Are Electric Vehicles Really the Answer?
Only if the question is “Are you wealthy with money to waste?”
By the end of 2021, American car buyers purchased 471,426 electrified vehicles (EVs). This represents 3.14% of the roughly 15 million total passenger vehicle and light truck sales throughout 2021. Even though this is an impressive 37% increase in EV sales from 2020, it speaks loudly as to the market demand for EVs among the general public.
Incidentally, have you noticed the massive advertising campaign by car companies these days for their electric vehicles? The Ford F-150 Lightning looks pretty sweet, and the Cadillac Lyriq is gorgeous. The Ford and the Cadillac are not even available, yet these and other EV ads were running constantly during the telecast of this year’s NBA Finals. It seems that every brand is fighting for the top spot of the EV pyramid, grabbing as much attention as possible to prove they are “on board with electric.”
Among the many brands of EV available, Tesla regularly accounts for over 70% of all quarterly electric vehicle sales and Tesla does not even advertise. This is not an indictment on the competition, who produce EVs at lower prices. So, why does Tesla consistently and handily beat out Ford, GM, Toyota, Nissan, VW, Hyundai, Kia, and all others regardless of their massive advertising efforts?
It’s simple: EVs are for wealthy people who have the money to waste on EV technology that is overpriced, impractical and definitely not ready for prime time.
Are EVs attractive to the average driver with a moderate income? Absolutely not.
For example, the 2022 Hyundai Kona is a compact-sized crossover that’s similar to the Honda HR-V and Mazda CX-30. The gas engine version of the Kona has a starting MSRP of $21,300, while the electrified version of the Kona starts at $34,000, a 59% premium for a different fuel consumption and propulsion system. Oh, and the Kona EV has over 40% less driving range than the gasoline-powered Kona, and that’s under the most favorable driving conditions.
Why would a guy with a wife and family spend nearly $13,000 extra for a Hyundai Kona EV that has the same features as the gas-powered Kona but only around half the driving range? Never mind the need for a charging station to be installed in the guy’s garage (if he has one), which adds at least another $2,000 to the equation. And if the guy lives in California or the Northeast, he’s already paying twice the national average for every kilowatt of electricity to charge his EV. That additional $15,000 up-front cost for an EV could purchase about five years (75,000 miles) of $6 a gallon gas assuming 30-miles per gallon on average.
And the expenses don’t end there. EVs have lower maintenance due to less moving parts, but they don’t have lower maintenance costs. The electrical high-torque, direct-drive engine that is used to accelerate and decelerate the vehicle places increased wear on tires beyond that of gasoline powered vehicles and requires tire replacement more frequently. Obtaining routine service can cost much more due to the scarcity of EV service centers – many traditional dealerships will send EV customers to a third-party destination for their specialized needs. And after around five years of regular use, the EV’s battery pack will exhibit noticeable weakness in terms of its capacity to retain a full charge, greatly reducing range and possibly requiring a battery replacement within ten years that can cost over $10,000 depending on its size.
It is only the wealthy that view the additional up-front cost and massively higher total cost of ownership of EVs as worthy and not stupidly wasteful. And the Teslas, Lightnings and Lyriqs are built for them.
The cheaper EVs available on the market are “compliance” cars that keep the government boot off the necks of automakers who still wish to make money selling their gas-powered SUVs and trucks. Automakers end up reporting losses on these vehicles as the nearly $40,000 entry-level price tag (after subsidies) is too high for the average national yearly income of $45,000. These low-rent EVs simply do not have a natural home in the free market and will likely be sold into governmental fleets mandating EVs.
Which leaves us the premium EVs like the Cadillac Lyric ($58,795), the Ford F-150 Lightning Lariat ($77,474), and the Tesla Model X ($110,490), vehicles targeted at wealthy people that are not concerned about the additional up-front costs or the total cost of ownership. This is the ONLY market segment that is viable for EVs.
The fantasy of EV adoption as anything more than a niche market for the wealthy is built on deceiving the public into believing that an EV can rival the performance and affordability of gasoline-powered models. No matter how expensive gasoline is made to be, the public can clearly see the overall negatives of EV ownership that include long charging time, unpredictable range, low resale value, high total cost of ownership, the actual impact on the environment, the “zero emissions” lie, etc.
Think about what happens when the subsidies end on new EV purchases. That “affordable” Hyundai Kona EV will now consume the ENTIRE average yearly wage in America, not just 75% of that wage after subsidy.
The entire argument for EVs is not based in reality today. Perhaps we will gain new technologies in the future that will mitigate the cost, hassles, and toxic byproducts of EVs and make them more appealing to natural market forces. But those technologies do not exist today.
So let the wealthy have their over-priced electrified play car. And let the automakers cater to this elite market while quietly keeping the gas-powered vehicles in their business portfolio to prevent them from losing their shirts.
And let’s stop pretending that there is a market for EVs beyond the wealthy who are financially reckless.