The electric vehicle (EV) industry has evolved dramatically over the last decade. The first commercial EVs offered a cleaner alternative to internal combustion engines but not much in the way of style and performance. Today, nearly every major brand has some form of an electrified car in their lineup, either a hybrid, plug-in hybrid, or full EV. Some manufacturers have all three types. EVs now have curb appeal, impressive performance, and luxurious interiors.
Moreover, governments continue to push initiatives for global climate change. The state and federal governments in the U.S. offer tax breaks to incentivize the purchase and use of EVs. While the switch to electrified vehicles has grown, the wholesale changeover to EVs remains a question. However, the question now appears to be when, not if, EVs will replace gas-powered cars. The answer may be sooner than you think.
Consumer Support for Electric Vehicles
For EVs to drive the internal combustion engine into extinction, there must be consumer support. Global EV sales grew by 43% to 3.2 million units in 2020. That number only represents 5% of total car sales. However, experts at the investment bank UBS project the EV segment to grow to 20% of total sales by 2025 and double again by 2030. By 2040, market insiders believe nearly every vehicle sold will be electric.
One reason for optimism lies with the consumer’s perception of EVs. Drivers don’t look sideways at them with disdain or distrust anymore. In addition, battery and electric motor technology has radically improved, overcoming range and performance concerns.
Another reason lies in the price. As the technology improved, so too did production. Manufacturers got better at making EVs which naturally led to better quality and lowered production cost. As a result, the price to purchase an EV has fallen. EVs still cost more than their gas-powered equivalents, yet the tax incentives have helped bridge that gap.
The cost of ownership has also impacted consumer support. EVs have fewer moving parts, thus requiring less maintenance. In addition, electricity costs the consumer less than gasoline. The numbers vary by EV model, but the average cost for electricity is $1.20 per gallon equivalent. As a result, the fuel savings could reach one thousand dollars a year or more according to a study by the U.S. Department of Energy.
Governments Push Manufacturers
Global initiatives from China, Europe, and the U.S. continue to pressure the auto industry to switch to EVs. In addition, these governments have set target dates to ban the sale of gas and diesel engines. These initiatives haven’t reached the mandated point yet, but you can see the impact in the future plans of automakers.
- Jaguar has committed to selling only EVs by 2025.
- Volvo offered a similar promise to produce only EVs by 2030.
- Lotus, the British sports car company, plans to provide electric-only vehicles by 2028.
- General Motors plans to sell only EVs by 2035
- Volkswagen projects 70% of its sales will be EVs by 2030.
- Ford has plans to sell only electric vehicles in Europe by 2030.
In the U.S., the government isn’t just pushing manufacturers to change. They’ve committed real money to build an infrastructure to support EVs. The U.S. currently has 43,000 charging stations. President Biden has put forth a bill that provides $15 billion to create a network of over 500,000 charging stations.
The EV’s driving range continues to present the biggest challenge, particularly for consumers living in middle America. Drivers have longer commutes in middle America where communities are farther apart, and charging stations remain few and far between compared to the more concentrated markets on either coast. President Biden’s bill should address that concern.
Pricing also remains a challenge. The cost of an EV can be $10,000 or more than gas-powered vehicles. Again, tax breaks for purchasing and using EVs help offset this concern. Improvements in manufacturing have also led to lower prices. As automakers continue to get better at building EVs, the price will continue to drop.
Battery technology has improved dramatically, offering impressive range and charging capability. Ten years ago, you paid $1,000 per kilowatt-hour of battery power. Today, that number sits at $100, which many experts say represents the tipping point for making EVs more affordable than gas-powered cars.
However, Asia possesses most of the materials necessary to manufacture these batteries, and China already has 70% of the manufacturing business. Experts believe that building batteries in the United States must happen for the EV to succeed. How that shakes out remains murky.
Economic experts believe a wholesale change to EVs will cost Americans jobs. According to the United Auto Workers union, the number could reach 35,000 jobs lost in the switch. EVs have fewer moving parts, resulting in fewer assembly jobs needed to build an EV. President Biden hopes to add battery manufacturing facilities to offset this.
The Electric Vehicle Revolution
Make no mistake. The EV will revolutionize the auto industry. This revolution will dramatically change not only the industry but the world. We only have to look back at history to see how other new technologies have impacted us.
For instance, the internet was first conceived in 1969, when a computer at UCLA talked with another computer at Stamford University. The following 20 years were slow developing, but by the 1990s, personal computers were starting to take off, and the internet with it. Prices fell, and performance grew quickly. By 1995, 16 million people were online. At the turn of the century, that number jumped to 513 million. Today, there are over 3 billion people on the internet.
You don’t need to be an expert to see the correlation between the internet and EVs. Right now, the EV revolution is poised to take off. The challenges ahead aren’t insurmountable either. Much the way gas stations sprouted up a century ago, so will EV charging stations. EV technology continues to grow at a rapid pace.
The internet was a technological revolution that changed the world. The process was disruptive, putting traditional methodologies out of business and changing how you do most everything.
Soon, EVs will drive the internal combustion engine into extinction. How disruptive the revolution gets remains debatable, but change appears inevitable. The question isn’t if, but when. At New Jersey State Auto Used Cars, we strive to keep our customers informed regarding the automotive industry. We hope you found this article interesting. We invite you to browse our blog online for more compelling topics.