The price of EVs is too high! Another Biden vision is about to fail: the electrification transition may take longer ·  12/04/2023 09:37

① The US government hopes that half of new car sales will be contributed by electric vehicles by 2030; ② However, this goal seems increasingly difficult to achieve; ③ The main reason is that costs are too high and consumer demand is slowing down.

Financial News Agency, December 4 (Editor Huang Junzhi) The US government hopes that by 2030, half of new car sales will be contributed by electric vehicles. However, in the face of many obstacles such as high prices and charging infrastructure, it seems increasingly difficult to achieve this goal.

Earlier last week, more than 3,000 car dealers asked the White House to “put on the brakes” on their electric vehicle targets. The letter, which was posted online, claims that “enthusiasm for electric vehicles has stagnated,” adding that EVs “are selling far less rapidly than expected — even with drastic price cuts, manufacturer incentives, and generous government incentives.”

The letter notes that most consumers are not ready for this transformation.

“They are concerned that the price of a pure electric vehicle is too high. Many people don't have garages for their homes to recharge, and there are no convenient public charging stations. “Customers are also concerned that mileage will drop in cold or hot weather,” the letter wrote. “Current technology is inadequate to support the needs of most of our consumers.”

In response, the White House pointed to the Inflation Reduction Act (IRA) passed last year, which encouraged adoption of electric vehicles by providing $7,500 in credit to eligible households.

A White House spokesperson said IRAs “make electric cars cheaper and help Americans save money while driving,” and stated in a statement that “the standards proposed by the US Environmental Protection Agency (EPA) are not mandatory — they don't force anyone to make, sell, or buy specific vehicles.”

The price is too high

An industry watcher said that credit provided through IRAs was insufficient to drive large-scale adoption of electric vehicles. Ramanan Krishnamoorti, Vice Chancellor for Energy and Innovation at the University of Houston, said, “The biggest challenge facing the popularity of electric vehicles is that prices are too high.”

“Only the top 10% of earners can afford an electric car,” he said. “We think there's a lot of hope for prices to drop.”

As the Federal Reserve raises interest rates to combat inflation, rising borrowing costs make it difficult for car owners to finance electric vehicles and manufacturers to produce electric vehicles.

Krishnamoorti said, “The kind of cheap money we had two years ago is no longer there today.”

Almost all costs associated with electric vehicles, from labor to batteries, are rising. Meanwhile, demand has weakened, prompting traditional automakers to recently cut their multi-billion dollar electric vehicle transformation plans.

Automaker Ford (Ford) said in its latest earnings report: “Many North American customers interested in buying electric vehicles are unwilling to pay more for electric cars than gasoline or hybrid cars, which greatly reduces the price space and profitability of electric vehicles.”

Industry giant Elon Musk (Elon Musk) also concurs with the need to make electric cars cheaper.

“The importance of cost cannot be overstated.” “We have to make our products more affordable so people can afford them,” he said in a recent earnings call.

GM CEO Mary Barra said, “By 2025, I think we'll really address the affordability issue. We'll also see continued expansion of charging infrastructure during this time. These are all things that must be done.”

The translation is provided by third-party software.

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