The wedge-shaped Tesla Cybertruck enters the marketplace as EV sales fall off
There’s been a lot of recent news about automakers cutting back or delaying production of electric vehicles (EV) due to slowing consumer demand. The headlines include Ford announcing it was postponing $12 billion in planned electric vehicle production, GM abandoning a goal to build 400,000 electric vehicles through mid-2024, and Volkswagen Group cancelling plans for a new $2 billion EV factory in Germany.
Why are consumers less-than-hot on EVs today, following a significant boost in sales in 2021? Here are five reasons why consumers are cooling off in 2023:
Unfamiliarity with the product
Automakers initially touted EVs as electric variants of traditional combustion vehicles, which did themselves a disservice. That couldn’t be further from the truth, as EVs are as dissimilar to pure combustion vehicles as propellor aircraft are to jets. EVs are less complex to build, more technically advanced, and require far less maintenance than their gasoline- and diesel-powered equivalents. Consumers don’t understand the nuances between the two powertrains — especially because the added initial cost of an EV pays for itself with a much longer (and less expensive) service life.
Lingering Concerns of Range
According to Department of Transportation statistics, the average driver in the United States drives 37 miles per day, which is effortlessly covered by today’s EVs (in 2010, the average EV only delivered about 80 miles of range, but by 2021, that number had exceeded 220 miles). Nearly all of today’s EVs will provide approximately 250 miles on a full charge, with some offering nearly double — upwards of 500 miles on a single charge. Yet consumers still mention range as one of their primary concerns about EVs.
Limited Charging Network
Every city and town in the United States has at least one gas station, and fuel stops may be found at nearly every offramp on highways and interstates — most drivers don’t even think about where they will find fuel until their vehicle is near empty. But that isn’t the case with EVs, as the national charging network is still in its infancy. A road trip in an EV requires planning, and drivers need to add additional time to the journey as replenishment (to 80 percent charge) typically requires 20-30 minutes — news that isn’t comforting to anyone in the market for an EV.
Early Adopters Have Been Fulfilled
As is typical with new emerging technology, the first wave of buyers were higher-income households, enthusiastic technophiles, and those concerned about the environment. That is a particular demographic that comprises only a small portion of consumers — adoption is expected to be much slower for other demographics. Automakers will have to engineer more entry-level models to reach a less affluent demographic and target buyers with vehicles that specifically replace their combustion counterparts.
High-Interest Rates
Electric vehicles are more expensive than their combustion counterparts — often upwards of 30 percent before incentives and credits are factored into the sale. The post-pandemic economy has seen interest rates rise significantly, which has slowed all vehicle sales — not just EVs. But, as they tend to be more expensive than an equivalent combustion vehicle, EVs are feeling the pinch extremely hard.