New York: The U.S. transition to electric cars faces a formidable hurdle as concerns about vehicle range, limited charging capacity, and core affordability issues hamper progress. In recent weeks, automakers have revised EV sales targets and deferred capital projects in a bid to reduce inventories of unsold EVs at dealerships.
Neil Saunders, managing director of GlobalData, noted that the slowdown in EV sales is more pronounced than in other vehicle categories and is not merely an economic issue. "The EV has a problem attached to it," he said. "It's a much more difficult and complex purchase due to the range of the vehicles and the charging infrastructure."
American consumers, accustomed to lengthy road trips given the country's vast size and limited public transit options, find the current network of EV charging stations unreliable, with many areas lacking infrastructure or equipped with undependable machines.
While more than three-quarters of drivers consider EVs reliable, according to a Consumer Technology Association CTA survey, significant doubts persist. Concerns revolve around inadequate charging infrastructure 36 percent, battery range 39 percent, and vehicle affordability 38 percent.
In October, the average EV sold for $51,762—$13,000 below the year-ago level but almost $4,000 above the average price of all autos. In Europe, the higher gasoline prices provide an incentive for consumers to overlook the lofty upfront cost of the vehicle. This factor is less influential in the United States, where gas prices are only about half the level in France or Britain, according to Observatoire Cetelem 2024.
Industry leaders like Tesla Chief Executive Elon Musk also highlight increased borrowing costs as a challenge following a series of Federal Reserve interest rate hikes over the last year and a half. Tesla continues to dominate the EV market, representing over 55 percent of the 873,000 EV autos sold in the first 10 months of 2023, as reported by industry researcher Kelley Blue Book.
Ford Chief Executive Jim Farley anticipates "some bumpiness" in the evolving U.S. market, attributing it to dynamic changes in pricing, adoption rates, and regulations that necessitate further cost reduction for EVs.
General Motors, Ford's rival, recently postponed its plan to convert its Orion, Michigan plant for EVs until the end of 2025. This move aims to better manage capital investment while aligning with evolving EV demand. Ford and Tesla are also focusing on simplifying manufacturing processes to limit costs. Tesla's Chief Financial Officer, Vaibhav Taneja, emphasizes, "Reducing the cost of our vehicles is our top priority."
For its upcoming Cybertruck, expected to begin deliveries before the end of 2023, Tesla is striving to "simplify that vehicle" to achieve efficiency "that is unheard of in the auto industry," according to Musk. Ford has similarly committed to tweaking its vehicle design and manufacturing to reduce complexity.
However, the results remain unproven, warns Deutsche Bank analyst Emmanuel Rosner, expressing concerns that automakers have not yet cracked the economics to make easy, affordable EVs.
Washington has rallied behind EVs during Joe Biden's presidency, approving $7.5 billion in funds for EV chargers and extending tax credits up to $7,500 for consumer purchases of EVs. The Biden administration aims for 50 percent of vehicle 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," cautions Saunders of GlobalData. He predicts that while the long-term trajectory is promising for EVs, progress will be gradual.__AFP