How the Future of Electric Vehicles Will Impact the Energy Market

There’s a lot of buzz about electric vehicles (EVs) right now. Every quarter EVs are a larger market share of new vehicles sold in the U.S. It’s sure to reduce the number of emissions that are generated on the road, but what about the impact on the energy market?

Electric vehicles may not require gasoline to get you where you need to go, but electricity is essential. Instead of gallons per mile you can think of it as kWhs per mile. Some people are legitimately concerned about what all the EVs could do not only to the electrical grids but also within energy markets. 

Could EVs end up increasing electricity demand beyond what the grid could provide? Will they use enough energy to increase rates for all consumers? 

There’s no 100% assurance of what will happen, but understanding how much electricity EVs use and how EV sales are trending can help us project for the future so that energy demands are met.

Electricity Used Annually by Electric Vehicles

One way to figure out how more EVs could impact the energy market is to look at the annual electricity use of electric vehicles. EnergySage estimates that the average American EV driver requires 4,000 kWhs of electricity annually for their electric vehicle.

Of course this is just an average. It’s going to vary for individual drivers based on two important factors: the EV you drive and how much you drive it.

Adding Up the Collective Impact of EVs

Looking at the average individual electricity use is good to know, but when you’re considering the energy market as a whole you have to gauge the collective impact. Looking at 2022 alone, 800,400 new electric vehicles were sold in the U.S. That’s a total of over 3.2 billion kWh of electricity used annually by the new EVs alone. 

This is why energy experts are worried electric vehicles could strain state electric grids. It could very likely extend peak demand hours further into the evening when many people are charging EVs at home. Anyone on a time-of-use plan may end up paying more for electricity if the peak demand hours are extended.

Researchers at MIT have noted that strategic charging station placement and smart chargers that can delay charging until a time when demand is low could potentially help reduce strain on the grid. However, as more EVs are sold more will need to be done to meet demand. 

The Future of Energy Markets as EV Sales Keep Skyrocketing

In January 2023, EVs made up 7.1% of car sales. That might not sound like a lot, but just a year earlier the EV market share was just 4.3%. That’s a huge increase in just one year. The way EV sales are going, you can’t use current figures to project for the future impact on the energy markets. 

The Argonne National Laboratory reports monthly electric vehicle sales. Their research found that a total of 100,605 plug-in vehicles were sold in March 2023. This includes plug-in hybrid electric vehicles and battery electric vehicles. It brings the total to 299,126 plug-in vehicles sold in Q1 2023. 

In the first quarter of 2023 electric vehicle sales totals were:

Tesla – 161,630 (estimated)

GM – 20,670 

Hyundai – 14,703

Volkswagen – 14,196

Ford – 10,866 

Tesla is still benefiting from getting market share early on. Well over half of all EVs sold in the U.S. are Teslas. But other automakers have gotten in the EV game and are attracting buyers. Automakers show no sign of slowing down EV production. In fact, they are positioning themselves to ramp up electric vehicle manufacturing. 

Ford and GM have both stated they plan to overtake Tesla in EV sales. That means the major automakers are planning to produce a lot more electric vehicles in the coming years. The competition will likely drive EV sales up among all three companies. 

Ford is currently expanding its facilities in order to double EV production. GM is set to double its EV production in the second half of 2023. The company expects to make 2 million EVs annually by 2025, and Ford should be doing the same by 2026.

But Tesla doesn’t plan to rest on its laurels. Tesla’s owner Elon Musk has said he plans to expand his production capabilities to make at least 20 million EVs a year for worldwide sale. 

What’s most impressive is that EV sales are going up at all price points. Consumers will get an even better selection of EVs to choose from in coming years as all of the automakers move forward with new models. 

Powering EVs With Renewables

One solution that is already being promoted is powering electric vehicles with renewables. Residential solar panel systems, community solar farms and green energy plans that use renewable energy credits (RECs) can all charge up electric vehicles without straining the electric grid or adding carbon emissions to the atmosphere. 

Verde Energy is proud to be a provider of electricity plans that are 100% powered by renewable energy. We have options for EV owners that want to minimize their carbon footprint without overpaying for green energy. 

Check to see which green Verde Energy plans are available in your area.