Electric Vehicles: Can They Stay on Track?

A decade ago, the cars were merely a novelty. But somehow, the car industry and a skeptical public has gotten behind the electric-vehicle wheel.

The latest data shows that more and more people are trading in their gas-powered cars for electric vehicles. Following record-breaking sales in 2022, nearly 260,000 electric vehicles were sold in the US during the first quarter of 2023, representing 7% of all new cars sold and putting the nation on pace to surpass the one-million mark for electric-vehicle sales in a year for the first time ever. Globally, the International Energy Agency projects electric-vehicle sales to grow by 35% this year, accounting for one out of every five cars sold worldwide. Since the pandemic, electric-vehicle sales have quintupled globally, from 4% of the overall car market in 2020 to an estimated 20% by the end of this year. “The market is clearly shifting,” says Bradford Marion, global sector leader for the automotive sector at Korn Ferry.

High gas prices driven by inflation prompted many consumers to make the switch to electric vehicles last year. That, combined with tax credits and manufacturer and dealer incentives, helped contribute to a record-breaking year in which roughly 10 million electric vehicles were sold. Electric-vehicle sales also benefited from the sustainability efforts of other industries, such as logistics and transportation, that purchased entire fleets of electric vehicles to meet their own carbon-emissions reduction targets. 

Seth Steinberg, a senior client partner in Korn Ferry’s Supply Chain Center of Expertise, says another, often overlooked factor is driving electric-vehicle sales: the shift to remote work. Steinberg says people who moved to the suburbs and needed a car for local driving were more comfortable switching to an electric vehicle. The fear many consumers have of running out of battery life was mitigated by the fact that people weren’t driving long distances and could recharge at home. “It worked to make EVs a more attractive option,” Steinberg says. 

Still, while the growth is impressive, experts still foresee many speed bumps as the EV business matures. “The shift could be happening faster,” says Marion. For one, he points out that overall global growth is skewed by China’s massive 60% market share; more than half of the world’s electric vehicles are on its roads. Europe holds a roughly 12% share, while the US is well behind, with only 5% of the electric-vehicle market. Moreover, the overall base is still relatively small: the IEA estimates electric-vehicle sales will reach 14 million this year. That’s about one-fifth of the roughly 67 million gas-powered cars that were sold worldwide in 2022. 

Supply-chain disruption still makes it difficult to obtain chips and other critical parts for these cars, meaning that some of the most popular models are still on back order. Cam Fulton, a principal in the North American Industrial practice at Korn Ferry, says manufacturers are scrambling to diversify their supply chains and strategically source components to rectify shortages. “People don’t want to wait for their cars,” he says. 

At the same time, the relative scarcity of charging stations is slowing electric-vehicle adoption. Battery range—how far a car can go before needing to be charged—is still a major psychological hurdle for consumers. So is the fact that it can take an hour or longer to fully charge a depleted battery, as opposed to a few minutes to fill up a gas-powered car. Industry leaders plan to invest $7.5 billion into building out a national network of 500,000 charging stations across all 50 states in the US by 2030; the hope is that this will help convince more people to switch to electric vehicles. 

With the economy in a prolonged period of uncertainty, experts are concerned that the high price of electric vehicles relative to their gas-powered counterparts could dampen sales growth this year. Electric vehicles cost an average of $15,000 to $20,000 more than gas-powered cars. Marion says electric vehicles are at a tipping point—that a blend of consumer adoption, affordability, and infrastructure development will have to come together before the transition can be fully realized. “It’s going to happen for sure,” he says, “but it may take longer than everyone expects or wants.”

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