By Peter Welch, NADA, President & CEO
This is an incredibly exciting time to be in the transportation industry.
New cars and trucks are safer and more efficient than ever. Automakers are introducing new technologies every day and will be deploying scores of new models with technologically advanced drivetrains and other features in the coming years. Partnerships on highly autonomous vehicle deployment abound between technology companies and OEMs. And all of this is happening while we are seeing major advances in internal combustion engine (ICE) vehicles.
For nearly 30 years, automakers have spent billions of dollars on the development and deployment of battery electric (EV), hybrid, plug-in hybrid and fuel-cell vehicles. It started in 1990, when California adopted its zero emission vehicle (ZEV) mandate, requiring 2 percent ZEVs in 1998, 5 percent in 2001, and 10 percent in 2003 and subsequent model years.
Yet despite a variety of government incentives, take-up has been slow, with EVs representing only 0.6 percent of new-car sales nationally in 2017 and 2.6 percent of new-car sales in California.
There are a host of reasons why consumers aren’t buying EVs at the rate regulators have tried to force-feed them, including expense, range, recharging speed, residual value uncertainty, utility, performance and insufficient recharging infrastructure. Most Americans won’t consider a vehicle that compromises their convenience or current mobility needs, let alone pay more for one—especially when today’s advanced ICE vehicles and their hybrid variations present affordable and convenient alternatives.
However, the pendulum is beginning to swing in the other direction. In the past two years, EV sales increased significantly, and we expect those sales to increase sevenfold by 2027 to around 4 percent nationwide. In the next 10 years, the price of EV battery packs with ranges of 250 miles or more are expected to drop significantly, to $100 per kWh. This could, for the first time, put the cost of EVs on a price parity with ICE vehicles. And dozens of new EVs in popular segments like crossovers will be introduced in the next decade. Indeed, many traditional automakers have said they believe the future of the vehicle is “all electric.”
Local dealerships are excited about being a part of that future and know that replacing America’s fleet of 266 million ICE vehicles with EVs could be a sales bonanza unlike any the industry has ever seen.
But even as prices are coming down and other obstacles are being addressed, prospective customers continue to ask pointed questions about the practicality of owning an EV—especially questions about recharging access and recharging speed, because most Americans don’t have their own garage or a dedicated nightly parking spot. While owners of ICE vehicles and hybrids take refueling for granted, EV owners simply don’t have that luxury.
There are 168,000 filling stations across America—many with 10 or more pumps—that dispense 40 million fill-ups every single day, so you can quickly and easily extend your vehicle’s range, over and over again, without ever thinking about it. But battery technology and infrastructure are simply not widely ready for fast charging. That’s why the U.S. Department of Energy’s Office of Renewable Energy has identified “the ability to refuel quickly or to fast charge” as a critical obstacle to wider adoption of EVs.
Even in the face of these real-world realities, some say dealers should do more to push EVs on their customers. That’s not how it works. According to a recent survey by Cox Automotive, 74 percent of today’s vehicle buyers purchased the vehicle they selected online prior to visiting a dealership. Local dealers are merchants; they stock, sell and service what their customers want to buy, own and drive—and they always will.
As Automotive News publisher Jason Stein wrote from CES in January, we should be careful not to let the promise of new technologies get too far out in front of the actual consumer marketplace. If the automotive industry really wants to achieve wide-scale acceptance of EVs, the solution goes far beyond sales incentives and introducing new models. We need to face the gritty reality that widespread acceptance of EVs will require closing the gap between the pumps that refuel today’s cars and trucks and the plugs that will be needed to continuously and quickly repower the cars and trucks of tomorrow.