The electric vehicle market has shown an impressive boom in getting EVs over the past years. More buyers are now switching to EVs as a clean mode of transportation. Urban Science reports that cities like San Francisco have seen impressive growth of over 35%. EVs now earned a 7.8% share of the vehicle market across the US, and they hold more than 8% of the vehicle market share. The market share of EVs grew over 50% between 2022 and 2023. As a result, manufacturers are providing affordable electric options, making it easier for buyers to switch to electric vehicles. Some are even considering a hybrid electric vehicle as a stepping stone to full electrification.
Challenges Ahead for the EV Market
Despite this huge adaptation, EV automakers are struggling. Market prices for many EVs have dropped over the past years. Manufacturers like Tesla and Rivian are seeing a decline in investor confidence. Most investors are concerned about increasing costs and production delays. As demand continues to increase, companies are spending on building new factories, conducting research, and developing the latest battery technologies. However, all these expenditures have resulted in low profit, ultimately leading to a financial crisis across the sector.
1. Fewer Tax Incentives Impact Sales
One big challenge for this industry is the decline in government incentives. In the past, buyers could get up to $7,500 in federal tax credits. But in 2024, only 7 EV models qualify for these tax credits, reports TheStreet.
As of early 2025, only a few electric vehicles meet the new tax rules. It makes EVs 6% expensive than gas-powered cars, which directly affects the electric vehicle prices
2. Infrastructure Challenges Persist
Another challenge is EV charging access. While charging stations are being built, many rural and suburban areas still don’t have enough. Long-distance travelling is hard without fast charging on every route. That’s why EV charging installation has become a top priority for both public and private sectors.
3. Cold Weather Performance Raises Concerns
Another challenge to EV performance is cold weather. Last year, during very cold days in the northern U.S., many EVs had trouble charging. Some drivers were even stuck at public charging stations. The reason is that batteries don’t work in cold temperatures. While engineers are working on it and improvements are coming along the way, these problems are making some people think twice before investing in an EV, especially when weighing the pros and cons of electric cars in cold regions.
4. Supply Chain and Battery Costs Rising
Supply chain issues continue to impact the electric vehicle sector. Battery materials like lithium and cobalt have become more expensive. The supply is not enough to meet the rising demand, which drives costs up and affects the overall electric vehicle cost.
As more people are switching to EVs, home charging has become a top priority. Factors like electricity rates and battery capacity affect how much it costs to charge an electric vehicle at home. Because of this, more people are choosing to install electric car charger systems, increasing demand for professional electric vehicle charger installation across the US
To conclude, the electric vehicle market is rapidly growing, but it also faces some big challenges like high battery prices and technical issues. Investors should be careful before investing in this sector. Conducting proper research before investing can reduce risks. With the help of proper strategy and planning, there may still be good opportunities in the EV industry.
News Source: Forbes