After years of slow adoption, electric vehicles are due to see a boom in sales, new models, and investments, possibly putting the gasoline engine out of business.
Look no further than Wall Street, where investors are ecstatic about the prospect of existing automakers, such as General Motors, offering full lineups of electric vehicles, as well as the prospects of startups such as Lucid Motors and Rivian, which are promising ground-breaking EVs in the future.
GM, Volvo, and Jaguar have all announced plans to phase out gas-powered vehicles over the next 15, 10, and 5 years, respectively. Tesla has always had a fully electric lineup.
Furthermore, the advent of the Biden administration and a Democratic-controlled Senate gives electric car advocates hope for a new round of tax incentives to promote the purchase of electric vehicles.
Consumer Reports’ Top Picks: These are the best new cars, vans, and SUVs for 2021, according to Consumer Reports.
If you want a new vehicle, expect to spend over $40,000 as prices continue to increase.
In a research note, Wedbush Securities analyst Dan Ives wrote, “The EV industry is entering a golden age,” noting that advances in battery technology, tax incentives, and more affordable models could lead to soaring demand.
Americans more open to electric vehicles
Percentage of Americans who say they will probably or definitely own an electric vehicle within the next 5 or 10 years:
To be sure, electric vehicle sales are only a small part of the overall car industry, accounting for just around 2% of the demand in 2020, according to Cox Automotive, which owns Kelley Blue Book and Autotrader. However, according to Cox executive analyst Michelle Krebs, the figure is projected to double to 4% in 2021.
She warned that automakers’ promises to turn to electric vehicles are “squishy,” meaning they could adjust if sales don’t go as planned.
“It’s important to remember that these are just intentions,” Krebs said. “Somethings can get in the way of those good intentions.”
There are still plenty of signs that the gas engine isn’t going anywhere anytime soon, including lingering concerns about electric vehicle battery range, cost and the availability of public car chargers.
But interest in EVs is picking up. Some 52% of car owners say they probably or definitely will own an electric vehicle within the next 10 years, up from 34% in 2018, according to survey data provided to USA TODAY in advance of its broader publication by car-buying site CarGurus.
What factors will dictate the speed at which the electric vehicle revolution unfolds? Here are some things to keep an eye out for:
How quickly will electric vehicle prices come down?
This may be the most important factor. While automakers have reduced the cost of battery development, it remains the main reason why electric cars have higher price tags than gas cars: often in the high five-figure range.
The Tesla Model S sedan and Model X SUV can easily top $100,000. Lucid’s new vehicles will also easily go into six-figure territory.
Tesla’s most affordable vehicle is the Model 3 compact car. While the price has changed several times, it’s generally hard to get for less than $40,000.
But even electric cars from non-luxury brands are still fetching a premium over comparable gasoline vehicles. The Chevrolet Bolt electric car starts at about $36,500, which is about $10,000 more than similarly sized gas vehicles from mainstream brands.
Can maintenance and fuel savings make up the difference?
Although electric car prices remain high, proponents claim that they make up for it by saving owners money on gas and maintenance. Electric vehicles have smaller components, use little to no fuel, and do not require oil changes.
According to AAA, owning a compact electric car costs about $600 more than owning a gas car, but the cost varies greatly depending on energy rates and use.
Joel Spurlock and his family own a Chevrolet Volt hybrid and a Chrysler Pacifica plug-in hybrid in Salina, Kansas. Both of his vehicles can fly hundreds of miles before needing to use gasoline.
Spurlock claimed to have driven 11,000 miles in his Volt without using a drop of fuel in 2020, when the pandemic was restricting travel options. He also enjoys the instant acceleration that an electric vehicle provides.
“Those who object to it have never powered one,” he explained. “Then they go in, punch it, and their head snaps around.”
Will there be enough electric vehicle chargers?
According to the CarGurus report, the availability of charging stations in one’s region is the single most important factor in convincing Americans to purchase an electric vehicle.
According to Tom Ryan, an attorney who lives in Union County, New Jersey, and works in Manhattan, the “real-world limitations” of EVs, such as restricted range and the need to carefully map out a path ahead of time on longer trips, are major disadvantages.
Ryan acknowledges that he is “a bit sceptical” about electric cars. His family is considering replacing their gas-powered Honda Civic and Volvo XC70, but he doesn’t believe an electric vehicle is currently feasible for their lifestyle.
“There’s a lot of preparation that goes into it, and I don’t believe the system is in place yet,” he said. “I’m not convinced it’s widely accessible up here,” says the author.
Will automakers make the kind of EVs that Americans want?
For years, gas-powered cars have been out of fashion, with models like the Honda Suit, Chevrolet Cruze, and Ford Focus being discontinued. SUVs like the Honda Passport, Chevrolet Blazer, and Ford Bronco have taken their place.
Despite this, only a few automakers are producing electric SUVs. The bulk of them are still vehicles.
According to Madison Gross, director of customer insights at CarGurus, “electric SUVs and crossovers are most likely to be considered (by shoppers), but few of them are available on the market today.”
Crossovers like the Tesla Model Y and the Hyundai Kona EV are among the few.
However, there will be more, including a GMC Hummer SUV, Rivian R1S, and Ford Mustang Mach-E.
Today, the three most popular vehicles in America are gas-powered pickups made by Ford, Chevrolet and Ram. But electric pickups are on their way, too, including the Tesla Cybertruck, an electric Ford F-150 and the GMC Hummer pickup.
Will electric car tax incentives help?
A long-established federal tax incentive for electric vehicles is worth up to $7,500, but it can no longer be used to purchase vehicles made by Tesla or GM since they’ve surpassed their caps.
However, since President Joe Biden took office, Democrats have introduced numerous bills in Congress to increase the limits, offering new incentives that could supercharge the EV market.
“We believe federal legislation will be enacted that will favour EVs under the new administration and in light of the new U.S. Congressional makeup,” CFRA Research stock analyst Garrett Nelson said in a research note.
“While it’s too early to say what shape this legislation would take, President Biden made renewable energy and electric vehicles a cornerstone of his campaign agenda, proposing new tax incentives, government purchases, and other steps to help EVs.”
Can EV startups compete?
In recent years, several electric vehicle startups have begun making big promises. Among them are:
• Lucid, which is led by CEO Peter Rawlinson, a former chief engineer of the Tesla Model S. Lucid has pledged to deliver the Lucid Air electric sedan in 2021, with one option starting at $139,000 and providing more than 500 miles per charge, an industry high. The company is poised to go public later this year, and is valued at $24 billion.
In an interview, Rawlinson said Lucid’s technology is “world-class” and capable of competing with the best in the business, which, he said, is currently his former employer Tesla.
• Rivian, which is poised to begin selling an electric SUV and electric pickup later this year. The company, which has fetched investments from the likes of Ford and Amazon, has raised $8 billion since 2019.
Rivian, which will build the first vehicles at a former Mitsubishi plant in Illinois, is expected to go public later this year with an IPO valued at $50 billion, according to Bloomberg.
• Fisker, Lordstown, and Bollinger, to name a few. In the coming years, all three of these startups promise gleaming new electric vehicles constructed from the ground up.
Are electric car investors too exuberant?
Investor interest in EVs soared in early 2021 as they sought to capitalize on the future of transportation. Tesla’s shares briefly topped $900, up three-fold since September, before falling back below $700 in recent weeks.
Volvo CEO Håkan Samuelsson said in an interview that investor interest in electric vehicle companies may have gone “a bit over the top.”
But “I think it shows that the financial sector and investors are really believing the car market will be electric,” Samuelsson said. “So I think it’s encouraging.”
With Lucid valued so highly despite never selling a single car, industry observers are watching closely to see whether the company delivers on its promises, including a groundbreaking combination of electric motors and inverter technology.
The Lucid Air’s arrival was recently delayed from the first half of 2021 to the second half, but Rawlinson said that delay was due to quality issues caused by COVID-19-related delays at suppliers. He argued that Lucid’s vehicles would exemplify the essence of quality.
“We’ve got the capital. This is a one-shot deal to make a real high-quality product,” he said.
Lucid, he said, will not make the same mistakes that Tesla made in the early going on the assembly of the Model 3 when CEO Elon Musk acknowledged that the company invested too much in automated equipment.
Rawlinson said, “We have a much more manual approach to a general assembly line where we bring the car together.” “That, I believe, was one of the pitfalls (for Tesla). For a number of purposes, we believe in the importance of human dexterity.”