Electric Vehicle Boom Is (Predictably) Out of Gas
The plugin electric vehicle (EV) business in the U.S. cruised into 2024 full of hype and hope. The hope was that a slowdown in EV growth that began in 2023 was just a hiccup in the otherwise inevitable boom cycle that many experts were predicting.
The administration had set a goal of EVs making up to half of all new vehicle sales by 2030, and created tax breaks to make EVs competitive with internal combustion engine (ICE) vehicles. Enthusiastic policymakers assured us that it wouldn’t be long before gas guzzlers had been rendered practically obsolete.
The year will end with plenty of hype, but the growth hiccup has morphed into a headache that shows no signs of going away anytime soon. As we noted here last March, the growth in retail market share for EV autos sold in the U.S. has been stalling.
An Associated Press poll in April found that just 8% of those surveyed reported that someone in their household owned an EV. Of the nearly 300 million vehicles registered in the US today, no more than 6 million are EVs, according to data collected by the Energy Department.
Consumers are wary about how far EV cars can go before needing a charge. They are annoyed by the limitations and complications of finding recharging stations. They are alarmed by technological breakdowns like the charging stations in the Upper Midwest that were rendered useless last winter by frigid weather.
Considering the staggering amount of money that has been invested in designing, producing, and marketing electric cars in the U.S., it’s clear that investors were so dazzled by the EV novelty and the potential for big returns that they forgot to ask consumers what they thought.
Had they done so, they would have discovered a yawning gap between what people say they’ll do and what they’ll actually do.
Polls completed in the past year reported that between 30% and 40% of consumers said they were at least “somewhat interested” in switching to an EV. But when asked whether it is "very" or "extremely" likely that their next car will be an EV, only 20% said yes.
Even more telling was a June survey by consulting giant McKinsey & Co. that found that almost half of Americans who own an EV are so disappointed that they want their gas guzzlers back.
A recent Pew Research study found that most Americans aren’t convinced that EVs are cheaper to operate: 28% said EVs cost more than a gasoline-powered car, and 32% guessed the costs are about the same. Those numbers would be different today, with the price of gasoline now historically cheap.
A fascinating finding in the Pew survey: attitudes about EVs tend to align with political affiliation. More Democrats than Republicans think EVs cost less to fuel, are as reliable as gasoline cars, and by a wide margin think they are better for the environment.
The Pew survey also highlighted the essential element that puts EVs at a disadvantage—there are gas stations everywhere. Most Americans, especially Republicans, doubt that the U.S. will build the charging infrastructure necessary to support large numbers of EVs.
Finally, there are few consumer products that are as subject to federal government policies than electric vehicles. According to a report this week by Reuters, the incoming administration plans to “cut off support” for EVs and impose bans on components currently supplied by China.
The EV boom with its celebrity brands and futuristic designs has been a lot of fun and a grand experiment. But along the way the industry, in its haste, made a fundamental mistake of not understanding what their customers wanted.
Marketing cars is subject to the same rules of retail engagement as selling lingerie or throw pillows or smart phones. Success comes to companies that deliver what customers have said they want, at a price they are willing to pay. As things look, that’s a very expensive lesson the Auto industry may be about to learn.
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