Americans Aren’t Buying EVs Despite Tax Cut: Here’s Why
The electric vehicle revolution is underway, but despite the lures of energy-efficiency travel, reduced noise, less expensive operating costs and government-endorsed tax credits, not everyone is rushing to be converted.
The Inflation Reduction Act — signed into law by President Biden in August 2022 — mandated tax credits for new and used EVs. And while new legislation has eliminated credits for many EVs and PHEVs (plug-in hybrids) that previously qualified for a maximum $7,500 electric car tax credit, the federal government is actively bolstering the domestic EV supply chain and heavily promoting the production and sale of electric models.
However, adopting electric vehicles isn’t a priority for U.S. drivers.
According to a recent survey by the Energy Policy Institute at the University of Chicago (EPIC) and the Associated Press-NORC Center for Public Affairs Research, only two in five Americans are at least somewhat likely to buy an electric vehicle as their next car.
These results pale in comparison to other countries around the world, which are rapidly transitioning to EV use. Sixty-seven percent of European car buyers said they will either buy a hybrid or an electric vehicle, according to a survey by the European Investment Bank. That’s more than double the number who said they’d buy a diesel or gas vehicle.
Some hesitance of buying electric results from consumers’ discomfort with change. Changing over from their trusted internal combustion machines will take time. However, as the EPIC/AP-NORC study shows, cost poses the primary obstacle to buying electric. If the government and automotive industry want to see mass-market-sales, they must solve cost issue — and ensure that infrastructure meets the resulting demand.
EVs Are Way Too Expensive
Even EV enthusiasts have to admit that electric cars are costly. And because of growing demand, even used models sell at a premium. Once EVs overtake the market completely, prices will fall, but in the meantime, expect to pay a minimum of $30,000 to well over $40,000 for a new EV. According to Edmunds, the average transaction price for a new electric vehicle was $59,739 for January 2023, without taking federal EV tax credits into account.
Electric vehicles are pricey because their main component, lithium-ion batteries, are costly to produce. While sales of EVs have increased dramatically over the past couple of years, the price for lithium has grown astronomically. New types of batteries, such as solid state, will be introduced to the EV market in time, but for now, if you have to replace your electric car’s battery, it will cost thousands, if not tens of thousands, of dollars.
“You’re going to have more and more people trying to source larger quantities of the supply of lithium to make sure that they have whatever they need to operate for the next fiscal year,” Craig Dillard, partner at the law firm Foley & Lardner, told Business Insider.
Not Enough Functioning Charging Stations
There are over 130,000 public ports in the U.S., according to a Feb. 15 White House Fact Sheet. However, this number is insufficient to meet expectation of EVs on roads in 2030.
Charging infrastructure is growing — the federal government alone is investing $7.5 billion in EV charging, as detailed in President Biden’s Bipartisan Infrastructure Deal. But at the present, it isn’t easy to find an available, functioning charging location in the U.S.
Of 56,256 charging stations identified by the Alternative Fuels Data Center in November 2022, over 4,000 were “temporarily unavailable” because they were undergoing some form of maintenance, USAFacts reported.
What’s more, stations are unequally distributed. The vast majority are located in California, which had 15,706 as of last November, followed by New York, Florida and Texas. Alaska, on the other hand, had just 58.
Take Our Poll: Do You Think AI Will Replace Your Job?
The slow switchover to electric vehicles in the U.S. can be partly attributed to growing pains. By competently addressing the twin hurdles of cost and infrastructure, the industry can reach its expected targets and Americans can embrace this forthcoming EV technology with assurance instead of indifference.
More From GOBankingRates