Market Trends

COVID-19 had a major impact on the light-duty vehicle market in 2020, consistent with trends seen throughout the economy. Business closures and the subsequent rise in unemployment caused vehicle sales to drop as consumers reduced their spending. Car and truck sales for 2020 are expected to total just 14.3 million units, down 16% compared to 2019, making 2020 the year with the lowest sales volume since 2012. Pandemic-induced supply chain problems also delayed releases of new models, including GMC’s Hummer EV and the redesigned Ford Bronco. Although sales in 2021 should improve and may cross the $15 million threshold, the impact of the pandemic will persist for at least several months. 

2020 was also the first year that more pick-up trucks were sold than sedans, continuing a trend toward larger vehicles that we have observed since at least 2014. This trend has helped some automakers, namely Ford and GM, which rely heavily on sales of larger vehicles. Hyundai gained market share as it appealed to higher-income, younger buyers with targeted messaging and a tailored lineup of new SUVs, while Nissan reported its first fiscal year loss in a decade. The best performer, however, may have been Tesla, whose stock soared 700% and now has a market capitalization larger then the next seven automakers combined. While 2020 was a challenging year for automakers, they continue to both innovate with internal combustion vehicles and invest billions in electrification. 

 

Electric Vehicles

While 2020 may have been highly disruptive for the broader automotive market, it was also a turning point for electric vehicles. Several manufacturers made significant announcements of future EV lineups. GM recently announced a $20 billion dollar investment to deliver 20 new EVs by 2023. Ford announced a similar $11 billion commitment to EV manufacturing, including electrifying its iconic Mustang. Hyundai plans to offer 23 electric vehicles by 2025, and Jeep announced that every one of its vehicles will have an electrified option by 2022. Combined with policy support for EVs around the globe, electrification continues to transform the automotive sector. 

Most of the EV offerings in the U.S. vehicle market to date have been either sedans or smaller crossover and utility vehicles. However, EVs are not immune to the broader trend favoring larger personal vehicles in the U.S. automotive market; 2020 showed that many of the recently introduced and soon-to-be available vehicles are larger SUVs or pick-up trucks. One notable example is the electric Hummer from GMC. Like its gasoline-powered predecessor, the electric Hummer stands out for its considerable size and power, topping out at 1,000 horsepower with a reported 350 mile range, and will stand in stark contrast to the perception many consumers have of EVs. Other large EVs include the Volvo XC40, a midsize SUV weighing about 5,000 pounds, and the Audi e-tron, a large SUV weighing about 6,000 pounds. Audi will also be expanding its e-tron lineup to include a sportier version, the e-tron GT. 

However, if they become predominant, large EVs can diminish the efficiency and emissions benefits of switching from internal combustion-engine vehicles (ICEVs) to EVs because they require more electricity than a smaller EV to move the same distance. Our electricity grid is still largely powered by fossil fuels, meaning that the more electricity EVs use, the more upstream emissions we create from electricity generation. Large EVs are clearly popular: VW’s electric SUV, the ID.4, sold out the night that it was announced in the United States, its popularity likely attributable to its combination of reasonable range (250 miles) and price (starting at $40,000 and still eligible for the federal tax credit). It will likely compete with the Tesla Model Y alongside Nissan’s soon-to-launch crossover, the Ariya, which is expected to be released in late 2021 and should start at about $40,000 with a 300-mile range. 

Ford is expanding its lineup with electric versions of two of its most well-known vehicles, the Mustang and the F-150. The Mustang Mach-E is a controversial remake of the iconic nameplate that uses the classic Mustang design elements in a crossover EV with a top range of 305 miles. Building off the Mach-E, Ford’s plans for the electric F-150 are notable given F-150’s status as the bestselling passenger vehicle in the United States. It may help popularize EVs to a broader market when it goes on sale later this year or next, inducing more drivers to consider an EV. Much like the Mustang Mach-E, the electric F-150 builds on a well-known nameplate, and both are significant for being electric versions of existing brands rather than new electric nameplates altogether. While the electric Mustang and F-150 may stand out as electric remakes that do not differ too much from their originals, the soon-to-be-released Tesla Cybertruck stands out for its unique design. Its sharp, angular shape and “exoskeleton” differentiate it from other trucks, but its dimensions are very similar to those of other pick-up trucks like the F-150 Supercrew, with a height of 75 inches and bed of 6.5 feet. Time will tell if this addition opens up a new market for pick-up trucks or competes with traditional brands. 

Multiple EV-only automakers have sprung up to produce EVs with the hopes of capitalizing on this growing industry. One automaker introducing new models in 2021 and garnering significant investment is Rivian. It is set to release an electric pick-up truck, the R1T, and a luxury SUV, the R1S, in the summer of 2021, hoping to appeal to many of the same customers as Tesla. Originally conceived as a competitor to Tesla in luxury personal EVs, Rivian has received billions in investments from the likes of Ford and Cox Automotive, but its most noteworthy investment is an order of 100,000 electric vans from Amazon. This order solidifies Rivian’s position in the market and allows it to capitalize on its existing battery and electric chassis technology. Another new automaker, Lordstown Motors, is slated to release an electric pick-up truck, the Endurance, to market in 2021 primarily to service commercial fleets. It has financial backing from GM and has taken over a manufacturing plant, in Lordstown, Ohio, from GM. While initially serving commercial customers, Lordstown may expand into the personal vehicle market and capture a portion of the large pick-up truck market.  

 

Battery Advancements

Driving the electrification of light-duty vehicles is the advancement of battery technology and increasing cost-effectiveness of EV batteries. Critical to the success of Tesla and the expansion of EV offerings from other automakers is the rapid decline in battery prices, which continued in 2020. Battery prices are on track to fall to $100/kWh mid-decade, which is widely considered the point at which fully electric vehicles will reach cost parity with internal combustion engine vehicles. Reflecting the impact of these advancements in battery technology, Tesla announced at its annual Battery Day that it was pursuing a $25,000 vehicle by 2023-2024. Tesla plans to further reduce costs by moving battery-cell manufacturing in-house as opposed to relying solely on its long-time partner, Panasonic. Additional cost reductions come from using larger cells, which are more energy dense. GM is also investing in larger cells for its Ultium batteries. 

The decline in battery prices is expected to continue as automakers develop batteries with new chemistries, including some that will use less cobalt and others that will use a new lithium-iron phosphate chemistry. Cobalt is an expensive and controversial metal that many automakers, especially Tesla and GM, are looking to move beyond. All EVs currently sold in the United States contain some amount of cobalt in their batteries, but developing cobalt-free batteries is a high priorityTesla has committed to making this change and has partnered with the Chinese manufacturer CATL. GM is aiming for batteries that eliminate both cobalt and nickel, while also giving vehicles greater range. The desire for longer-lasting batteries is pushing automakers to develop “million mile” batteries that are durable enough to last for one million miles of driving. We should expect to see 300+ mile range vehicles increasingly become the norm in coming years. The BMW i4, iX, the Cadillac Lyriq, the Lucid Air, the Nissan Ariya, Rivian’s R1T and R1S, and many of Tesla’s vehicles have 300+ mile ranges and are available now or will be shortly. 

 

Automation Technology and Electric Vehicles

As automakers advance their EV technology, they are also adding more automation technology to their vehicles. Among EVs, Tesla’s Autopilot is perhaps the most well-known; it comes in a standard or “full self-driving” model, available as an upgrade on all new Teslas, including the Model 3 (which is on our Greenest list). The standard version assists the driver with braking, accelerating, and steering, while the “full self-driving” model, which despite its name is not fully automated, enables the vehicle to park itself, change lanes, and recognize stop signs and traffic lights. While this technology has raised safety concerns, and its impact on fuel efficiency remains uncertain, it is likely to spread to more vehicles in the future.

GM is similarly working on greater automation in its vehicles, including some of its EVs, with its Super Cruise. Hands-free Super Cruise will be available first on GM’s Bolt EUV and is expected to allow for driver assistance while on the highway, similar to Tesla’s Autopilot. The technology is also expected on the Cadillac Lyriq and the electric Hummer, the latter of which already has Super Cruise on its gasoline version. While automated technologies offer many benefits, the environmental and energy implications remain to be seen. From a technology standpoint alone, two to four kilowatts of electricity are required to process a large amount of data and power the array of sensors. For EVs, this would draw from the same electricity propelling the vehicle and could mean a loss of 10 miles of range for each hour on the road. While technology manufacturers will undoubtedly find ways to decrease the energy requirements of automation, automated technology—especially autonomous vehicles—could increase vehicle emissions and energy use. As these technologies develop and proliferate, it will be important to address these concerns.

 

Internal Combustion Engines

Despite the rapid development of mass-market electric vehicles and the numerous announcements from automakers committing to all-electric fleets, almost 94% of cars and trucks analyzed for model year 2021 lacked a plug. Only 4% of models are fully electric or use hydrogen fuel cells. Revolutionary design and technology have brought continual improvements to the efficiency of gasoline engines, solidifying their dominance in the market for years to come. Furthermore, as the U.S. market shifts toward larger vehicles, like crossovers and SUVs, automakers are discontinuing some of their smaller gas-powered vehicle lineups. This includes the loss of the Honda Civic Coupe and Fit, the Hyundai Elantra GT, and the Toyota Yaris, as well as the Chevrolet Sonic, the Ford Fiesta, and the Volkswagen Golf. This trend may limit the choices available to consumers seeking smaller, generally more fuel-efficient vehicles. 

Automakers continue to change their lineups from year to year, and hybrids are no exception. Toyota is expanding its lineup of the very popular RAV4 Hybrids with an XLE Premium version, signaling an increasing focus on hybrids. While many U.S., European, and Chinese automakers are moving toward plug-in vehicles, Japanese automakers are increasingly focusing on traditional hybrids, especially outside of their luxury vehicle groups.

Because they provide 70% of the efficiency benefits of traditional hybrids at 30% of the cost, 48-volt mild hybrids have also proliferated in the market. In late 2018, the first widely available powertrains featuring a 48-volt mild hybrid system hit the market in offerings from Jeep, RAM, Mercedes-Benz, and Audi. For model year 2021, BMW extended its use of the technology to its 5-series vehicles. Use of this technology among automakers is expected to increase. 

 

Greener Choices for Everyone

When it comes to buying a new vehicle, the most environmentally friendly step is simple: first evaluate your needs and your budget, then look for suitable models with the highest green scores. Even though our top 2021 ratings go to vehicles with some form of electrification, all vehicle classes feature nationally available gasoline-powered vehicles that score significantly better than average.

Our Greener Choices table highlights top-scoring vehicles available to everyone in almost all major market segments. The list includes only automatics. In the past, manual transmission versions of vehicles on the Greener Choices list often had higher fuel economy, but this is less common today, thanks to advances in continuously variable (CVT) and automatic transmissions. The good news: You can find cleaner and more-efficient vehicles throughout the market. The Greenercars.org database lists hundreds of vehicles beyond those listed in this table.

Buying green does more than fulfill your own personal commitment to reducing pollution and protecting the environment. It sends a signal to manufacturers. As more consumers buy green, automakers will increasingly view environmentally friendly design as a market opportunity rather than an obligation. They will be motivated to invest more in better technology, leading to more green vehicles in the years ahead.

Keep in mind that the average car or light truck runs for 15 years—or more—thanks to increasing vehicle durability. Even if you don’t keep your new vehicle for more than a few of those years, the choice you make now will expand the options available to used car buyers in the future. So instead of putting another gas guzzler on the streets, the greener choice you make today can help cut pollution for years to come.