Electric Vehicles: A Look into 2021 and Beyond
By: Richard Reina
Tags: Ev, Automotive, Cars, Electric Vehicles

THE CURRENT SITUATION

Electric vehicles (EVs) can trace their history back to the dawn of the horseless carriage in the late 1800s. The earliest pioneers in the automobile industry experimented with gasoline, steam, and electricity for motive power, with gasoline eventually winning the day. Modern EVs have been on the market for about 10 years. The Nissan Leaf EV, currently in its 2nd generation, is the longest-selling EV nameplate available today, having been launched in December 2010.

A November 2020 article in Car & Driver magazine listed 19 EV models presently for sale in the U.S., including 4 from segment-leader Tesla. Prices range from just under $30,000 to well over $100,000, with plenty of choices within striking range of the $39,000 new vehicle average transaction price. (Those prices do NOT include the Federal $7,500 tax credit that many EVs are eligible for. Various states also have incentives and subsidies in place for purchasers of EVs.) Legacy manufacturers have pledged huge investments in EVs: $11 billion from Ford, $20 billion from GM, and $91 billion from VW (as part of their mea culpa for Dieselgate). Aside from Tesla, which can no longer be considered a start-up, plenty of new companies are entering the fray, intending to gain a foothold in what they predict will be a burgeoning future market for EVs. Up to 50 new EVs are expected to enter the market within the next two to three years.

Will other EV makers follow Tesla and install dedicated charging stations?

So are Americans, spoiled with choices, snapping up EVs, especially as pricing has become more favorable? That same Car & Driver article detailed new EV registrations through the first 7 months of 2020. Extrapolating those numbers as a percentage of total light-duty vehicle sales, EVs represent a miniscule 1.3% of all vehicles sold. Pulling segment-leader Tesla’s sales out of the total drops that number to 0.25% for the remainder of the industry. The answer to our question is “obviously not.”

THE AMERICAN MINDSET

Why are Americans not purchasing EVs, and what needs to change for sales to increase? The answer to the first part of that question starts with a look at fuel prices. The website for the U.S. Energy Information Administration provides access to the national average price of a gallon of regular gasoline over the 30-year period of 1990–2020.For roughly the first 10 years of that period, that price hovered around a dollar a gallon. In early 2002, prices began a long but jagged climb, hitting a 30-year peak in July 2008, when it topped out at $4/gallon. Six months later, prices plummeted to below $2/gallon, before beginning a years-long climb again. By the summer of 2014, pricing hit its most recent peak of $3.60/gallon, and has been on the decline ever since. On an annual basis, the gallon price of regular fuel has averaged between $2.00 and $2.50 from 2016 through 2019, and has dropped even further in 2020, partly due to decreased demand during the pandemic.

This overview tells us that right now, Americans are enjoying historically cheap gas, and buyers have little reason to consider fuel economy when new-car shopping. Four of the top-10 selling nameplates in 2020 are full-size pickup trucks. Many other top-sellers are medium-to-large SUVs, frequently with larger 6- and 8-cylinder engines. Fuel prices offer no incentive to shop for smaller cars, much less EVs and the manufacturers, for whom the larger vehicles are more profitable, aren’t exactly discouraging this buying trend.

Batteries have gotten better, with many EVs offering driving ranges of 200–300 miles, yet “range anxiety” remains. The lack of a perceived national infrastructure supporting easily-accessed charging stations does give pause to prospective shoppers. It’s one thing to make a 20-mile round-trip commute to the office knowing that you have the battery capacity; it’s another to undertake a 400+ mile drive into another state and be uncertain where you can charge up. That kind of concern simply doesn’t exist with a gasoline-powered car.

To answer the second part of our question, “what needs to change for EV sales to increase?”, we can begin by looking at pickup trucks as a microcosm of the EV market.

WILL ENTRY INTO A NEW SEGMENT SPUR EV SALES?

There is nothing new about Americans’ love for their pickup trucks. The full-size models from each of the domestic Big 3 (Ford F-150, Chevrolet Silverado, and Ram 1500) have sat at the top of the sales charts for years, remaining relatively immune to fluctuating fuel prices. What we have not seen yet is an all-electric pickup, and that’s about to change.

Big, brawny, bold, and beautiful, Americans’ love affair with pickups continues unabated.

In November 2019, Tesla previewed their forthcoming CyberTruck, with styling that can be best described as controversial. The Tesla website states that the least-expensive AWD version will start at $49,900, with production due to begin in late 2021. Not to be outdone, Rivian, which has been the recipient of significant investments from both Amazon and the Ford Motor Company, has been displaying prototypes of its R1T EV pickup truck. Rivian announced a Launch Edition starting at $75,000 due in June of 2021, with a lower-priced version ($67,500) due in January 2022. And third, legacy truck maker GMC is bringing back the Hummer, not as a brand, but as a model name on its all-electric pickup truck. The Edition 1, starting at $112,595, is sold out, with successively lower-priced models down to $79,995 to be rolled out through spring of 2024.

OTHER LONG-RANGE FACTORS AFFECTING THE EV MARKET

It remains to be seen how this ‘perfect storm’ of EV pickup truck introductions coming in the next 6 to 24 months will impact pickup truck sales. Is the traditional American pickup driver even interested in EVs? Might Tesla, Rivian, and Hummer sell to first-time truck buyers? And will EV pickup sales make any dent at all in the output of hundreds of thousands of trucks sold each year?

While I’m excited to be able to watch this unfold, other market forces will continue to influence the EV market as a whole. Fuel prices are stable for now, but history has demonstrated that world events outside our control can quickly upend that stability. Charging station infrastructure is getting better, and some car makers have invested in such companies partly as a way to alleviate customer concerns. EV pricing is slowly coming down, but has not yet reached parity on a feature-by-feature basis with gasoline-powered counterparts. (Americans so far seem to pay no mind to the lower maintenance costs of EVs, which lack drivetrains that require regular replacement of consumables such as fluids, filters, belts, and hoses.) Globally, more governments are enacting bans of gas-powered engines, and this parallels a generational shift as today’s millennials are more mindful of technology’s environmental impacts, compared to older generations.

The second half of 2021 and into 2022 will show us if entering a new market segment, as EV pickups are about to do, will change the playing field. Long-term, the global embrace of EVs as an alternative to gas-powered vehicles is sure to come, but it’s still too far off to judge its timing with any certainty.