A Tesla electric vehicle drives past the Tesla Inc Santa Monica Place store, in Santa Monica, California Photo: AFP/File

U.S. transition to electric vehicles faces delays

By Elodie MAZEIN

The U.S. transition to electric cars has hit a speed bump, with concerns about vehicle range and limited charging capacity adding to core affordability issues.

Automakers in recent weeks have pushed back EV sales targets and delayed capital projects as they seek to reduce inventories of unsold EVs at dealerships.

"The slowdown in EV sales is much more pronounced than it is for other categories of vehicles and that isn't related to the economy," said Neil Saunders, managing director of GlobalData.

"The EV has a problem attached to it," he said. "It's a much more difficult and complex purchase because of the range of the vehicles and the charging infrastructure."

American consumers are accustomed to often-lengthy road trips for holidays or to visit friends and relatives, owing to the country's large size and limited public transit options.

But so far, the network of EV charging stations remains dodgy, with many areas either lacking infrastructure or equipped with unreliable machines.

More than three-quarters of drivers consider EVs reliable, according to a survey by the Consumer Technology Association (CTA), the organizer of the annual Consumer Electronics Show in Las Vegas.

But there are also significant doubts among drivers surrounding the autos over inadequate charging infrastructure (36 percent), battery range (39 percent) and vehicle affordability (38 percent).

The average EV sold in October for $51,762, some $13,000 below the year-ago level for the autos, but almost $4,000 above the average price of all autos.

In Europe, the elevated price of gasoline adds an incentive that allows consumers there to overlook the lofty upfront cost of the vehicle.

But that is less of a factor in the United States, where gas prices are only about half the level in France or Britain, according to Observatoire Cetelem 2024.

Industry leaders such as Tesla Chief Executive Elon Musk have also pointed to increased borrowing costs as a drag after a series of Federal Reserve interest rate hikes over the last year and a half.

Tesla remains a dominant player in EVs, accounting for more than 55 percent of the 873,000 EV autos sold in the first 10 months of 2023, according to industry researcher Kelley Blue Book.

Ford Chief Executive Jim Farley predicted "some bumpiness" in the evolving US market.

"The dynamic changes in the market -- pricing, adoption rates, regulations -- are forcing us to further reduce the cost of our EVs," Farley said last month.

Ford's rival and fellow Detroit giant General Motors recently pushed back until the end of 2025 a plan to convert its Orion, Michigan plant for EVs "to better manage capital investment while aligning with evolving EV demand," the company said last month.

"In addition, we have identified engineering improvements that we will implement to increase the profitability of our products," GM said.

Ford and Tesla too are looking to simplify their manufacturing processes to limit costs.

"Reducing the cost of our vehicles is our top priority," said Tesla Chief Financial Officer Vaibhav Taneja.

For its futuristic Cybertruck, which is expected to commence deliveries before the end of 2023, Tesla is "doing everything possible to simplify that vehicle" to reach efficiency "that is unheard of in the auto industry," Musk said.

Ford has also vowed to tweak its vehicle design and manufacturing in order to reduce complexity.

But the results are still unproven, according to Deutsche Bank analyst Emmanuel Rosner.

"What concerns us most is that automakers haven't cracked the economics to make an easy, affordable EV," Rosner said on CNBC.

Washington has mobilized in favor of EVs during the presidency of Joe Biden, approving $7.5 billion in funds for EV chargers and extending tax credits up to $7.500 for consumer purchases of the autos.

The Biden administration wants 50 percent of vehicles sales to be electric by 2030.

"The politicians wanted it to happen overnight, but you can't just set arbitrary targets, you've got to make sure the infrastructure's there," said Saunders of GlobalData.

"The long-term trajectory is probably good for EVs," but "it's something that's much slower-going," he predicted.

© 2023 AFP

©2023 GPlusMedia Inc.

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Good. Looking for ways to increase prices to collect more taxes. That is all.

0 ( +1 / -1 )

quote: In Europe, the elevated price of gasoline adds an incentive that allows consumers there to overlook the lofty upfront cost of the vehicle.

Not in the UK it doesn't. Hyperinflation and rising poverty means people are bagging second hand ICE vehicles for a grand rather than shelling out a fortune for an EV. There is very limited charging infrastructure. Local councils fight tooth and nail to prevent new pylon lines, required to bring the extra electricity in for charging EVs, from spoiling the view. They block solar farms and turbines for the same reasons. They are not rolling out much charging infrastructure as many of them are heading for bankruptcy, and they simply don't have the cash anymore.

When the economy was strong, before Brexit and Covid, EVs could have sold, like iPhones, as status symbols. Now everyone is tightening their purse strings. European import restrictions, high import fees to block low cost Chinese EVs, a lack of labour, negligible domestic EV production and a limited charging network are all causing problems. Unlike the US, many UK properties cannot easily squeeze in the charging kit (or heat pumps).

The US has likely sold initial EVs to enthusiastic 'early adopters' (also known in tech as 'crash test dummies') who are capable of buying high priced, new cars. Beyond that, it gets a lot harder, and those higher price tags will be a real impediment. It will be a long time before low cost second hand EVs hit the market. If governments are serious about a transition, they will have to subsidise it, big time. Not tax credits, but artificially reduced prices.

2 ( +2 / -0 )

IF EVs are so good, why does the government have to pay people to buy them?

For people in cold climates, they are useless. Battery life drops in the winter, charging is painful and cold. If you have a short commute (or no commute) and only drive to the supermarket down the street, they are useful. But for serious driving? No.

1 ( +3 / -2 )

Maybe people who live far from cities have concerns about range, but here in California more than 25% of the cars sold this year have been EVs, and charging stations seem to be everywhere. Traveling to Frisco, San Diego, or Vegas in an EV is not a problem if one lives in Southern Cal.

With the recent spike in gasoline and diesel prices, I see fewer large cars on the road, and more smaller cars, and many more EVs. About two thirds of the EVs are Teslas, and their charging stations are abundant. Musk may be eccentric, but he got the EV thing right.

We haven't switched to an EV yet, as our old Buick runs great, gets good fuel economy, is very comfortable, and besides, we don't drive all that much any more. If I did have to buy a new car, I would look at the cheaper EVs, like the Bolt or the Leaf, and at the plug in hybrids. A Toyota hybrid with 40 mile battery range would be at least 10k cheaper than any Tesla, and would suit us just fine.

In the last year I have seen three Teslas show up on our block, with our neighbors, and when I drive around town, Teslas seem to be on every block. The rest of the US is probably a few years behind California, but what else is new?

1 ( +1 / -0 )

Who knows? Maybe the legacy manufacturers are correct. Maybe they can slow their roll and still survive by timing the market correctly.

OTOH, we are starting to enter the more vertical phase of BEV adoption and I fear that they may be left behind if they don’t have their supply chain sorted and product in the pipeline. Tesla is hardly slowing down. And, will build out Mexico and maybe announce another GF location. They are continuing to ramp Germany and Texas. They will hit 1.8 BEV vehicles this year. Hyundai/Kia is aggressive. And, the Chinese are coming.

1 ( +1 / -0 )

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