Is EV Manufacturing Exceeding Demand?
Carmakers roll out more cars as consumers stall.
(Photo by Scott Olson/Getty Images)
Car manufacturers make little, if any, money on EV sales. A dearth of charging stations discourages new buyers, who are also put off by high sticker prices. Sales of new electric vehicles have dropped off, as have used resale values. Manufacturers nevertheless proclaim these machines are here to stay and that they will keep making them regardless of whether consumers are willing to buy them. This upside-down sales plan may prove troubling for carmakers and consumers alike.
An Unusual Business Model
If traditional business models were in play, manufacturers would presumably produce cars that buyers desire rather than seek to create a market that doesn’t exist. However, in the ideological milieu of climate change urgency, the corporate tail seeks to wag the consumer dog, fueled by massive state and federal subsidies, EPA regulations that penalize gas-powered vehicle manufacture, and relentless propaganda that EVs will save the world. This tension between buyer and seller will unfold over time as either a win for green technology as sales improve or a loss for carmakers as buyers favor gasoline over electricity for transportation.
Car manufacturers have entered into an adversarial relationship with the majority of their customer base. One recent poll reported that 46% of respondents claimed they were unlikely or very unlikely to buy an EV. Of the electric units currently sold, 78% are categorized as “premium” or high-priced models. Mainstream American buyers are discouraged by high prices, range anxiety (fears of running out of power), and a lack of charging stations. Wealthier buyers are more likely to afford home charging stations as well as fancier chariots. It is unclear how manufacturers propose to bridge this stubborn divide.
Charging stations remain a sticky wicket for most buyers. Although the Biden administration pledged $7.5 billion to install charging stations nationally, to date there are only about 40,000, and a quarter of those are in California. The Department of Energy’s National Renewable Energy Laboratory counsels that at least 180,000 charging stations will be required by 2030. This chicken-and-egg competition between EVs and the stations needed to charge them will continue until sufficient charging facilities have been installed, which industry advocates claim will help EV sales turn the corner.
However, consumer complaints about charging reliability compound the availability problem. Increasingly, claims of environmental benefits are dented by revelations that lithium mines and aluminum smelting for EVs adversely impact the ecosystem. Grid capacity to meet the demands of those theoretical 180,000 stations is also in question. Consequently, resale values have plummeted for existing models.
New EPA tailpipe emission rules effectively mandate that 56% of all new car sales will be EVs by 2032, yet that percentage far exceeds current sales levels. Inflation remains sticky, the economy is wobbling, and President Biden just slapped Chinese EVs with a 100% tariff. In such a climate, the competition for car sales appears to be less between consumers and manufacturers and more between policymakers, regulators, and money printers.
The EV Future
General Motors and Ford still need to make a profit in EV sales, and both companies seek to design more affordable vehicles with broader model options. Despite slumping sales and high pricing, GM CEO Mary Barra claims the company remains committed to a 100% electric car fleet – regardless of how many Americans still want to buy a gas-powered car. GM claims it plans to sell exclusively electric models by 2035. Historically, consumers have driven product demand, but today’s manufacturers have put the cart before the horse. According to Ford CEO Jim Farley, “the journey on EVs is inevitable, in our eyes.” And a GM spokesperson told NPR: “Although the rate of growth has slowed recently, EV demand is clearly moving in the right direction.”
It may be that manufacturers can successfully dictate demand for future car purchases to their customer base. Should the economy decline, food and housing inflation persist, charging stations remain a pipe dream, and reliability of vehicles and chargers continue to be problematic, the best-laid climate plans of carmakers may leave behind showrooms full of new EV museum pieces while workers are laid off and consumers favor affordable, vintage, gas-powered transport. This showdown will determine the outcome of the current tension between car manufacturers and their reluctant buyers, which one observer aptly described as “a troubling gap between expectations and reality.”
(Previously published at Liberty Nation.)
There is also a growing disconnect between buyers and manufacturers on the ever-increasing amount of technology on cars.
A retired dentist told me of the great deal he got on his luxury EV because of all the rebates and discounted prices. Driving SoCal roads with their older pickup trucks driven by those who physically do the heavy lifting, the policies subsidizing EVs are shockingly immoral. Add to it that apparently, EV weight causes damage to the roads, which then hurts the working poor driving the roads, notwithstanding the environmental damage obtaining the resources for the batteries, and you arrive at Thomas Sowell's admonition that the so-called do-gooders never suffer the fate of their policies. They just move on to the next thing.