In recent news, there has been a flurry of articles discussing Why Is Electric Vehicle Inventory Not Moving Off Dealer Lots? Many of them featuring images of Teslas. However, it is important to note that Tesla, being the leading EV automaker, is not experiencing this particular issue. Several factors are involved in this ongoing topic.
I roll my eyes at these “EVs are piling up” articles with photos of Teslas which is the primary EV automaker without that problem. Any reporting on electric vehicle inventories indicates a discrepancy regarding “dealer lots” showcasing Tesla vehicles. However, it is important to note that Tesla operates without traditional dealerships and does not experience the same inventory challenges.
There are multiple issues at play here:
1.) OEMs like Toyota/Subaru or VW that have issues with their EV software, charging speed, poor efficiency, etc. that make their models less attractive. You need to build a competitive EV to sell it.
One of the major problems EV users face is charging speed. For a mass adoption of EVs, charging infrastructure and speed have to get better. This has been a challenge to OEMs like Toyota/Subaru, who have been criticized for the slow-charging speed of their EVs. It is essential to ensure that the charging infrastructure for EVs must improve quickly, or EV adoption will be held back by this one factor. Addressing this concern is vital for the success of any competitive EV in the market.
Apart from charging speed, efficiency is another critical factor to consider when building an EV. Since the range of an electric vehicle depends on its capacity, poor efficiency often results in shortened range. OEMs like VW are currently struggling with their range and mileage claims due primarily to poor efficiency, which has hurt their EV sales. Thus, ensuring the software is efficiently managing each component and system in an EV is crucial in providing good mileage and meeting the expectations of customers.
Another important component of EV software is its integration with other systems like adaptive cruise control, lane assist, and collision detection technology. Integrated software plays a vital role in making these features seamless while ensuring the safety of every passenger. By implementing high-quality software to interpret and communicate data, integrated systems can prevent collisions and make driving much safer.
Building a competitive EV in today’s market requires prioritizing and focusing on software development. The software is the underlying foundation upon which the vehicle mechanics and infrastructure are built, and good software design will lead to a better end product. OEMs must work towards improving the charging speed, enhancing efficiency, and integrating software with other systems to provide a seamless and safe driving experience. An efficient, sustainable, and reliable EV will attract customers and remain competitive in the growing market. By prioritizing software and investing in it, OEMs like Toyota/Subaru and VW can remain competitive and even outgrow new entrants to the market.
2.) OEMs like Kia/Hyundai with models that aren’t able to access the IRA tax credits which makes their EVs less competitive.
Kia/Hyundai offers a range of EV models, from the highly rated Kia Niro to the luxurious Hyundai Ioniq. However, these models do not qualify for the IRS tax credits worth $7,500, which other EV models from other manufacturers get. The credits are incentives for automakers to produce more energy-efficient vehicles, and they reduce the cost of owning such vehicles for consumers.
The disadvantage is that the lack of these credits makes Kia/Hyundai EVs less competitive than those from other manufacturers. For example, the Kia Niro EV has a starting price of around $40,000, compared to the Tesla Model 3 at $35,000 or the recently launched Ford Mustang Mach-E at $43,999. Since Kia/Hyundai customers do not benefit from the IRS tax credits, they pay more for an EV that may offer the same features as those from other manufacturers.
Additionally, the lack of tax credits reduces the value of these EVs when selling. People, when buying used EVs, factor in the ability to access tax credits that lower the overall cost when they’re new. Thus, Kia/Hyundai EV models become less attractive to buyers compared to other models that come with such credits.
The inaccessibility of the IRS tax credits for Kia/Hyundai EV models puts their models at a disadvantage, making them less competitive in the market. The lack of incentives drives up the cost of owning their EVs and reduces their value when selling. The OEMs should concentrate their efforts to meet the EPA standards and submit their data as early as possible, making their EVs eligible for these tax credits. Alternatively, they should work with the government to expand the qualifications for the tax credits to consider delays caused by the certification process. In doing so, Kia/Hyundai can level the playing field and remain competitive in this burgeoning EV market.
3.) All OEMs except Tesla that do not have current access to the Supercharger network. Now that there is a future date when many models will feature a NACS port, why not just wait? Again, less competitive due to charging network.
Tesla has long been known for its Supercharger network, boasting of fast-charging stations located in key travel destinations. In contrast, many other EV manufacturers are struggling to keep up with their charging infrastructure due to the lack of charging stations. Until recently, the only EV charging standard allowed on many non-Tesla electric cars was the CCS (Combined Charging System). However, with the advent of the NACS (North American Charging Standard) port, many electric vehicles will soon have access to the fast-charging infrastructure. But, should OEMs wait for the NACS port before joining the fast-charging network?
First, let’s clarify what NACS is and how it differs from other charging standards. NACS is a charging standard set by the North American auto manufacturers themselves. It combines the CCS and Tesla Supercharger standards for a more flexible charging protocol that benefits the entire automotive industry. This will allow for the development of a more comprehensive and integrated charging network as all auto manufacturers can access charging options previously exclusive to Tesla vehicles.
On the other hand, many non-Tesla automakers have long been concerned about the economic feasibility of building out their own fast-charging networks. Given that Tesla has already invested in a Supercharger network, it’s difficult for other automakers to catch up. In comparison, initially charging stations for EVs were only available in car dealerships and public charging spots. This exclusivity has prevented fast and convenient charging across long road trips, causing anxiety for drivers. So far, only limited fast-charging networks have emerged and they are a far cry from Tesla’s Supercharger network in terms of access and convenience.
Despite the significant investment required to build and maintain an extensive charging network like Tesla, many automakers like GM have taken the difficult and costly route of building their own fast-charging infrastructure. However, this approach has been less effective as it has resulted in less widespread access. Because of this, automakers have been voicing their support for the NACS port over the CCS as it could solve the problem and level the playing field.
There are several advantages of the NACS port. For one, it could be a more affordable option as manufacturers don’t need to invest in building their own charging infrastructure. Car buyers also get to benefit from the shared network of fast chargers and diversity of EV models. This could lead to more EV sales as range anxiety is reduced, and more important, can allow automakers to focus their capital and resources on battery development or new vehicle models. It also leads to an improved charging experience with EV customers using a uniform, open-access charging network.
But should OEMs wait for the NACS port to catch up with Tesla’s Supercharger network instead of investing in building out their own network? Although NACS is an excellent solution to the current predicament, it may not be a quick fix. While many electric vehicle models will adopt the NACS port, current models may still be incompatible with the updated charging standards. This could result in the continued lack of fast-charging infrastructure for vehicles that are already on the road.
The Supercharger Dilemma is a complex issue facing non-Tesla EV automakers. While the NACS port presents a new and better charging standard for EV’s, it may not be the immediate panacea to close the gap with Tesla’s Supercharger network.
If OEMs wish to match or exceed Tesla’s charging infrastructure, they would need to build network coverage quickly to prevent further loss of market share. Regardless, the NACS port presents a solution to an issue that has long plagued electric cars. Manufacturers must collaborate on the expansion of charging infrastructure and avoid simply waiting for the competition to catch up. In the end, a reliable and surprisingly user-friendly charging infrastructure will lead to more people embracing EVs, and that’s what we want for a better and cleaner future.
4.) EVs are generally a greater up front investment. That obviously doesn’t stop the sale of $50-80K trucks, SUVs, and premium cars, but it doesn’t help either.
Let’s take a closer look at why EVs may seem like a greater upfront investment, but are certainly worth it in the end.
- Higher Upfront Cost Compared to Gasoline Vehicles: One of the biggest reasons why EVs may seem like a greater upfront investment is because they are generally more expensive to purchase than traditional gasoline vehicles. However, it’s important to keep in mind that the cost of EVs is steadily decreasing as technology advances and more manufacturers enter the market. Additionally, incentives such as tax credits and discounted charging rates can help offset the initial costs.
- Long-Term Savings:While the upfront cost of an EV may be higher, the long-term savings are significant. EVs have lower running costs compared to gasoline vehicles due to the lower cost of electricity compared to gasoline and fewer moving parts, meaning less maintenance is required. Plus, EV drivers can save hundreds of dollars every year on fuel costs. According to the Department of Energy, the average EV driver can save up to $700 per year in fuel costs alone.
- Environmental Benefits: The environmental benefits of owning an EV can’t be ignored either. Gasoline vehicles emit harmful pollutants, contributing to air pollution and climate change. Electric vehicles emit no tailpipe pollutants, making them a much cleaner option. Additionally, EVs can be charged using renewable energy sources like solar power, further reducing their carbon footprint.
- Improved Charging Infrastructure: Concerns about range and charging infrastructure have been a major barrier to EV adoption in the past. However, significant progress has been made in recent years to improve charging infrastructure, making it more accessible and convenient for EV owners. For example, there are now more than 43,000 charging stations across the US, and many offer fast charging options that can get an EV up to 80% charged in less than an hour.
- Battery Life: Another concern some people have about owning an EV is the lifespan of the battery. It’s important to note that advancements in battery technology have made EV batteries more durable and longer-lasting than ever before. Additionally, most EV manufacturers offer warranties on their batteries that can last up to 8 years or 100,000 miles.
While the higher upfront cost of an EV may seem daunting, it’s important to consider the long-term savings and environmental benefits that come with owning one. Lower running costs, better charging infrastructure, and longer-lasting batteries make EVs a worthwhile investment. As EV technology continues to advance and more manufacturers enter the market, we can expect to see even more affordable and accessible options for environmentally-conscious drivers.
5.) There aren’t as many EVs available as of yet in more desirable segments (trucks, vans, SUVs) although that is changing slowly as new models rollout. You see EVs like the Tesla Model Y in a crossover format that are selling rapidly.
The lack of segment diversity is striking in the electric vehicle industry. Most EVs currently available on the market are sedans, which do not appeal to everyone.
This has been a significant barrier to the adoption of electric vehicles in the mainstream market. However, SUVs and trucks are becoming increasingly more common in the EV market. With the popularity of larger vehicles, it’s only logical that automakers would expand their EV offerings to include more desirable form factors.
The Tesla Model Y is an excellent example of a crossover format that is selling at a rapid pace.
6.) The economy is a challenge for everyone with high interest rates and a possible recession on the horizon.
Don’t think we need to beat this dead horse.