Future Electric Vehicle Production in the United States and Europe – Will It Be Enough?

Hong Yang and Lewis Fulton

Institute of Transportation Studies, Working Paper Series from Institute of Transportation Studies, UC Davis

Abstract: The US and Europe have ambitious plans and targets for light-duty electric vehicle (EV) market growth. This study estimates planned EV production capacity in both regions and investigates whether coordinating their combined production capacity would help them meet targets. We find that, while each region is developing a strong EV production capacity domestically, either may fall short of their targets given investments in EV production announced to-date. Transatlantic trade can serve as a critical “spare capacity” to add assurance. Yet, in scenarios where both regions seek higher EV sales targets, a combined shortfall in annual EV production capacity could reach over 6 million EVs compared to the 20 million needed by 2030. An additional investment of about $42 billion across both regions could address this concern, however, time is getting short to build new plants and bring them online. The capacity shortfall may persist even with planned EV production capacity from other major manufacturing centers such as Canada, Mexico, Japan and South Korea. Additional policies and incentives will be needed to ensure planned capacities are developed in a timely manner. Some options include providing incentives to invest and reducing barriers to trade. Exploring the potential supply of vehicles from other major EV manufacturing countries, such as China and India, is recommended.

Keywords: Engineering; Social and Behavioral Sciences; Electric Vehicle; Production; Investment; Transatlantic; Trade; North America; Europe; European Union (search for similar items in EconPapers)
Date: 2023-08-23
New Economics Papers: this item is included in nep-cna, nep-ene and nep-tre
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