WHEN WILL AMERICANS FULLY EMBRACE EVS?
Many have concerns with higher prices, charging stations
The world’s major automakers have made something abundantly clear: They believe electric vehicles will dominate their industry in the years ahead.
Yet for that to happen, they’ll need to sell the idea to people like Steve Bock.
When Bock recently replaced his family’s 2013 Honda Pilot SUV, he considered — and then dismissed — the idea of buying an electric vehicle. An EV with enough room to carry his two dogs would cost too much, he decided. And he’d worry about driving long distances with too few charging stations.
“I would consider it if the prices would come down,” Bock said, though leaving open the possibility of buying an electric vehicle next time.
Instead, Bock, of Apex, N.C., settled on a Subaru Outback. Like nearly every other vehicle sold in the United States, it runs on gasoline.
Opinion polls show that a substantial majority of Americans are aligned with Bock. An EV might be on their shopping list if it cost
less, if more charging stations existed and if a wider variety of models were available. In other words, the time isn’t right.
It all adds up to a significant risk for the largest automakers. Most of them are staking their futures on the notion that consumers will soon be ready to buy vehicles that run not on the internal combustion engines that have powered cars and trucks for more than a century but on electricity stored in a battery pack.
General Motors, Ford and Volkswagen plan to spend a combined $77 billion developing global electric vehicles over the next five years, with models from pickup trucks to small SUVs. GM has gone so far as to announce a goal of ending gasoline- and dieselfueled passenger vehicles entirely by 2035 — and to become carbon-neutral by 2040.
For the automakers, the risk is as hazardous as it is simple: What if U.S. consumers reject electric vehicles for many years to come?
Companies would have no choice but to discount them and hope, in the meantime,
that their profits from gas vehicles would still cover their costs — at least until large proportions of buyers gravitated toward EVs. If they don’t, the financial blow could be heavy. For now, EVs make up less than 2 percent of U.S. new-vehicle sales and about 3 percent worldwide.
“It’s still a sector that doesn’t have a mass appeal to the entire population,” said Jeff Schuster, president of global vehicle forecasting for LMC Automotive, a consulting firm. “It could be a financial drain if consumers do not buy at the same level.”
Yet in contrast to the U.S., sales of EVs have taken off in Europe and China, largely because of much more farreaching pollution regulations and government incentives. Those tighter environmental regulations are forcing the industry to sell more electric vehicles.
Automakers plan to introduce 22 new EV models in the U.S. this year after having rolled out six last year, according to LMC.
Tighter regulations — and, perhaps with it, higher sales of EVs — might be coming to the U.S., too, if the Biden administration succeeds in its promotion of electric vehicles as part of a broad plan
to fight climate change.
Still, it could prove an uphill battle. Only 260,000 fully electric vehicles were sold last year in the U.S.. That’s out of a total new-vehicle market of 14.6 million. In fact, Americans are still spurning cars, in general, in favor of less-fuel-efficient trucks and SUVs.
Two polls late last year offered a glimpse of Americans’ appetite for electric vehicles. One, by Consumer Reports, showed that only 4 percent of adults with a driver’s license planned to acquire an EV the next time they buy a vehicle. An additional 27 percent said they would consider one. About 40 percent express
some interest — but not for their next purchase. About 29 percent don’t want an EV at all.
Likewise, when J.D. Power surveyed people who intend to buy or lease a new vehicle in the next 18 months, only about 20 percent said they were likely to buy an EV. Roughly 21 percent were unlikely. The rest were undecided.
“For every new-vehicle shopper seriously considering (battery electric vehicles), there’s another at the opposite end of the spectrum,” said Stewart Stropp, senior director of automotive retail at J.D. Power.
For one thing, Stropp
said, most buyers are unfamiliar with electric vehicles and haven’t ridden in one. Those who have, though, are roughly three times as likely to consider them, he said. People want as many chargers as gas stations, Stropp said, but don’t seem to realize that most charging can be done at home.
The task of breaking down the American public’s hesitance to invest in a fully electric vehicle could prove problematic. And the automakers clearly recognize it. Last year, GM planned a major public campaign featuring test drives and engineers to answer customer questions at events around the country. The viral pandemic, though, forced it to scrap the plan.
GM is making experts available virtually this summer as it starts selling a Chevrolet Bolt small electric SUV for just under $34,000, its first electric entry into the most popular segment of the U.S. market. But Tony Johnson, marketing director for Chevy electric vehicles, acknowledges that there’s no substitute for “putting seats in seats.”
Schuster foresees U.S. sales rising this year to 359,000, taking off in 2022 and reaching over 1 million the
next year. By 2030, LMC predicts U.S. sales of over 4 million EVs. Yet even that would represent only one-quarter of the overall market.
Still, encouraging signs emerged in February, when EV sales rose 55 percent from a year ago to 18,969, according to Edmunds.com. Helping boost sales, Schuster said, was the variety of models, plus added incentives and the expectation of stricter pollution limits from the Biden administration. Biden favors expanding a tax credit for buying EVs and has pledged to help build 500,000 more charging stations and increase fuel economy requirements.
Currently, a $7,500 federal tax credit is phased out after an automaker hits 200,000 EV sales. GM and Tesla have both exceeded that level, and Nissan is close. A bill from Democrats would raise the cap to 600,000.
The market will tip toward EVs, Schuster predicts, when all these forces line up.
“There are more choices, competitive pressure,” he said. “A new generation of technology will drive prices down. We’re getting there.”