Millions of electric vehicles (EVs) are now cruising the roadways alongside their gas-powered counterparts. And as more companies join EV giants like Tesla, we’re likely to see even more.
We at the MarketWatch Guides team uncover 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.
- EV sales in the U.S. grew from 1.4 million vehicles in 2023 to 1.7 million in 2024.
- California, Florida, Texas and Washington have the highest numbers of EV registrations in the U.S.
- Electric vehicles tend to have higher car insurance rates than those for gas-powered vehicles at an average of $3,520 annually.
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 to make the car run. The Environmental Protection Agency (EPA) classifies EVs as zero-emissions vehicles due to the lack of exhaust or tailpipe emissions expelled.
Rather than fueling with gas, an EV requires its battery to be recharged, 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.?
About 1.7 million EVs were sold in the U.S. in 2024 — a 21% increase from the 1.4 million sold nationwide in 2023. The U.S. accounted for 10.2% of all new EV registrations worldwide in 2024.
China, Europe and the U.S. represent the three most significant global EV markets. The U.S. is working to increase domestic manufacturing, especially battery production. The federal government awarded $23 billion in loans and grants via the Infrastructure Investment and Jobs Act in 2021 and the Inflation Reduction Act in 2022. These programs aim to boost EV and EV battery production.
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. Toyota has set a production target of 20% EVs by 2026. Some of the biggest hurdles continuing to delay or deter progress include supply chain constraints and volatility in critical mineral prices. However, according to the IEA, EVs are set to replace 6 million barrels of oil used daily by 2030 at the current pace.
EV Market Share
In Q2 of 2024, with more automakers joining the EV market, Tesla’s EV market share dipped below 50% for the first time since the end of 2017. As of Q3 2024, Tesla holds 48.2% market share, which remains the most dominant share. Tesla is followed by Ford (6.8%) and Chevrolet (5.8%).
Some luxury brands, such as Jaguar and Cadillac, are seeing substantial year-over-year growth in EV sales as they implement new EV offerings. Meanwhile, some brands, such as Volvo and Volkswagen, are seeing sales decline. This is likely due to the limited availability of entry-level EVs from Volvo and the delayed release of new Volkswagen EV models in the U.S.
Who Is Adopting EVs?
California, Florida, Texas and Washington lead the charge in number of EV registrations, with California comprising 35% of nationwide EV registrations. The state had 1,256,646 total EV registrations by the end of 2023. However, a stark divide exists among states adopting all-electric vehicles and those that are not.
In 2023, 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 | 1,256,646 | 322 |
| Washington | 152,101 | 195 |
| Hawaii | 25,565 | 178 |
| Colorado | 90,083 | 153 |
| Oregon | 64,361 | 152 |
| Nevada | 47,361 | 148 |
| New Jersey | 134,753 | 145 |
| Arizona | 89,798 | 121 |
| Vermont | 7,816 | 120 |
| District of Columbia | 8,066 | 119 |
In contrast, the following states have the fewest EV sales per 10,000 residents:
| State | EV Registrations | Per 10,000 Residents |
|---|---|---|
| Mississippi | 3,590 | 12 |
| North Dakota | 959 | 13 |
| West Virginia | 2,758 | 16 |
| Louisiana | 8,150 | 18 |
| South Dakota | 1,675 | 18 |
| Wyoming | 1,139 | 19 |
| Arkansas | 7,108 | 23 |
| Alabama | 13,047 | 25 |
| Kentucky | 11,617 | 26 |
| Iowa | 9,031 | 28 |
How Do EV Tax Credits Work?
The U.S. offers clean vehicle tax credits for those who purchase an EV that meets certain requirements. 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.
2023-2032 Tax Years
Current EV tax incentive rules, which started in 2023, 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 electric vehicle 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.
2024 Revised Credits
New updates regarding electric vehicle tax credits went into effect on July 5, 2024, according to the Taxpayer Advocate Service. The sellers of new electric vehicles — typically automotive dealers — have three calendar days after purchase to furnish buyers with a Clean Vehicle Seller Report, which confirms the vehicle’s eligibility for tax credits through the IRS. Those seeking to claim the used electric vehicle tax credits must purchase the car for personal use and must be the second owner, having taken ownership after August 16, 2022. Taxpayers can only claim the used electric car tax credit once within a three-year span and cannot be claimed as a dependent.
Are Electric Vehicles Worth it?
Finding out if an EV is the right move for you requires considering the advantages and disadvantages of EV ownership.
Benefits
EVs offer several benefits, including:
- Efficiency: The National Renewable Energy Laboratory 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.
- Eco-friendliness: EVs are also kinder to Mother Earth than their gas-powered equivalents. “EVs can be better for the environment, especially when charged using renewable energy sources,” says Dr. Rajit Gadh, professor at the University of California, Los Angeles. “In this case, EVs not only eliminate tailpipe emissions but also significantly reduce emissions at the energy generation stage, creating a cleaner and more sustainable transportation solution.”
Concerns
We asked the experts what’s keeping EVs from becoming ubiquitous, and there are a few things, including:
- High cost: Along with supply chain issues and a volatile minerals market, the average price of EVs continues to impede consumer adoption. As Wes Chang, assistant professor of mechanical engineering at Drexel University, explained, “In 2024, the lowest-cost electric vehicles are still solidly $10K to $15K more expensive than the lowest-cost gasoline-powered vehicles. Cars are one of the most expensive items a household owns, so this remains a significant barrier to entry.”
- Charging station infrastructure: EVs can’t compete with gas-powered cars when it comes to the convenience of fueling up. “Our charging infrastructure is poor, and in many cases inadequate,” Chang added. “Even with more abundant charging stations in California, it turns out many of the ports can be faulty or charge extremely slowly — meaning you could be sitting there for hours just to get a fraction of a charge. We need policies that help standardize charging stations, and we need technology that enables faster charging capabilities.”
- Range anxiety: Running out of power when traveling a long distance is also a common concern of consumers hesitant to take the EV plunge. “EV range is getting longer, but for long trips EV owners need to recharge,” said Jeremey Michalek, professor of engineering and public policy at Carnegie Mellon University. “It takes longer to charge an EV than to refuel a gasoline vehicle, even at the fastest chargers, and since many people travel on the same peak travel days, like Memorial Day or Thanksgiving holidays, charging queues can be long.”
Other Roadblocks to EV Adoption
Other doubts that may impact the future of electric cars include:
- EVs still represent evolving technology and many consumers remain unsure of how to address (and pay for) maintenance and repairs.
- 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 to ensure the longevity of the EV lifestyle. 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 for to prove their worth and earn 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.
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 on ownership. 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 automotive industry that’s seen changes along with the rise of EVs is the auto insurance field. The average cost of full-coverage car insurance for gas-powered vehicles is $2,681 annually, according to data gathered from Quadrant Information Services. For EVs, that cost rises to $3,520 annually for full-coverage car insurance — an increase of 31%.
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 cheaper options are available, the average price of a new EV was $6,000 more than that of a standard vehicle as of November 2024.
- EV battery packs cost around $200/kWh, a 90% drop over the past 15 years.
- 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.