By Phillip Molnar | The San Diego-Union-Tribune
General Motors, Ford and Tesla have all warned of an electric vehicle slowdown because they say demand might drop.
Auto makers mainly say higher borrowing costs are the issue but some car dealerships say EVs are sitting longer than regular cars. They say consumers are concerned about the range of EVs and lack of infrastructure.
In a Cox Automotive survey, 53 percent of consumers said EVs will eventually replace internal combustion engines, but less than a third of dealers agreed. Several dealerships interviewed by CNBC said EVs were taking longer to sell and there was a supply and demand imbalance with the vehicles.
Ford said two weeks ago it would increase production on its hybrid F-150 pickup trucks because of waning demand for its all electric model.
EV advocates insist the demand is still there, but consumers are only temporarily shying away because of high interest rates that make EVs — typically more expensive than your average car — more difficult to purchase.
Q: Has enthusiasm for electric cars waned?
Phil Blair, Manpower
YES: But a momentary blip. As someone who has only bought all-electric cars for my last five purchases, they are the future of car transportation. Yes, it has hit a lull. Interest rates, concern over ample charging infrastructure and availability of lower price models are valid concerns. New houses coming with charging capabilities are a telling sign.
Gary London, London Moeder Advisors
NO: Technology breakthroughs often take decades to achieve market acceptance. Electric, and perhaps hydrogen, and other vehicle technologies are in their infancy. The issues of range anxiety, cost and even their actual contribution to reducing the overall carbon footprint, will all be solved over time. Personal perspective: I am now driving my second electric vehicle. They drive better, are simpler to manufacture and incorporate superior technology. And they are more fun to drive.
Alan Gin, University of San Diego
YES: One factor is higher interest rates, which makes buying the more expensive electric vehicles more difficult. Another is that gas prices have come down after a recent surge. But a big reason might be that early adopters of the technology may have already gone all in on EVs. Getting the next tier of customers might require a game changer such as Toyota’s solid-state battery technology, which could raise the range to 700 to 900 miles and reduce charging times to less than 10 minutes.
Bob Rauch, R.A. Rauch & Associates
YES: Enthusiasm for electric vehicles has waned, though EVs are still growing in number. GM is delaying the opening of a large electric-pickup-truck factory in Michigan and Ford is considering canceling a shift of factory production on its electric F-150 Lightning pickup. Tesla’s vehicle deliveries are still growing, but at a slowing rate, despite steep price cuts. There are concerns about charging vehicles on long drives, prices, and government subsidy requirements.
James Hamilton, UC San Diego
YES: Or at least the rate of growth of sales has slowed. The first wave of buyers of EVs were higher-income households with strong concerns about the environment. Adoption may be slower for other demographic groups. Higher interest rates historically depress all vehicle sales and disproportionately discourage sales of more expensive cars like EVs. The ultimate transition is inevitable but may come a little slower than some people thought 12 months ago.
Austin Neudecker, Weave Growth
NO: As with all new technologies, at first, enthusiastic technophiles and idealists purchased EVs. Today, the economics are positive for many consumers, especially those who own single-family homes. Higher interest rates, a recent buying binge, and unfamiliarity are causing a temporary weakening in demand. Fear of the unknown — range/charging/tech — and car replacement timing have deterred others thus far. In time, additional exposure, improved range, increased competition, gas price uncertainty, and environmental awareness will drive widespread adoption.
Chris Van Gorder, Scripps Health
NO: I think the desire for EVs remains but as noted, high interest rates, the lack of needed infrastructure and the vehicles’ limited range will slow sales. When range capabilities, infrastructure and charging speeds increase and costs and interest rates decrease, sales will improve. Electric hybrids will continue to bridge the gap as drivers start testing EVs.
Norm Miller, University of San Diego
NO: EVs remain relatively more expensive cars, for now, albeit cheaper to own. When budgets are subject to higher interest rates, consumers shift to lower-priced substitutes. A gas Subaru Crosstrek starts at $24,995, a Subaru Solterra EV starts at $44,995. That is a huge difference for the average consumer. With higher interest rates we have seen higher-priced choices, EVs included, become less attractive. EVs are here to stay and eventually, with less expensive batteries, will become more affordable over time. It’s all I’ve driven since 2012.
Jamie Moraga, Franklin Revere
NO: Consumers are still interested in electric vehicles, and it will only grow over time as battery technology and long-distance supercharging networks improve. If cost has been a factor, car makers like Tesla have been cutting prices on some of their models recently and interest rate hikes are finally leveling out. With gas prices continuing to increase, an EV is still a good option for long-term fuel savings, lower maintenance costs, and EV tax incentives.
David Ely, San Diego State University
YES: Now that early adopters have purchased EVs, it is natural for enthusiasm to wane. Range anxiety and high interest rates are leading many shoppers to delay the switch to EVs. Sales of EVs are still rising, just at a slower pace. EV sales growth would be lower if not for significant price reductions by manufacturers. This suggests that demand is falling short of expectations and needs to be brought back into alignment with supply.
Ray Major, SANDAG
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YES: Early EV adopters and tech enthusiasts are already driving EVs regardless of price. Concerns about range, accessible charging stations, charging time, cost and the lifespan of a vehicle, are some of the reasons why not everyone has jumped in. Nationally, customers in colder climates are experiencing significantly less battery life than those here in Southern California. Enthusiasm for EVs has slowed and full adoption will take decades, not years.
Caroline Freund, UC San Diego School of Global Policy and Strategy
NO: Despite waning enthusiasm for Tesla CEO Elon Musk, EVs are still hot commodities with heaps of new models becoming available. Adoption of new technologies tends to follow an S curve — slow at first, then speeds up, and eventually levels off. EV sales are no exception. Sales were pretty flat in the years through 2020, picked up in 2021, and will likely remain strong for some time before flattening.
Haney Hong, San Diego County Taxpayers Assoc.
NO: While it may be more expensive to finance a car purchase, gas prices have skyrocketed. Also, the federal and state tax incentives are hefty. I know anecdotally that plenty of people are still in the market for EVs, as there are a lot of reasons for someone to purchase one. Now if there’s any waning, it’s probably a smaller reduction than in the demand for gas-powered vehicles.
Kelly Cunningham, San Diego Institute for Economic Research
YES: Electric vehicles continue to have promising technological developments, but there are limits for potential uses that may not encompass all transportation needs. Costs and risks should not be imposed on less well-off citizens to the benefit of wealthy investors and buyers. Electric cars will continue to be a substantial endeavor for those capable and willing to take on inherent risks. Governments should not be imposing mandates or subsidizing developments that may prove counterproductive or ineffective.
Lynn Reaser, economist
YES: Several factors are slowing sales beyond early adopters. First, the limited range is of great concern. Second, the time to recharge takes a multiple of the few minutes to fuel an internal combustion-powered vehicle. Third, the limited number of charging stations is hampering sales. Fourth, the higher prices even with various subsidies are a problem. Fifth, battery inflammatory risk is cause for concern. Finally, the poorer performance in cold climates is a limiting factor.