US Demand For EVs May Be Gone Forever
Automakers are bleeding billions, charging networks keep falling short, and a cheaper gallon of gas could seal the fate of electric vehicles in America before the decade is out.
EV sales in the US fell 30% through the first three quarters of this year. Meanwhile, several manufacturers walked away from EV production altogether, at least in the US market. One reason is that nothing on the horizon will slow the slide. As gas prices have risen, people have aggressively turned to hybrids as “good enough” to offset those prices. Hybrids like the Toyota (NYSE: TM | TM Price Prediction) Prius get about 57 MPG. Range isn’t a problem, as it is with EVs. Most hybrids can travel up to 500 miles without stopping for fuel. Some can go 700. That makes range similar to or better than gas-powered cars.
As companies exit the EV market, another question is how much it will cost them to return. It will include retooling factories, changing marketing plans, supplying dealers with parts and mechanic training, and creating new models. An industry that lost tens of billions of dollars on its first EV gamble faces doing that again.
The US is a different market than China and the EU, which are the only other two that matter in volume. Europe has continued incentives across many countries. It has focused on building out charging station networks. Among the most important incentives in China is staggering air pollution. And many of the largest Chinese EV companies were built on government money. US companies spent their own money and shouldered their own losses.
Charging stations remain a drawback. Public charging stations may be plentiful around large cities. Outside those areas, they are not. As EV range continues to be a problem, the challenge of getting buyers continues to be crippled.
And, if history is any measure, gas prices will drop again. Oil is plentiful worldwide. Because of the Middle East, however, it simply isn’t available. And the US is the world’s largest producer and exporter of crude. That does not entirely solve its problem. Much of the crude it imports goes to US-based refineries. Oil flows will resume. Less than a year ago, it traded for $55.
If gas drops below $3, US demand for EVs won’t return. If federal financial or tax incentives don’t return, solving the EV demand problem will be even harder.
EVs may have gone the route of the horse and buggy.
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Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.
McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.
His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.
A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.
TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.
McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.
