the carbon pollution that results from the manufacturing process and charging needs.
• California, Florida, Texas and Washington lead the nation with the highest numbers of EV registrations.
• Electric vehicles tend to have higher car insurance rates.

What Is an EV?

All-electric vehicles (also known as battery electric vehicles or BEVs) are powered by an onboard battery that stores electrical energy, according to the U.S. Department of Energy’s Alternative Fuels Data Center. Unlike conventional gas-powered or hybrid vehicles, EVs rely solely on electricity for propulsion. The Environmental Protection Agency (EPA) classifies EVs as zero-emissions vehicles due to the lack of exhaust or tailpipe emissions expelled.

Rather than fueling, an EV requires its users to recharge its battery, similar to charging your smartphone, laptop or other electronic device. Current battery technology limits how far EVs can travel, especially compared to gas-powered vehicles. However, extensive research and development continue to identify methods to lengthen this range and improve efficiency to accommodate market demands.

How Many Electric Vehicles Are Sold in the U.S.?

Electric car sales have taken off in the U.S. since 2020. About 1.6 million EVs were sold in the U.S. in 2023 — a 60% increase from the 1 million sold nationwide in 2022. The U.S. accounted for 9.7% of all new EV registrations worldwide in 2022. Globally, EV sales topped 10 million for the first time in 2022. In the first quarter of 2023, over 2.3 million electric vehicles were sold worldwide, a roughly 25% year-over-year increase.

China, Europe and the U.S. represent the three most significant global EV markets. Over half of 2022 EV sales were finalized in China, although the U.S. saw a 55% increase in sales that same year. A whopping $52 billion was sunk into North American EV supply chains between August 2022 and March 2023, according to the International Energy Agency (IEA). About half of the investment went to battery manufacturing, while an equal 20% went to both battery components and EV manufacturing.

Many automakers have publicly announced their green intentions. For instance, Jaguar announced its aim for a full electric lineup by 2025. Mitsubishi joined in with goals of 50% electrification by 2030 and 100% just five years later. Some of the biggest hurdles continuing to delay or deter progress include supply chain constraints and volatility in critical mineral prices. However, EVs are set to replace 5 million barrels of oil used daily by 2030 at the current pace, according to the IEA.

EV Market Share

As of October 2023, Tesla made up more than half of the U.S. EV market share. Chevrolet ranked as the second-largest EV brand in America at 5.9% market share, with Ford close behind at 5.8%.

Volkswagen, Rivian, BMW and Mercedes-Benz EV registrations are rising, though Hyundai, Kia and Nissan are struggling to gain ground in the market, according to Automotive News. Experts point to recent changes in the EV tax incentive requirements, which limit eligible vehicles based on the manufacturer’s suggested retail price (MSRP) and the country of final assembly. However, non-Tesla EV registrations rose 151% in the first few months of 2023, while Tesla saw a drop in market share from 72% to 58% early in the same year.

Cheapest Electric Vehicles

The average price of a new EV comes in just under $60,000. Federal and state tax incentives also influence final EV ownership costs. Some of the most popular and affordable electric vehicles include:

• Audi Q4 e-tron: Built off the ID.4 platform, the Q4 e-tron starts at just under $50,000 with a range of around 265 miles.
• Chevrolet Bolt and Bolt EUV: Priced under $30,000, the Bolt EV and Electric Utility Vehicle (EUV) achieve a range exceeding 240 miles.
• Hyundai Kona Electric: Sales of this 258-mile range EV are limited to 12 states, with prices starting at $33,000.
• Kia Niro EV: Priced near $40,000, the Niro EV claims a 250-mile range. Interiors also feature recycled wallpaper headliners and animal-free materials throughout.
• Mazda MX-30: Complete with 100 miles of range, this Mazda’s base price hovers around $35,000.
• Mini Cooper SE: For under $30,000, you can drive up to 110 miles with this electrified Mini.
• Nissan Leaf: One of the older EVs on our list, the Leaf makes it to nearly 150 miles of range. Prices start at just over $28,000.
• Polestar 2: Starting at around $50,000, the Polestar 2 manages 270 miles of range.
• Tesla Model 3: At around the $40,000 mark, the Model 3 achieves 272 miles of range with the base rear-wheel-drive model.
• Volvo XC40 Recharge: Equipped with a dual motor and all-wheel drive (AWD), the XC40 Recharge offers 223 miles of range starting at around $50,000.

Are Electric Vehicles Better for the Environment?

Due to their lower emissions and energy efficiency, EVs are generally better for the environment and have a smaller carbon footprint than their gas-powered counterparts. Because there are many misunderstandings about how EVs work and their impact on the environment, the EPA recently dispelled some common EV myths:

• Myth: EVs are worse for the environment than gas-powered cars due to power plant emissions that result from the electricity needed to charge them.

Fact: Producing EVs (specifically the battery) requires additional energy compared to what’s needed for a 12-volt battery. However, EVs claim zero tailpipe emissions and an overall smaller carbon footprint than their gas-powered siblings, including the electricity used during charging.

• Myth: Carbon pollution created by EV battery manufacturing makes EVs more harmful to the environment.

Fact: While EV manufacturing can create more carbon pollution than creating gas-powered vehicles, the overall carbon footprint of EVs is still smaller than those of gasoline cars — even accounting for the carbon pollution required during the manufacturing process.

Additionally, recycling EV batteries can reduce emissions by reusing materials and components. However, challenges remain in developing the technology necessary for efficient recycling practices.

• Myth: The rise in EV charging threatens the stability of the U.S. power grid.

Fact: Despite concerns of overloading the power grid, California claims charging more than 1 million EVs represents less than 1% of the grid load for the entire state, including during peak hours. Charging at night can help reduce the impact on the power grid, and it’s cheaper as well.

• Myth: There aren’t enough EV charging stations.

Fact: Over 60,000 EV charging stations serve the entire nation, and they’re becoming more accessible thanks to government initiatives and the rise in EV popularity. EVs can also be easily charged at home.

• Myth: EVs’ limited ranges aren’t enough for daily travel needs.

Fact: The typical person drives less than 50 miles daily on average, but most EVs exceed 200+ miles in range. However, temperature fluctuations can reduce EV range by up to 40%.

• Myth: EVs aren’t as safe as gas-powered cars.

Fact: Considering the extreme power held within an EV battery, manufactured battery packs must meet specific standards, including safety features that render the electrical system harmless should a short circuit or impact occur.

Who Is Adopting EVs?

California, Florida, Texas, and Washington lead the charge in the number of total EV registrations. California accounts for 37% of that total, with 900,000 light-duty EV registrations in 2022 alone. However, a stark divide exists between states adopting all-electric vehicles and those that are not. In 2022, the states embracing the EV movement most with the highest numbers of EVs per 10,000 residents included:

State

EV Registrations

Per 10,000 Residents

California

903,600

232

Hawaii

19,800

137

Washington

104,100

134

Oregon

47,000

111

Nevada

32,900

104

Colorado

59,900

103

New Jersey

87,000

94

Arizona

65,800

89

Utah

28,000

83

Vermont

5,300

82

In contrast, the following states lack the same momentum:

State

EV Registrations

Per 10,000 Residents

Mississippi

2,400

8

North Dakota

600

8

West Virginia

1,900

11

Louisiana

5,900

13

South Dakota

1,200

13

Wyoming

800

14

Alabama

8,700

17

Arkansas

5,100

17

Kentucky

7,600

17

Iowa

6,200

19

How Do EV Tax Credits Work?

The Clean Vehicle Tax Credits embody the available EV tax credits in the U.S. The Inflation Reduction Act of 2022 extended the credit through 2032, with broader eligibility requirements to include a greater number of eligible vehicles. With these federal tax credits, EV owners can offset ownership costs at tax time.

2022 Tax Year

Previous eligibility for federal EV tax incentives included limitations on how many EVs were sold and the purchased EV’s weight. Plus, only original owners were eligible. Vehicles placed into service after Aug. 17, 2022, were required to be finally assembled in North America to maintain eligibility for these tax credits.

2023-2032 Tax Years

EV tax incentive rules for 2023 through 2032 include several requirements:

• The $7,500 tax credit is split in half, with one half ($3,750) awarded for meeting critical mineral requirements and the other for battery component requirements.
• The MSRP cannot exceed $80,000 for SUVs and pickups or $55,000 for other vehicles.
• The car must weigh less than 14,000 pounds in gross vehicle weight and have a storage capacity of 7 kilowatt-hours (kWh) or more.
• The EV must undergo final assembly in North America.
• Modified adjusted gross incomes must be below $300,000 for married couples filing jointly, $225,000 for heads of households, and $150,000 for individuals or married couples filing separately.

Consumers can now receive tax incentives on used EVs, specifically the lesser of 30% of the sales price or $4,000. Additional eligibility requirements apply, such as income thresholds, MSRP limits and final assembly stipulations. Individual states may also offer additional EV tax incentives.

EV Batteries

There are four categories that encompass the most common types of electric batteries, including:

• Lithium-ion: Prevalent in most electronics that prioritize high energy output, efficiency and long battery life, lithium-ion batteries are the go-to battery type for most EVs. Research is ongoing to determine more efficient recycling methods, extend battery life and reduce associated costs.
• Nickel-metal hydride: Common in many electronics, nickel-metal hydride batteries last longer than lead-acid batteries and can be found in many hybrids electric vehicles. Costs, discharge rates and heat generation of nickel-metal hydride batteries exceed those of lead-acid batteries.
• Lead-acid: Most common in gas-powered vehicles, lead-acid batteries are affordable, relatively safe, and reliable, and fit into established recycling processes. One downside is that they remain susceptible to temperature fluctuations.
• Ultracapacitors: Ultracapacitors can deliver high amounts of energy quickly and work well as secondary energy sources in various applications.

Recycling these batteries requires various processes depending on the type being recycled. Smelting, direct recovery and intermediate processes can help recover various components to increase the recycling process efficiency. However, further research is required to determine the best methods for material recovery, including how battery design and standardization can positively influence recycling efforts.

How Long Does It Take To Charge an Electric Vehicle?

Charging an EV can take anywhere from a few minutes to several hours, depending on the type of charger:

• Level 1 chargers, which plug directly into a standard household 120-volt AC outlet, can take five to six hours to recharge a plug-in hybrid electric vehicle (PHEV) and 40 to 50 (or more) hours to charge a BEV from empty to 80%. That’s about two and five miles of range per hour of charge.
• Level 2 chargers achieve 10 to 20 miles of range per hour by charging PHEVs in one to two hours and BEVs to 80% in four to 10 hours.
• Level 3 Direct Current Fast Charging (DCFC) only takes an hour to charge a BEV up to 80%. Most PHEVs aren’t compatible with DCFCs, however. Many EV owners choose DCFCs because they replenish nearly the full range of most modern EVs in an hour.

Several other factors, including charger availability and charging rates, can affect charging times. Most EV owners now use Level 1 chargers at home overnight or plug into Level 2 chargers at work. The Tesla Supercharger network incorporates DCFC chargers that are available to the public.

How To Maintain an EV Battery

The cost of replacing an EV battery rival and may even exceed the cost of transplanting a new powertrain into a gas-powered vehicle. Below are the costs to replace an EV battery in some models, according to RepairPal:

• Chevrolet Bolt: $19,546-$19,615
• BMW i3: $15,817-$15,942
• Nissan LEAF: $20,657-$20,807
• Ford Mustang Mach-E: $42,005-$42,159

The true cost to maintain or replace an EV battery remains unknown, as most batteries are only now reaching end-of-life. Experts predict that current EV batteries will last well beyond the standard manufacturer warranty of eight years or 100,000 miles, but those theories have yet to be proven. Several factors affect an EV battery’s lifespan, including:

• Fluctuating temperatures
• Charge state during operation
• Frequency of charge and discharge cycles
• Charging rates

The lack of robust aftermarket support also drives EV battery replacement costs sky-high. Although EV owners can extend the life of these batteries by avoiding extreme temperatures, limiting the use of fast-charging stations, and fully depleting the battery before charging it again, battery replacements can still cost several hundred dollars per kWh.

How Much Does It Cost To Charge an EV?

The steps below can help you calculate the cost of charging an EV at home:

• Locate on your electricity bill how many kilowatt-hours (kWhs) you used over the last billing cycle (the most common billing period is 30 days).
• Divide your electric bill total by the number of kWhs to find the price per kWh.
• Calculate or track how many miles you drove in the last 30 days (i.e., your monthly mileage).
• Most EVs get three to four miles per kWh. Divide your monthly mileage by three to determine how many kWhs you use monthly.
• Multiply the number of kWhs by the price-per-kWh you determined in the second step to figure out how much you’d spend monthly to charge your EV.

Note that electricity rates vary by region and fluctuate with the time of day and year you charge your EV. Public charging stations vary widely when it comes to prices and options, but they typically cost more than charging at home. Some employers and shopping centers provide the benefit of discounted or free charging. Generally, public charging stations are Level 2 or DCFC chargers and incorporate a premium to account for installation and upkeep.

The prices you pay at public charging stations vary based on current electricity prices, the charging method, the type of EV you have, the location of the charger, the company that operates it, the time of day and time of year you’re charging, and more. Some also offer different options for charging either by minute or by kWh, which can influence what you pay.

To give you a sense of how much public charging may cost, we took a look at current pay-as-you-go rates at EVgo charging stations in cities across the U.S. All of these costs are for 100 kW chargers and include a 99-cent session fee on top of the total cost of charging.

EVgo Charger Location

Cost per kWh

Portland, Ore.

$0.43

Charlotte, N.C.

$0.45

Dallas

$0.52

Denver

$0.52

Philadelphia

$0.52

Newark, N.J.

$0.59

Columbus, Ohio

$0.59

Los Angeles

$0.60

Phoenix

$0.65

How To Find the Right EV for You

Determining whether an EV is right for you and which models may best suit your lifestyle can be challenging. Consider your driving needs, budget, federal and state tax incentives, charging options and vehicle availability for starters. You may also ask yourself the following questions:

• How many miles do you drive daily, and how does that align with your chosen EV’s range?
• Where will you charge your EV? Do you have money available to upgrade to a Level 2 charger at home if necessary?
• How much will you save on electricity compared to gas?
• Which available EV models, if any, do you prefer?
• How can you take advantage of current federal and state EV tax incentives?
• What will you do if the battery pack fails?

Many potential EV owners opt to lease an EV before pulling the trigger. Consider looking into an EV lease at a dealership near you to put available models to the test. Car subscription services can also offer extended test drives with shorter terms than leases.

Auto Insurance for EVs

Another industry that’s seen changes along with the rise of EVs is auto insurance. The average cost of full-coverage car insurance in 2023 was $2,008 annually, according to data gathered from Quadrant Information Services. When looking at EVs, estimates show that the average cost of insuring one of these vehicles can range from 10% to 135% more, depending on the model.

What exactly contributes to higher EV car insurance premiums? The following factors may give us a clue:

• EVs may have fewer components, but those components are more expensive to repair and replace.
• The average price of an EV is greater than that of a gas-powered vehicle, directly affecting insurance premiums. While the price gap is beginning to narrow, the average price of a new EV was $4,000 more than that of a standard vehicle as of December 2023.
• ConsumerAffairs estimates that the average cost of replacing an EV battery is between $4,500 and $18,000.
• The auto repair industry suffers from a shortage of qualified technicians and shops certified to work on EVs, mainly due to the specialized training required for safe repairs.

Tesla Car Insurance for EVs

Tesla launched its own car insurance company in 2019 and currently offers coverage in 12 states. Tesla’s usage-based insurance relies on computer models to determine personalized premiums based on:

• Driving score
• Mileage
• Vehicle type (MSRP)
• Location
• Selected coverage level, including multi-vehicle

While Tesla may not necessarily be reducing car insurance rates for EV owners, it joins many of the largest auto insurance carriers in forging new paths in EV insurance coverage.

Are Electric Vehicles Worth it?

Consumers may ask themselves this question considering the popularity of EVs. A thoughtful answer requires considering the advantages and disadvantages of EV ownership as they apply to your situation.

Benefits

The transportation sector accounts for 70% of the nation’s petroleum consumption and 30% of total energy needs, according to the Alternative Fuels Data Center. Much of the electricity produced within the U.S. comes from nuclear energy, natural gas, coal, wind, solar and hydropower. In such a climate, EVs offer the following benefits:

The National Renewable Energy Laboratory (NREL) estimates today’s EV batteries will last between 12 to 15 years in moderate climates or eight to 12 years in climates with extreme temperature changes. Most EV manufacturers offer an eight-year, 100,000-mile warranty on electric or hybrid batteries and related components, and aftermarket vehicle service contracts and extended warranties provide similar coverage.

Concerns

However, certain doubts exist about the future of electric cars and what’s holding us back:

• Despite sub-$70,000 sticker prices on most EVs and the promise of tax incentives, many consumers still find eco-friendly models out of their affordable price range.
• EVs still represent evolving technology and many consumers remain unsure of how to address (and pay for) maintenance and repairs.
• Range anxiety is real, especially as Americans drive farther and put thousands more miles on their cars yearly.
• Drivers anticipate lines at the gas station, but a lineup at the EV charging station could spell a run-on electricity and spikes in charging costs.
• A more comprehensive charging infrastructure is necessary. Running out of gas in the middle of nowhere is one thing, but a powerless EV can quickly leave you stranded with no charging station for miles.

For many, EVs have quite a bit of ground to make up in proving their worth and earning a place in the family garage. All benefits aside, cost can deter even the most eco-conscious consumers with an eye on their bottom line.