The EV Revolution In The US Is Just Getting Started

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If you have been keeping up with the stories in the mainstream press lately, you may have gotten the impression that the EV revolution in the United States has fizzled out and Americans will continue to drive cars with infernal combustion engines until the ocean reclaims most of the East Coast.

Of particular note is the news that Hertz is dumping a third of its Tesla rental cars after its CEO Stephen Scherr claimed they cost the company a ton of money in terms of depreciation and maintenance. Two years ago, Scherr sought to put his company at the leading edge of the EV revolution by purchasing large quantities of electric cars from Tesla and Polestar with plans to add tens of thousands from GM and Ford in the future.

Scherr blames Tesla for cutting prices in 2023, a move that slashed the resale value of its electric cars, which in turn had a negative impact on the company’s balance sheet. Scherr aslo blamed higher then expected repair costs. But in actuality, Hertz went forward with its EV plans with its eyes wide shut. It negotiated no fleet discount with Tesla and failed to add technicians to service its electric cars, relying instead on Tesla service centers which in some cases were hundreds of miles away from Hertz rental locations.

Hertz, under the so-called leadership of Scheer, also failed to educate its staff about EVs. As a result, customers were slammed into EV rentals with little or no orientation. Often the cars were rented with their batteries less than 50% charged and no information on how to find a charger or use one when necessary. In other words, Hertz bungled the whole EV rental experience. Why Scherr hasn’t been fired is the real mystery here.

EV Sales To Increase In 2024

Car and Driver has a rosy prediction for the EV revolution in 2024. It says EV sales in the US in 2023 were the highest ever, both in sheer numbers and as a percentage of the overall new car market. The EV Sales Tracker from EVadoption estimates nearly 1.2 million battery-electric vehicles and another 190,000 plug-in hybrids were sold in 2023, totaling 1.36 million vehicles. That’s 8.8 percent of the total of 15.5 million, per Wards Intelligence — the highest share of new electric car sales in the US ever. Sales of conventional hybrids last year were about 8 percent of the new car market.

2024 is expected to set another EV sales record both for volume and total market share. Colin McKerracher of Bloomberg projects EV sales in the US this year will total about 1.9 million units or 13 percent of new car purchases. This year should see fewer of the supply constraints that hobbled availability over the last four years. Depending on a host of factors, some analysts suggest overall vehicle sales could be 1 million vehicles or more higher than last year.

Everyone agrees the US saw a slow down in EV sales in the second half of 2023 but most forget that interest rates were historically high during most of last year, causing major corporations like Tesla, GM, and Ford to delay investment plans due to the high cost of borrowing. Yet Car and Driver points out that hitting the pause button in investments is not the same as cancelling plans to manufacture electric cars.

High interest rates also made buying a new car more expensive. In addition, the cost of an EV remained high (although Teslas became much more affordable). The least expensive EV on the market last year was the Chevy Bolt/EUV, which GM has now discontinued even though its replacement it still 18 months to two years away from production.

There is another factor in play. EV charging infrastructure in the US is dismal. The chargers that are out there often don’t work or won’t connect for one reason or another. It’s still early days for the EV revolution. When cars with internal combustion engines first arrived on the scene, gasoline was sold in pharmacies. It was only when gas stations became common that the transition from horses to motorized vehicles picked up speed. The Biden administration has made a massive investment in charging infrastructure, but it will take years to get enough EV chargers operational to take away people’s fears about charging an EV while travelling.

A Ray Of Sunshine

One reason for optimism is that a number of new EV models are arriving this year. Three row SUVs are the sweet spot in the new car market at present and the Kia EV9 is a three row electric SUV that happens to cost less than other similar vehicles in the US market such as the Mercedes EQS SUV, the Rivian R1S, and the Tesla Model X. The very similar Hyundai Ioniq 7 is scheduled to arrive by the end of this year. Both will be manufactured at the Hyundai Motor Group factory currently under construction near Savannah, Georgia, which means they should be eligible for all or part of the federal tax credit.

Missing in action are the General Motors EV models based on the highly touted Ultium platform. Car and Driver says the lengthy delays getting Ultium models into production appear to be related to problems GM is having with the automated machinery that inserts individual cells into the modules that go inside a battery pack. Meanwhile, the list of vehicles selling at minimal rates or simply not available has grown to include the Chevrolet Silverado EV, the Blazer EV,  the Equinox EV, the Cadillac Lyriq, and the GMC Hummer EV.

Inexpensive Cars From China

The longer GM and Ford dither and diddle getting EV production started, the more the door will open to inexpensive electric cars from China. The Volvo EX30 is due in showrooms this summer and will carry a starting price under $40,000. Given the 27.5 percent tariff on Chinese cars imported into the US, expect Chinese automakers like BYD to import cars built in Mexico or Brazil, two countries exempt from that import tariff. Imagine if BYD brought its newly announced electric pickup truck to the US and sold it for under $40,000. There would be lines of Americans banging on the door at BYD dealerships begging to be let in so they could buy one.

If you want to know where the action is in the EV world, look to see what is happening in China. EV sales in that country are expected to hit 10 million this year — half of all electric cars sold globally. Almost four out of every 10 new vehicles sold in China this year will be an EV, Bloomberg says. That in turn will give Chinese manufacturers like BYD the experience and higher volumes they need to keep cutting costs.

China has spent the past ten years and hundreds of billions of dollars of strategic investment by national, state, and local Chinese governments to dominate the EV space. China now leads in EV metals, battery assembly, and EV production worldwide. Despite lavish promises and tens of billions worth of investments made or planned, Detroit’s automakers aren’t anywhere close to that scale, nor are European automakers or other Asian companies.

Car and Driver says the US has unique constraints, since ginormous SUVs and trucks are what most American consumers want. Those vehicles tend to be priced cars at $60,000 or more largely because they need enormous battery packs to give them adequate range. Because such behemoths are not in demand elsewhere, American manufacturers face a limited export market for their EV products.

The Takeaway

Bear in mind that the EV revolution is only about 12 years old. Yes, there are challenges — high costs, poor charging infrastructure, and limited selection. But those issues are being addressed. Are some plans for manufacturing electric car in the US being scaled back of deferred? Yes they are. But deferred is not the same as cancelled. There will be more EVs sold in America this year than last and even more the year after that.

My Tesla Model Y has been in the shop for the past week after getting bumped in a parking lot. In the meantime, my wife and I are driving a Volvo S60 sedan. It’s a fine car but we miss the smoothness of our Tesla. All that thrashing and gnashing of gears gets really tiresome. We also miss regenerative braking, which makes urban driving such a pleasure. One can argue about how much we want computers to intrude into our driving but the experience of driving an EV cannot be matched by any car with a conventional engine and transmission.

An EV is simply the better choice. As the charging issues get resolved and more affordable electric cars come on the market, the EV transition will pick up speed. The overall goodness of driving electric is just so superior that once you experience it, you will never want to go back to the old way if there is any way to avoid it. The death of the electric car, part two, is a myth hyped by the fossil fuel industry. Don’t believe it. As we say at CleanTechnica, “Keep calm and charge on.”