The US auto industry has been very concerned lately about electric vehicle sales. Cars Still Sell Electric, plug-in hybrid and plug-in hybrid vehicles accounted for 18% of new car sales in the US in the first quarter of this year, according to new data shared by the US Energy Information Administration this week. But this share decreased slightly from the previous quarter. Which is certainly not where automakers want it to be.
Both electric vehicle makers and potential buyers face a similar dilemma: high upfront costs but lagging financial benefits.
For many automakers, their massive investments in new battery factories and supply chains have, so far, not paid off, says Gil Tal, director of the Center for Electric Vehicle Research at UC Davis.
“Right now, they lose on every electric car they sell, if they just divide the total investment by the number of cars. But if you divide it by the next 10, 15, 20 years of selling electric cars, they won’t lose money,” Tal said.
But saying, “Just wait, we’ll be making money from this in a decade,” doesn’t sound great in a quarterly earnings report.
Consumers also have to make a significant investment upfront, says Leah Stokes, an associate professor at the University of California, Santa Barbara.
“I think a lot of people want to have electric cars, but that little bit of a higher price in terms of initial ownership costs, it makes it a little bit more expensive to buy a vehicle. That’s a really big variable,” Stokes said.
This deters consumers, even if they will save money on gas in the future, Stokes says. They are concerned about how far they can drive on a single charge.
“Price, reliability, ease of use, charging, and charging speed,” says Brian Moody, senior editor at AutoTrader, are all hurdles automakers will have to overcome to see more widespread adoption of electric vehicles. But he believes that at some point in the near future, a car company will check all the necessary boxes.
“Once electric vehicles reach cost parity, and then once they’re offered long range, and we see the availability of chargers, at that point, we’re likely to see widespread adoption in the market,” said Seth Goldstein, equity strategist at Morningstar. .
In other words, once we don’t have to change our lifestyle or budget to drive an electric car, we’ll buy more of them.
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