Evidence Suggests Electric Vehicles Are Losing Popularity
As consumers start to shy away from EVs, their choice will affect not just the car industry, but U.S.-China relations, state budgets and commodity prices.
Consumers Prefer Gas-Powered Cars
Despite the efforts of Elon Musk and government subsidies, consumers still prefer gas-powered cars over electric vehicles (EVs). The inconvenience of retrofitting their garages and the range anxiety associated with finding charging stations are major deterrents. In fact, J.D. Power reports that 21% of public chargers do not work. This shift in consumer preference will have implications not only for the car industry, but also for U.S.-China relations, state budgets, and commodity prices.
The evidence is becoming increasingly clear. Hertz recently made headlines for reducing its EV fleet and taking a $245 million charge against its earnings. Even its plans to purchase EVs from GM are now uncertain. Additionally, EV sales in the fourth quarter of 2023 only saw a slight increase of 1.3%. EVs also tend to sit for longer on dealer lots compared to gas-powered cars. Despite price cuts by Ford, Tesla, and GM, customers are still not flocking to EVs.
State Subsidies and Budgetary Concerns
State governments have been providing substantial subsidies for EVs despite facing significant budget deficits themselves. For instance, California gives additional subsidies of up to $7,500 on top of the federal credit. New Jersey even provides $4,000 checks to EV buyers. However, these states cannot sustain such expenditures indefinitely while facing ongoing budgetary challenges.
Toyota, which focused on hybrid vehicles instead of EVs, now appears to have made a prescient decision. The automaker's stock price has outperformed GM's by 40%. Toyota Chairman Akio Toyoda has pointed out that EVs require fewer parts and less manufacturing time compared to traditional cars. This perspective aligns with the concerns of automobile unions.
Recognizing the Ingenuity of EVs
Despite the waning popularity of EVs, it's important to acknowledge the ingenuity of the engineers and designers behind them. EVs, once considered glorified golf carts, have made significant advancements. Tesla's cars have proven to be fast and capable, outperforming even luxury brands like Porsche. Furthermore, Elon Musk's accomplishments extend beyond the automotive industry into space travel.
Although the current market trends raise doubts about the long-term success of EVs, it's essential to recognize the achievements and possibilities that these vehicles represent.
