Analysts at Bank of America are forecasting a slower wave of electric vehicle (EV) growth than previously predicted in their latest note on the sector. While electric vehicles and hybrids will still make up roughly 60% of new car supply by 2028, the bank notes that figure is down from 64% last year.
Bank of America is seeing a resurgence in internal combustion engine (ICE) vehicles, with supply forecast to nearly match electric vehicles (112 vs. 113) over the next four years. Hybrids are also gaining popularity (20% of offerings), attracting consumers seeking efficiency without a full commitment to electric vehicles. This trend is influencing automakers like GM, which are now prioritizing hybrids alongside electric vehicles.
EV penetration is also expected to be slower, reaching 25% by 2027, one year behind the bank’s previous forecast. Their analysis projects that U.S. electric vehicle sales will reach 1.8 million in 2024 and grow to 4.5 million by 2028. This means EV penetration will be 11% in 2024 (up from a forecast of 14%) and 25% in 2027 (up from 27%).
Bank of America predicts that Tesla (NASDAQ:) will maintain its leadership in electric vehicles, supported by new Model 3/Y derivatives and an entry-level model. However, existing automakers are expected to capture a larger share of the electric vehicle market, increasing from 40% currently to 65% by 2027. Bank of America identifies Stellantis, GM, Toyota and Honda as potential entrants that could increase their share of the emerging electric vehicle market.