The production of electric vehicles (EVs) is on the rise in North America, which is contributing to their slightly lower prices. In the first quarter of 2021, North American factories produced 219,000 battery-powered cars and trucks, representing a 39% increase from the same period last year. Tesla continues to be the leader in the global EV market, with production increases for all four of its vehicles in North America during the first quarter of this year. However, it is the launch of entirely new cars and trucks, such as the Ford F-150 Lightning, Volkswagen ID.4, and Mercedes EQS and EQE SUVs, that is having a significant impact on the EV market in America. In Q1 2021, North American factories produced almost 29,000 EVs that were not being manufactured a year earlier, with just these four models now accounting for 13% of domestic EV production. General Motors also tripled its production of the Chevrolet Bolt in the first three months of the year, as the carmaker sought to fill an increasing number of orders before discontinuing the model after a six-year run.
Despite this growth in production, North American EV production still lags behind demand. While 7.2% of cars sold in the US are now electric, only 5.7% of the vehicles made on the continent are EVs, a share that has marginally declined from Q4 2020. During the first quarter of 2021, North American factories produced 219,000 EVs, while US car buyers purchased 259,000 EVs. There is clearly a market for EVs, and the production needs to increase to meet demand.
The location of EV production is also significant for US buyers, as the Inflation Reduction Act provides generous EV subsidies for domestically produced vehicles. Legacy automakers have been slower to shift towards EVs, citing concerns over profitability. For example, Ford’s electric vehicle unit lost $722 million before taxes and interest in Q1 2021, and the company does not expect its EVs to break even until late next year. However, Ford CEO Jim Farley believes that EV profits will come with scale, and the company aims to build 2 million battery-powered cars and trucks a year by the end of 2026, with the expected volume delivering an 8% profit margin. Ultimately, the increase in EV production is a positive step towards a more sustainable future, but there is still much work to do to meet demand and make EVs more accessible to all.