Electric vehicles face obstacles even if Congress passes climate bill

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.

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