The transition to electric vehicles may take longer than the Biden administration wants. this is the reason.

The transition to electric vehicles may take longer than the Biden administration wants.  this is the reason.

The US government wants half of new car sales to be electric by 2030. But reaching that goal looks increasingly difficult due to hurdles ranging from pricing to charging infrastructure.

Earlier this week, more than 3,000 auto dealers asked the White House to “pump the brakes” on the electric vehicle goal. “Enthusiasm for electric vehicles has stalled,” the letter, posted online, states, adding that battery electric vehicles “are not selling as quickly as they reach our dealers — even with deep price cuts, manufacturer incentives, and generous government incentives.” .

The majority of consumers are not ready to make this shift, the letter states.

A Tesla charging station stands idle in Albuquerque, New Mexico, on Wednesday, November 15, 2023. The New Mexico Environmental Improvement Board and the Albuquerque-Bernalillo County Air Quality Control Board have adopted rules that will increase the percentage of electric vehicle deliveries by 2023. Auto manufacturers to New Mexico prosecutors after the conclusion of a joint public hearing on Thursday, Nov. 16, 2023. (AP Photo/Susan Montoya Bryan)

A Tesla charging station is idle in Albuquerque, New Mexico, on Wednesday, November 15, 2023. (Susan Montoya Bryan/AP Photo) (News agency)

“They are concerned about the unaffordability of BEVs (battery electric vehicles). Many do not have garages for home charging or easy access to public charging stations. Customers are also concerned about losing driving range in cold or hot weather,” the letter read. “. He added: “Today’s current technology is not sufficient to support the needs of the majority of our consumers.”

In response, the White House pointed to the Inflation Reduction Act (IRA) passed last year, which incentivizes EV adoption by offering $7,500 credits to qualifying households.

A White House spokesperson said the EPA “makes electric vehicles more affordable and helps Americans save money when driving,” noting in a statement that “the EPA’s proposed standards are not a mandate — they do not force anyone to manufacture, sell, or buy products.” specific”. “The proposed standards are performance-based, meaning manufacturers can choose to commit to methods that suit them and their fleets.”

“The price point is too high”

The credit offered through IRAs isn’t enough to move the needle for mass adoption of electric vehicles, according to one industry observer.

“The biggest challenge to the proliferation of electric vehicles is that the price point is too high,” Ramanan Krishnamurti, vice president of energy and innovation at the University of Houston, told Yahoo Finance.

“Only the top 10% of the population can afford electric cars,” he said. “We thought there was a lot of promise for lower prices.”

As the Federal Reserve raises interest rates in its fight against inflation, the rising cost of borrowing has made it difficult for drivers to finance electric cars and for manufacturers to build them.

“What we had two years ago, that cheap money, is not available today,” Krishnamurti said.

Almost every cost associated with electric vehicles has risen, from labor to batteries. At the same time, demand has fallen, prompting legacy automakers to scale back their multi-billion-dollar electric vehicle conversion plans.

“Many North American customers interested in purchasing electric vehicles are unwilling to pay premiums for gas-powered or hybrid vehicles, putting sharp pressure on electric vehicle prices and profitability,” automaker Ford (F) said in its latest earnings release.

Read more: Are electric cars more expensive to insure?

Industry giant Elon Musk has echoed the need to make electric vehicles more affordable.

“I can’t stress enough how important cost is. We have to make our products affordable so people can buy them,” the Tesla (TSLA) CEO said during the company’s most recent earnings call.

It’s a challenge that manufacturers expect to continue to address through 2024.

“In 2025, I think we’ll really get over the affordability issue. And over this entire period, what we’ll also see is the continued expansion of charging infrastructure. That’s what needs to happen,” Mary Barra, GM’s CEO, told the editor. Yahoo Finance executive Brian Suozzi earlier this week.

Drivers’ concerns about the charging station infrastructure, which is still under construction, poses another major challenge. Drivers often complain about incompatible or unreliable terminals.

“(Consumers) want to know when they’re going to get a charger, and it’s going to be available, and it’s going to work,” GM’s Barra said.

Earlier this year, the government announced a deal with Tesla aimed at building a network of chargers open for use by all electric car drivers by the end of 2024.

“The infrastructure for electric vehicles is not coming fast enough. And even when it is coming, what we find is that charging times are too long,” Krishnamurti said.

“Stay away from electric vehicles”

Given the cost and infrastructure challenges electric vehicles face, consumers are increasingly turning to hybrid models, which turn off the gasoline feature when at rest.

The BMW X5 and Toyota Highlander hybrid models were among the two fastest-selling used cars in October, according to recent data from iseecars.com. The data indicates that electric cars are selling at a slower pace, although their prices are falling faster than hybrid or gasoline models.

The research shows that an electric vehicle takes an average of 57.5 days to leave the dealership, versus 20 days last year. By comparison, a hybrid vehicle now takes 37.2 days to leave the dealership versus 20 days a year ago.

“This tells you that there is a shift in the market away from electric vehicles to more of these sustainable solutions,” Krishnamurti said.

Despite these challenges, EV sales in the third quarter of this year are still growing — jumping nearly 50% from a year ago to 313,000. U.S. EV market share reached 7.9%, an all-time high.

“You need time to build capacity, build charging stations, get the cost down, and get ahead,” chief US energy adviser Amos Hochstein told Yahoo Finance in an interview last month.

“So you will see this huge growth in sales and adaptation, and then it may slow down a little bit and then grow again,” he added.

Ines Ferry is Yahoo Finance’s chief business correspondent. Follow her on Twitter at @ines_ferre.

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