Electric vehicles are poised for the biggest policy boost in US history, but barriers remain before plugs replace gas pumps on a mass scale.
Why it matters: EVs are a key tool for cutting carbon from transportation, the largest source of US planet-warming emissions.
catch up fast: Democrats’ energy deal would hugely expand incentives if it passes.
- It nixes the per-manufacturer cap on the $7,500 consumer tax credit for EVs and makes them available as point-of-sale rebates.
- There are also first-time credits for buying used EVs (up to $4,000) and commercial fleet purchases. Axios’ Joann Muller has a deeper look.
- Sales are already rising, but from a low starting point. EVs were almost 6% of the US passenger vehicle sales in the year’s first quarter, though they remain under 1% of the country’s fleet, according to the Alliance for Automotive Innovation, the auto industry’s main US trade group.
The big picture: Here’s what stands in the way of vastly expanding that share quickly:
Sticker prices: The average electric vehicle price in June was nearly $67,000, which is well above the average gas-powered car, per Kelley Blue Book, a division of Cox Automotive.
- “Our data shows that price is the number one barrier to EV adoption,” Michelle Krebs, a top analyst with Cox, said in an interview.
- “We should be getting more affordable EVs, we’re promised that by the automakers, but they’re not here right now, not in great numbers,” she said.
- That’s especially important because the Senate deal imposes price limits on which vehicles qualify for credits: They can’t cost more than $55,000 for sedans and $80,000 for pickups and SUVs.
Availability: While automakers are ramping up output and rolling out new models, EVs remain relatively scarce. Buyers often have long wait times.
- “Supply is the primary limiting factor for electric vehicles right now,” iSeeCars.com executive analyst Karl Brauer told me via email.
- “Today’s high fuel prices are driving a lot of new interest in EVs, but automakers can’t produce them fast enough to meet demand.”
Acceptance and education. Surveys show lots of consumers are at least EV-curious, but taking the plunge can be another matter.
- Moving from gas to electricity means different fueling habits, often installing new home charging infrastructure (or obtaining nearby access), and more.
- Edmunds analyst Jessica Caldwell, in an interview, notes that many people are “just busy and they don’t want to learn a new system,” so they default to the status quo.
- One thing to watch: how well federal officials and industry spread the word on wider incentives. A recent Consumer Reports poll showed that 46% of people are unaware of existing federal and state purchase incentives.
Charging access. Drivers’ confidence they can find plenty of places to charge up — and quickly — will be key.
- Nationwide access is rising, but there’s miles to go before charging is deeply woven into the fabric of US transport infrastructure.
- Watch the progression of Biden administration efforts to spend billions in the separate infrastructure law for a major nationwide buildout.
- In fact, states have a deadline today to submit plans for using the main, $5 billion pot of money under the plan, but multiple steps in the process remain.
The power of incumbency. People don’t buy cars very often!
- We just covered new research showing that EV adoption rates consistent with Paris agreement goals would require much faster fleet turnover.
- The average life of a US gas-powered car is 16 years, the study noted.
What we’re watching: Research groups and firms, like BloombergNEF, produce careful market forecasts of EV adoption.
- Watch this space as they weave the legislation into their models and update their work.