Regulation has made the U.S. more EV-ready than the U.K., EY study says

The U.S. is now ranked third in its readiness for an electric vehicle future, beating the United Kingdom, Sweden and Germany, among other sustainability leaders, according to a report from EY.

China and Norway, two nations known for EV-friendly regulation and demand, took the top two spots. Still, the U.S. rose sharply this year to third place from seventh place in 2022, the result of new models, investment in battery manufacturing and more affordable EVs.

Regulation has played a key role in enhancing EV affordability. A series of policy measures that encourage the development of a domestic EV supply chain boosted the U.S. in the ranking, Gaurav Batra, EY's global advanced manufacturing and mobility analyst leader, said in an email.

"These are viewed as amongst the most comprehensive regulatory interventions globally, helping drive a significant uptick in investment activity," he said.

The nation's prominence in the global EV supply chain and consumer market has grown quickly. EY's findings, which imply that the U.S. is about to join the world's elite club of sustainability leaders, are good news for automakers investing billions in EVs and the supply chain.

EY examined the top 20 vehicle markets for their preparedness for the arrival of electric vehicles based on a number of metrics, including supply, demand and regulation.

The Inflation Reduction Act and the Infrastructure Investment and Jobs Act have funneled billions toward EVs and related technology development. Batra highlighted several regulatory levers that are improving EV readiness in the U.S., including:

• $7,500 purchase incentives for EVs, "among the highest globally."
• $3 billion in competitive grants for battery facilities.
• State grants that offer rebates and other incentives for consumers who purchase EVs.

Despite gains for the U.S., China remains at the forefront of EV readiness in part because of its supply chain control and battery manufacturing prowess — it accounted for 74 percent of the global investment in battery manufacturing in 2022, according to EY.

Chinese consumers are also quicker to adopt EVs than those from other nations. Nearly 60 percent of Chinese buyers said their next vehicle would be an EV, compared with 41 percent across other markets.

Still, the EV battery manufacturing sector in the U.S. is expanding rapidly in part because of companies' $73 billion investment in planned projects in the sector in 2022, Batra said. Those types of investments are expected to increase EV battery manufacturing capacity by 20 times by 2030.

Norway, the country with the highest EV adoption rate in the world — 81 percent, claims second place in the ranking.

The U.K.'s drop comes from slowing investment from battery manufacturers and automakers, partly the result of growing dominance from the U.S. and steady confidence in China.

The U.K. has committed millions to EV battery development, production and research.

Still, the U.K. "is looking for a step up in the investment towards the EV supply chain development," said Batra.