Could the EV Push be Unraveling?

by Carolyn Mathas

We’ll explore the evidence that suggests it is. Stay tuned for January’s piece, when we’ll dive into the technology working to make it happen.

There’s increasing evidence that the Biden Administration’s EV push may unravel. The administration’s regulations seem to necessitate an increase in EV sales from 8.5% to 67% of all U.S. auto sales by 2032. The problem is that the feasibility of the mandate is coming into play.

Challenges include:

  • The lack of adequate infrastructure.
  • The top-to-bottom impact of rapid electrification.
  • The high cost of vehicles for the average income consumer.
  • The net savings in greenhouse gas emissions.

First, let’s explore the mandate itself, followed by some happenings that make it difficult to achieve its full potential.

The Mandate

In April 2023, the Environmental Protection Agency (EPA) proposed regulations to increase fuel economy and vehicle emission standards significantly. These regulations made it impossible for gasoline-powered vehicles to comply. That inability forces auto manufacturers to produce electric vehicles to meet the criteria. However, EVs are now expected to reach 67% of new vehicle sales by 2032, up from the administration’s 2021 Executive Order target of 50% of EV sales by 2030. This could be a tall order for manufacturers, considering Tesla currently accounts for nearly two-thirds of today’s sales.

The proposed regulations don’t just impact the car manufacturers themselves. For example:

  • Many question whether the power grid can handle the number of EVs by the mandated date
  • Supply chains are not yet in place to support the rapid manufacturing growth
  • Reports indicate that a shift to EVs could impact job loss in certain states. For example, in 2022, Ford announced plans to eliminate 3,000 positions in a shift to EVs. Stellantis announced eliminating 3,500 hourly jobs (U.S.) to produce electric vehicles.
  • The EPA finalized rules for heavy-duty trucks, creating the “strongest-ever national clean air standards to cut smog- and soot-forming emissions.” The standards went into effect in March and will be implemented for new trucks sold after 2027

So, Where’s the Pushback?

The realities of EVs outside of the electric plug vs. gas refill are beginning to make a difference. Approximately 15 to 20% of the emissions of an ICE vehicle over its lifetime occur before the car is first driven. With EVs, 15 to 100% of the emissions occur over the vehicle’s life and, when totaled, are greater than a conventional vehicle. EVs, for example, require a fuel tank and battery built using difficult-to-acquire metals.

“Electric Vehicles for Everyone? The Impossible Dream,” authored by Manhattan Institute’s senior fellow Mark Mills, threw cold water on the climate and cost benefits of EVs, indicating electrification of the U.S. transportation sector will raise consumer costs, increase grid vulnerability to the point of blackouts, and may likely fall short of greenhouse

gas emission level goals. Mills claims, “The subsidies and the mandates run the risk ofcausing maybe the biggest misallocation of capital in modern times in the industrial markets. Hundreds of billions of dollars are going to be spent chasing these mandates, requirements.”

Ford doesn’t seem to be completely buying into the EV push, scaling back an EV battery plant under construction in Michigan by 40% and slashing related job plans by 32%. Its EV division continues to lose billions. According to the EPA, the estimated average fuel economy for model year 2022 cars was 26.4 miles per gallon. The mandate requires

automakers to more than double fuel efficiency in less than a decade or pay substantial penalties. To date, Ford has never paid civil penalties under the CAFÉ program. Now, however, it would have to pay $1 billion in civil penalties if a National Highway Traffic Safety Administration (NHTSA) proposal is finalized. GM and Stellantis face even higher fines. Where will the funds come from? Perhaps we need to watch that sticker price?

The Deloitte 2023 Global Automotive Study indicates that the next car purchase for 62% of Americans will still be gas-powered. Only 8% prefer an entirely battery-powered car, while 20% prefer a hybrid. A recent survey of car dealerships found that 45% of dealerships say they would not sell EVs under any circumstances.

Research has explored the long-term satisfaction of electric vehicle (EV) owners. In California, approximately 20% of EV owners have reportedly switched back to gas-powered vehicles, citing charging inconvenience as a primary reason. Additionally, a national study indicates that about 50% of EV owners opted not to purchase another EV. These findings highlight the importance of considering consumer experiences and challenges in adopting electric vehicles.

Range, recharging time, and reduced performance are key reasons.

The EV mandate also challenges energy supply chains, creating greater mineral dependencies on foreign powers.

In a 221-197 vote, the House approved the Choice in Automobile Retail Sales (CARS) Act, with 216 Republicans and five Democrats voting in favor. The CARS Act will block regulations proposed by the Environmental Protection Agency (EPA) in April, significantly increasing tailpipe emissions standards for gas-powered cars.

What Say Consumers?

For many, EVs are not attainable to buy or maintain. Here are some reasons:

EVs have a higher sticker price. According to Kelley Blue Book, a new EV is just under $62,000, while an average ICE sedan is under $49,000. The disparity doesn’t end there.

The U.S. Department of Energy reports long-term ownership expenses for a small electric SUV are $0.4508/mi. vs. $0.4727/mi. for a similar gas car. The average annual total cost of an EV is $3,300, and $3,900 for gas-powered cars.

The cost of charging must be considered when looking at electric vs. gas fuel. Gas fuel costs approximately $1,120 on average annually. Operating an EV is just under $500/year. You can lower the operating costs if you have a home charger (cost and installation $2,000). The average driver spends nearly $60 charging an EV at home and more using chargers outside of the home.

They are not maintenance-free. Annual EV maintenance costs approximately $900 vs. $1,200 for a gas or diesel engine.

The real hit—EVs are about 50% more to repair, which has a major impact on the cost of insuring them.

Regulatory credits, subsidies, and infrastructure costs are $50,000 per EV, which is being subsidized by gas vehicle owners, taxpayers, and utility rate increases—a high price for an EV that someone else drives.

Approximately half of U.S. potential buyers say they are not likely to consider an EV, and 13% more say they won’t.

Desperate Times, Desperate Measures?

The EPA has initiated an ‘EV Video Challenge,’ which offers Americans a total prize pool of $13,500. This initiative has drawn diverse reactions. The Alliance for Consumers commented on using taxpayer funds to encourage positive narratives about electric vehicles (EVs). Jason Isaac, the founder and CEO of the American Energy Institute, shared his perspective on the challenge, highlighting aspects such as government-subsidized charging stations and #EnvironmentalJustice and #ClimateActionNow initiatives.

Meanwhile, Consumers Research expressed their views on the matter, with their executive director, Will Hild, critiquing the use of taxpayer money for what he perceives as a promotional campaign aligned with a specific agenda. These varying responses underscore the complexities and differing viewpoints surrounding the promotion and adoption of electric vehicles.

Recent surveys suggest a shift in American attitudes towards phasing out ICE (internal combustion engine) vehicles, with favorability decreasing by seven points since 2021 across various political demographics. This change in public opinion highlights concerns regarding consumer demand, cost transparency, and the adequacy of infrastructure for electric vehicles (EVs). These factors are crucial in understanding the potential success of the transition to EVs, particularly in the context of the current economic landscape.

To provide a more comprehensive perspective, a follow-up discussion is scheduled here on PartProcurer for January. Part 2 will explore the technologies and initiatives being developed to address these challenges and make the EV initiative more possible.

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