Electric cars for everyone? Not unless they get cheaper

SAN DIEGO >> Robert Teglia bought a Tesla Model 3 sedan even though he knew it cost more than many luxury cars. He didn’t particularly care that it might be better than the others for the environment.

Teglia, a commercial real estate appraiser in San Diego, tallied the costs of a gasoline vehicle and a Tesla, and he realized that even after paying more to buy a battery-powered car, he would end up saving money on gas and maintenance.

“I’m a Tesla buyer who didn’t buy it for altruistic reasons,” Teglia said. “I bought it just because I think it’s awesome.” His wife, Dianne, bought one, too.

Their decision illustrates the challenge President Joe Biden and automakers face as they push Americans to go electric to help address climate change. These cars cost much more than gasoline vehicles, which can deny the thousands of people who would want to buy an EV — regardless of reason — to be able to actually purchase one.

At the high end, a Tesla Model S starts at more than $80,000, and at the low end, a Chevrolet Bolt starts at $31,000 — nearly $10,000 more than a larger gasoline-powered sedan like the Chevy Malibu.

A federal tax credit can lower the sticker price by as much as $7,500, but it no longer applies to Tesla and General Motors models. In addition, some Americans do not owe enough in income taxes to take advantage of the credit, and others can’t manage to pay thousands of dollars in anticipation of a refund the following year.

As a result, many Americans cannot buy one EV, let alone two like the Teglias, because they cannot make the large investment needed to reap savings that the cars can deliver on fuel and repairs.

Biden recently said that he wanted half of new cars sold in the country to be battery-powered by the end of the decade. But that ambitious target could be hard to meet. Less than 4% of new cars sold in the United States in June were electric, a far lower rate than in China and Europe, which offer more generous incentives and have stricter auto regulations.

The Biden administration wants to invest billions of dollars to build charging stations for EVs and to lower the vehicles’ cost. But the bipartisan infrastructure bill in the Senate would authorize only $7.5 billion for chargers, half of Biden’s original request, and it does not expand incentives for EV purchases.

Automakers have pledged to support the transition with dozens of new models. GM said in January that it would stop producing gasoline cars by 2035. Ford Motor, Volkswagen and others are also aggressively pushing into EVs.

To achieve those aggressive targets, Biden and the automakers will need to secure something more elusive: buy-in from drivers.

Electric cars are common in high-income neighborhoods.

Consider Carmel Valley, Robert Teglia’s well-to-do neighborhood in San Diego. Vehicle registration data compiled by Drive Dominion, a research firm, found that there are more Teslas registered in the 92130 ZIP code, which includes most of the neighborhood, than in all but two others in California, in Palo Alto and Orange County. Banks of electric vehicle chargers have mushroomed in the neighborhood, including 18 Tesla Superchargers atop a parking garage at a mall, One Paseo.

The Times interviewed more than a dozen electric vehicle owners in this part of San Diego, and only a few cited environmental considerations as the primary motivator for buying an EV. Many were drawn in by technological novelty or were persuaded by friends and family members.

The people here are not Hollywood stars or billionaire tech entrepreneurs who might own Ferraris and private jets. But they are well off. The median household income in the area exceeds $165,000, and half the homes are valued at more than $1 million. Eight in 10 residents have at least an undergraduate degree. As early buyers with high incomes, they can easily take advantage of the federal EV tax credit.

The incentives are, in effect, “subsidizing my luxury,” said Teglia, who also has solar panels on his home. The Model 3s he owns sell for about $40,000 before government incentives.

Dr. Jack Hsiao, an obstetrician-gynecologist, had avoided buying an electric vehicle for fear that he wouldn’t be able to drive very far before having to plug in — a phenomenon known as range anxiety. But his sister, who moved to California from Texas and bought solar panels and a Tesla, persuaded their father, who lives with Hsiao, 54, to buy one, too. Following his family, Hsiao bought a Tesla and solar panels.

“Gas prices have just gone through the roof, and so, given that I’ve got the solar panels, it cost me next to nothing to charge,” he said. “For me, it was just a perfect fit.”

Elaine Borseth, a retired chiropractor, is another convert. Before she bought a Model S, she had never spent more than $20,000 on a car. But after seeing several of the big, sporty sedans on the road, she drove one about seven years ago. “I thought they were sleek and sexy,” said Borseth, who now runs the Electric Vehicle Association of San Diego.

“It’s almost one of those cases where the more you see, it just kind of breeds upon itself,” she said to explain why her neighborhood has so many electric cars.

Research backs up her intuition. Word-of-mouth plays a major role in car-buying decisions. A 2017 study commissioned by the California Air Resources Board, a state agency, found that neighborhoods that were early to adopt electric vehicles continued to buy them at higher rates, suggesting that both socioeconomic status and exposure to the vehicles play a role.

“It’s not about the Super Bowl ads, it’s about listening to other people, and that’s why it takes time,” said Gil Tal, director of the PlugIn Hybrid & Electric Vehicle Research Center at the University of California, Davis.

The places furthest along in switching to electric vehicles typically share three traits, he said: They have high-income individuals, many single-family homes, and early adopters who introduce the idea of going electric to others. People rarely give just one reason for buying electric, Tal said. They tend to argue that electric vehicles are fun, fast, easy and, as an added bonus, good for the environment.

“We never find someone who’s like ‘I don’t care for the environment, it’s only about the 0 to 60’ or someone who says, ‘It’s only about saving the $20 a week,’” he said. “It’s the bundle that works for people.”

The government could help make electric cars more affordable.

Interest in electric vehicles is growing, but concerns about how far the cars can travel on a charge and about the availability of public charging stations keep many Americans from taking the leap. And then there is the cost.

While many electric and hybrid vehicles qualify for the $7,500 federal tax credit, the value of the credit varies by brand and model, which can be confusing. Making the incentive uniform and turning it into a rebate that lowers the purchase price — an approach states like New York and New Jersey take with their incentives — would do more to encourage EV purchases, policy experts said.

“There’s just lots of reasons why a direct consumer rebate or ‘cash on the hood’ is a really important incentive,” said Ben Prochazka, executive director of the Electrification Coalition, a Washington nonprofit group that advocates greater use of electric vehicles. “It’s clear, very clear for everybody, the buyer and the person who’s selling.”

Scott Eng and his wife, who live just a few miles south of the 92130 ZIP code, considered an electric vehicle when they were car shopping this year. Still, they ultimately couldn’t justify the cost of buying a new car, said Eng, the pastor of a nondenominational church. With few used electric vehicles to choose from and no easy way to gauge the health of a car’s battery, they bought a used hybrid Chevy Volt to match the one they already have.

“The Volts work for us right now, but we would ideally like full electric,” he said.