High EV Costs are a Barrier to Adoption
The shift to electric vehicles is underway worldwide. Governments around the globe are pushing auto makers to make their fleets zero-emissions on aggressive timelines. Environmental benefits, impressive performance, and potential lower running costs have also pulled drivers towards EVs; their market share in the U.S. was up significantly in 2022 compared to 2021.
Still, electric vehicles represent far less than 10 percent of vehicle sales in America – and those sales are concentrated in regions where financial incentives, and environmental policies, are aggressive. The rest of America lags behind. Indeed, a recently released study from international consultancy Deloitte suggests that only 8 percent of Americans are actively considering an electric vehicle as their next daily transport. That lags significantly behind other markets surveyed, like Germany (16 percent) and China (27 percent).
Purchase Costs Lead List of Concerns
Even though the number of electric vehicle choices is greater than ever, the perception in the U.S. market is that EVs are still not affordable. Over half of U.S. respondents listed cost as their biggest concern about EVs. Concern over costs – and not range or charging – have increased compared to previous years.
That shouldn’t come as a surprise. A number of popular electric vehicles, such as the Chevrolet Bolt and Ford F-150 Lightning, have had price increases over the last year, driven by a massive rise in material costs for battery production. Indeed, the costs to produce batteries, the most expensive part of any electric car, actually rose for the first time between 2021 and 2022 – the first time in over a decade that costs haven’t come down.
The good news for those considering electric cars in 2023 is that the incentive landscape is changing. A new incentive of up to $4,000 is available on used electric vehicles priced under $25,000, and at least until March, some new electric vehicles that would qualify for $3,750 in federal incentives may qualify for up to $7,500. Incentives are also good for leased electric vehicles at the time of writing.
EV Charging Challenges Easier to Answer
Potential buyers’ concerns about driving range (48 percent) and charging time (47 percent) are relatively similar to prior studies. Interestingly, Deloitte’s study asked what kind of range would be sufficient for EV prospects, and 300 to 399 miles of range received the highest score (22 percent); only 19 percent wanted 600 miles or more.
That’s good news, as the range of the average EV on the EPA’s testing cycle has certainly improved in the last couple of years. Many new EVs come rated by the EPA with estimates of over 250, or over 300 miles, making range less of a barrier to entry than before.
Charging time is also less of a concern as we enter 2023. Not only is the number of DC fast charging stations across the country improving daily, but the cars themselves have the ability to charge faster than before. 150-kW charging speed is now the norm for newly-introduced EVs, with many such as the Kia EV6 capable of charging at 270 or even 350 kW.
Interestingly, the survey also asked potential buyers what an acceptable charging time would be at a public facility. In the U.S, over half of respondents said that between 10 and 40 minutes was an acceptable charging time. That is, so long as wi-fi (64 percent) and restrooms (60 percent) were available when charging on the go.
Most electric vehicle owners will do most of their charging at home. 77 percent of U.S. survey respondents indicated they would charge at home – the highest in the world. However, 19 percent said that there would be no possibility for them to charge at home, indicating a need for comprehensive charging solutions in densely-populated urban areas where shared accommodations and multi-story parking garages may be difficult or expensive to upgrade. Even 40 percent of those who could set up charging at home said the cost of installing a home charger was prohibitive.
Good News for Hybrids
Looking at the electrification picture more broadly, it’s clear many Americans are still looking to reduce their carbon footprint and reduce their fuel consumption. While EV intention was just 8 percent, 20 percent of respondents said they would be considering a hybrid vehicle, and 8 percent a plug-in hybrid vehicle. These types of vehicle still offer their drivers a reduced carbon footprint while still offering the flexibility to take long drives without long charging stops.
While they don’t offer the same huge reduction in gasoline costs that pure electric vehicles do, plug-in hybrids and hybrids still can help reduce fuel consumption and operating costs. And while they still require more service than electric cars thanks to having a gasoline engine, hybrids and plug-in hybrids have been proven to be more reliable.
All of which is to say, if you’re looking to save on fuel and reduce your carbon footprint, there are a lot of options available to you in 2023.