Can I buy an EV, Already?!
According to Autolist.com’s 2023 Electric Vehicle Survey, new car buyers’ top concerns with EVs include sky-high prices, range limitations, and a lack of public charging. As their data suggests, year-over-year progress has been made on all three of these fronts, with consumers increasingly warming to the idea of EV purchases. Nevertheless, significant obstacles remain.
The average MSRP of an EV has narrowed relative to that of gas powered models, albeit both are at stratospheric levels. In fact, the average selling price of a new vehicle is now $48,000.
The statistics for new vehicle purchases are simply eye popping. For example, the average amount financed for a new vehicle is $41,500 and 17% of new auto loans have monthly payments in excess of $1,000 per month.
Gas or electric, the price of a new vehicle is increasingly moving out of reach for more and more of us.
That said, progress is being made on the EV front. Across the board, EV ranges have grown by leaps and bounds, with most models now achieving 250 miles or more between charges. In addition, progress with publicly available charging has been made, like the impending buildout of charging stations along interstate corridors (as part of the bipartisan infrastructure law), and the opening of the Tesla Supercharger network to outside brands.
Despite these advancements, there are still a lot of reasons to shy away from EVs. These include sky high prices for most trim and drivetrain configurations, outright lack of all wheel drive availability amongst budget models, the inability to take advantage of the $7,500 clean vehicle tax credit for many domestic and foreign models, and slow EV architectures (resulting in slow “fast charging” speeds).
My household is in the market for a second vehicle, and over the last few months we’ve given EVs a serious look. Through this process we’ve created a list of “must haves.” Unfortunately, there isn’t a single vehicle on the market today that meets our specs. Our list includes an (after tax credit) retail price of no more than $35,000, a crossover or small SUV configuration with all wheel drive, a range of at least 300-350 miles, and a vehicle architecture that supports charging at 200-350 kW. Give me the electric version of a Sportage or RAV4 and I’m all in.
The vehicle has to be able to take us to the Minneapolis airport (in all seasons) and back without needing to be charged (~300 miles), and it has to be able to recharge in about 20 minutes. We frequently drive to Montana, Colorado, and the Northwest, so being able to traverse I-90 with minimal time spent at charging stations is a must.
Maybe this list is unreasonable, but it seems to me that these are the baseline must-haves many EV-curious consumers would be willing to tolerate.
Like so many, however, we’ve come away frustrated at the state of the market. First and foremost, prices are way too high. This is further complicated if all wheel drive is a must-have feature. Unfortunately, many entry-level EVs are rear wheel drive, which for many of us in northern climates is a dealbreaker because all-wheel drive and front wheel drive vehicles handle better in the snow.
Then consider the price premium to get all-wheel drive. The rear wheel drive Tesla Model 3, which has a starting price of $32,740 (after accounting for the $7,500 tax credit) is a pretty darn good deal. But upgrading to all wheel drive increases the price to $39,740. The same is true for the Hyundai Ionic 5. It has a starting price of $41,450 for rear wheel drive, but you need to shell out $50,335 for the cheapest all wheel drive option.
Very few models fit within the $35,000 sweet spot, and those that do often come with crippling penalties–like small profiles (e.g., the Bolt, Leaf, Niro or Kona), limited ranges, not all wheel drive, and painfully slow charging speeds.
At first glance the Bolt seems intriguing. After all it starts at $20,000 after federal credit, but with charging at a maximum 50 kW/hour, taking about an hour and a half to recharge, it becomes an absolute, hard “no”. Curiously, after much consumer pushback to GM’s announcement to discontinue the Bolt this fall, GM just announced the Bolt will return, at some unspecified time, with an upgraded battery and electrical architecture. Let’s just hope it doesn’t cost $40,000!
GM also plans to start production of the Equinox EV this fall and has gone to great pains hyping its starting price of $30,000, but unfortunately will not produce anything other than the top trim level until at least next summer. By that time the $30,000 Equinox EV will likely be an unfilled, hollow promise, much like the Ford Lightning Pro was.
Price-wise, the situation with plug-in hybrids (PHEV) is, if anything, worse. On the one hand, PHEVs have the short term potential of reducing vehicle emissions most effectively in the shortest amount of time. Rather than piling a finite amount of scarce battery resources into pure electric vehicles with huge batteries, distribute them more widely amongst more users. With all electric ranges of 25-50 miles, a plug-in hybrid provides the best of both worlds by electrifying most daily driving while still providing long trip flexibility.
With few plug-in hybrid models to choose from, those that are available, like the Toyota RAV4 Prime, Prius Prime, Kia Sportage, Ford Escape, and Hyundai Tucson are priced anywhere from $8,000 to $10,000 above their hybrid counterparts. Take, for example, the Toyota RAV4 Hybrid, which starts at $31,225. The RAV4 Prime (with an all electric range of 42 miles) starts at $43,090, or $11,865 more! To add insult to injury, only a handful of models qualify for part of or the full $7,500 federal credit.
Of all the must-haves, vehicle charging speed is perhaps most important to me, yet in practice, perhaps matters least. Recent model EV ranges have grown by leaps and bounds because these vehicles come with larger batteries. Most EV charging is done at home, so the issues of range and charging speed are somewhat overblown. And yes, the average American rarely (if ever) travels distances in excess of a few hundred miles.
For better or worse, however, every year we find ourselves packing the vehicle to head out west. For those trips, being able to have access to fast charging, and having a vehicle that supports that charging speed is critical. Several high-end models with extended ranges, like those made by Tesla, Rivian, Kia, and Hyundai have charging speed capabilities of 225-350 kW/hour, which makes it possible to recharge from 10% to 80% of battery capacity in under 20 minutes. Unfortunately, nearly all of the entry level models have maximum charging speeds of only around 100 kW.
EV sales now account for about 7% of sales nationally. Much has been made of the 5% tipping point theory, whereby once EVs reach a 5% market penetration, their growth is somehow exponential and unstoppable. As many have written about, that presupposes there exists a large and eager pool of consumers willing to go electric. To date, EV sales have been driven first and foremost by early adopters–those willing to put up with various inconveniences, so long as what they drive is electric. In recent years, the growth of the high-end market has exploded, and is evidenced by the success of Rivian, Tesla and others.
Yet, as recent stories of ballooning EV inventories suggest, the exponential growth in EV adoption is not inexorable. EVs have a way to go before they meet the needs of most customers.
Build me a vehicle that matches the price and capability of an equivalent hybrid version and I’m all-in. Meanwhile, I’ll stick with a RAV4.