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The Biden administration's efforts to encourage more Americans to buy electric vehicles are falling short of expectations as consumers worry about prices, battery range and a lack of charging stations.
U.S. sales of all-electric cars are still growing rapidly — up more than 50 percent this year from 2022 — but automakers say growth has slowed in recent months, prompting them to cut their to cut production plans and suspend some investments.
“Automakers have gone from rosy to reality because consumer acceptance has grown more slowly. So they're thinking about slowing down the rollout a little bit,” said Michelle Krebs, industry analyst at Cox Automotive. The transition to electric vehicles “will not be linear and there will be many bumps along the way,” she added.
According to data provider JD Power, 869,000 all-electric vehicles were sold in the United States in the first ten months of this year, a 56 percent increase over the same period in 2022. This growth rate represented a slowdown compared to two years earlier and was below the Forecasts from some car manufacturers.
“The narrative has taken hold that electric vehicles are not growing. They’re growing,” Ford CFO John Lawler said in October. “It’s just growing slower than the industry and, to be honest, that’s what we expected.”
The Biden administration has announced that by 2030, half of all new car sales should be zero-emission vehicles, which it defines as fully electric vehicles and plug-in hybrids. According to JD Power, these models accounted for 10.8 percent of new vehicle sales in the United States last month, with the majority of them being fully electric.
Electric vehicle experts say it's still possible to meet the White House goal if consumers see progress in charging availability soon – something that should happen as government-subsidized chargers come to market in the coming months. Mark Z. Jacobson, a renewable energy expert and engineering professor at Stanford University, said buyers also need more information about the cost savings of switching to electric power.
“Given that driving an electric vehicle saves the average driver about $20,000 to $30,000 over a 15-year period in fuel cost savings alone, I think the only thing holding back consumer demand is the lack of information about it,” he said.
Electric vehicles face one obstacle: car dealers
The Biden administration says electric vehicle sales have tripled since President Biden took office, citing research that shows 51 percent of Americans surveyed have considered an electric vehicle this year, up from 38 percent two years earlier . With the help of federal grants, the country is on track to add 500,000 new chargers by 2026, government officials say.
“More Americans are buying electric vehicles every day – with sales of electric vehicles increasing faster than traditional gasoline cars – as the president’s Investing in America agenda makes electric vehicles more affordable, helps Americans save money on driving, and makes charging electric vehicles accessible and makes it convenient,” White says House Speaker Angelo Fernandez Hernandez said in a statement.
Still, Ford and General Motors are among the automakers that have cut production of electric vehicles and postponed investments in recent weeks amid falling sales.
GM said in October that “slowing near-term growth” had led the company to abandon its goal of building 400,000 electric vehicles by the middle of next year and delay the start of electric vehicle production at a factory in Lake Orion, Michigan . GM added that it will keep its manufacturing flexible to produce gas-powered or electric vehicles depending on demand.
GM CEO Mary Barra last month stressed the need for a more robust charging network to address consumer concerns. JD Power surveys have shown that drivers are frustrated by the lack of chargers and often broken charging stations. According to Elizabeth Krear, an electric vehicle expert at JD Power, about one in five charging attempts fail and about one in three electric vehicle buyers do not have access to home charging.
Ford announced in October that it would cut production of its electric Mustang Mach-E and postpone $12 billion in investments in battery factories and other EV initiatives. Ford has also announced it will place greater emphasis on hybrid vehicle production, calling it a “bridge” to the all-electric vehicle market.
In recent weeks, Ford told suppliers it was cutting its 2024 production plan for the F-150 Lightning electric pickup in half to about 1,600 per week, Automotive News reported this month. A Ford spokesman declined to comment on the report, saying only that the company “will continue to adjust production based on demand.”
Even Tesla, which dominates electric vehicle sales in the U.S., scaled back its plans to open a new factory in Mexico to serve the North American market, although it blamed high interest rates rather than anything specific to electric vehicles.
“I think we just want to get a feel for what the global economy looks like before we go full throttle into the factory in Mexico. “I am concerned about the high interest rate environment we find ourselves in,” Tesla CEO Elon Musk told investors in October. “I just can’t stress this and that enough [for] For the vast majority of people who buy a car, it’s about the monthly payment.”
Declining demand and growing competition have led to further reductions in the price of electric vehicles and helped narrow the price difference between electric vehicles and gasoline-powered cars. According to Cox Automotive, the average U.S. price for a new electric vehicle was $52,345 in November, about 8.5 percent higher than the average price for the overall market. A year ago the EV premium was more than 30 percent.
Improving the sparse and often flawed public charging network is critical to expanding the electric vehicle market beyond tech-savvy, higher-income buyers and including more middle-income Americans who aren't willing to endure inconvenience just to switch, experts say To accept electric vehicles, say experts.
VW spent $2 billion to build a charging network in America. It's in last place.
Early adopters are “very tolerant of mistakes in new technologies,” said Nick Nigro, founder of Atlas Public Policy, which conducts research on climate and technology issues. “Normal people aren’t like that. If the charger doesn’t work when you plug it in, it won’t work, even if the problem is just that you need to try again.”
The bipartisan infrastructure bill that Biden signed two years ago gave state and local governments $7.5 billion over five years to subsidize the construction of chargers, a campaign that is only now beginning to open new charging stations.
Sam Abuelsamid, a charging expert at market research firm Guidehouse Insights, said it took so long because charging providers have to jump through many hurdles to build a station, including working with local utilities to secure power, obtaining permits, purchasing and installing Installation of hardware.
“Given the time it takes to deploy a DC charging station, I’m not at all surprised that we’re only now getting the first ones,” he said.
Currently, the US network relies heavily on Tesla. According to Atlas Public Policy, there are about 35,000 public fast-charging ports in the United States, about two-thirds of which are owned by Tesla.
GM, Honda, Hyundai and several other automakers announced this summer that they are teaming up to significantly expand the fast-charging network by installing 30,000 new chargers in North America. The first stations are expected next summer.
“I think for years the car companies have defined their product as the car … and it's up to different providers to maintain and fuel those cars,” Jon McNeill, a GM board member and former top executive at Tesla, said in an interview. “It took some time for manufacturers to understand… that the product is not just the car, but also the experience… it's also the charging experience.”