Price cuts at Tesla show that the EV market is facing challenges

PITTSBURGH — Joe Pegher likes the idea of ​​electric vehicles. He enjoyed taking it for a test drive. And during the annual auto show here last week, he crossed the busy convention center to check out Ford’s electric pickup, the F-150 Lightning.

But when it recently came time to buy a new truck, Pegher stuck with a gasoline model.

“I understand the concept of [EVs] and I think it’s a good idea. It’s probably 10 years too early,” he said from the sidelines of the show, citing a lack of charging infrastructure as his biggest concern. “I think everyone is jumping the gun a little bit.”

That view, common among trade show attendees and consumers across the country, takes the shine off the EV transition three years after automakers and the Biden administration stormed the United States with big EV plans.

Sales of all-electric vehicles are still growing much faster than sales of gasoline cars in the United States; according to Wards Intelligence, sales rose 49 percent last year to 1.1 million vehicles.

But automakers say growth has cooled recently due to lower gasoline prices and lingering concerns about a lack of charging stations, which has contributed to a 10.8 percent drop in the average EV price over the past year, to $55,353. according to data from Cox Automotive.

The start of the year was tough. Mercedes-Benz this week postponed its electrification targets by up to five years. Ford cut the price of its electric Mustang Mach-E to compete with Tesla’s Model Y, which got its own price cut this month. Hertz has started jettisoning about 20,000 electric vehicles from its global fleet. And for the first time in years, EV ads from Detroit automakers were noticeably absent from the Super Bowl.

The EV transition is cooling off as demand declines and automakers scale back production

Increasing consumer caution is forcing the Biden administration to reconsider some of its grand ambitions for a green transition. The Environmental Protection Agency is considering relaxing regulations that would have required automakers to quickly scale up production of electric vehicles, people familiar with the matter told The Washington Post this week. The news came after thousands of car dealers wrote to the government complaining that electric cars were piling up on their sites.

It’s not all bad news. Plug-in hybrids appear to be catching on more quickly with consumers because they combine a limited range with the security of a backup gasoline engine, dealers and automakers say. According to Wards Intelligence, these were the fastest growing light-duty vehicles sold in the United States last year, up 60 percent to 293,558 vehicles. And analysts expect all-electric vehicles to continue gaining market share this year, likely reaching a double-digit percentage of new car sales.

White House officials say electric car sales have tripled since President Biden took office, with the help of federal tax breaks for buyers. They add that drivers will see more progress with electric vehicle charging this year as federal funds for charger construction begin to pay off.

Biden’s agenda “makes EVs more affordable, helps Americans save money while driving, and makes EV charging accessible and convenient,” White House spokesman Angelo Fernandez Hernandez said in a statement. The government has also welcomed the sale of plug-ins as a contribution to reducing emissions.

Some visitors to the Pittsburgh auto show said they were already proud EV owners or were ready to take the plunge. When David Kennedy looked at an electric Nissan Ariya, he said he likes driving his fiancée’s Tesla and plans to go electric the next time he buys a car.

“I wouldn’t consciously or intentionally go back to a gasoline vehicle,” he said. “It’s pretty dirty, all those exhaust fumes coming out of all those cars everywhere.”

But many others expressed their concerns. While looking around with his sons, Mark Hanrahan said his views on electric cars have become more positive over time: he no longer thinks they are “lame.” But he is not convinced there are enough public charging points to make long car journeys.

“I think they’re the future, but I wouldn’t invest in them just because we have six kids, and I just don’t think they’re practical enough,” says Hanrahan, who has a GMC Sierra truck and a minivan at home. .

Chuck McCoy said he thought it was “too early” for electric vehicles and didn’t think they could handle the hills of his hometown of Weirton, W.Va.

Tom Phillips said he was considering buying an electric BMW but was concerned about the frigid winter weather, which could drain EV batteries. “If you go to the Midwest or you go to Canada, it’s not enough,” he said.

Mark Z. Jacobson, a renewable energy expert and professor of engineering at Stanford University, said cold weather reduces the range of electric vehicles by about 20 percent, but it also reduces the range of gasoline cars – and the pollution emissions of gasoline vehicles increases. Concerns about electric cars being able to tackle hills are unfounded, he added.

“The first thing I noticed was that [my EV] I accelerated up the steep hills of San Francisco so much easier than any gasoline car I had ever driven,” Jacobson said. Better public education is needed to highlight the benefits of electric vehicles, he added, including that they eliminate all tailpipe emissions and can save drivers up to $30,000 in fuel costs over 15 years.

Still, many auto show attendees said they were much more open to buying hybrids. Dylan Higinbotham said he has too much ‘charging anxiety’ for a fully electric car, but loves his new plug-in hybrid, which has dramatically reduced his monthly fuel bill.

Dealers in several states told The Post that plug-in hybrids are growing in popularity and that buyers aren’t ready to say goodbye to gasoline engines completely. “I think a lot of people have gone from one extreme to the other and become interested in all-electric, and then maybe realized that’s too big of a leap,” said Shane Collins, a Ford and Nissan dealer in Louisville.

That trend has General Motors scrambling to add plug-in hybrids to its lineup, even as it slows some production of all-electric pickup trucks. This year marked the first that GM hasn’t aired an EV ad during the Super Bowl since 2021, when it launched its electric ambitions in a commercial starring Will Ferrell.

CEO Mary Barra said last month that GM remains committed to ending sales of gasoline vehicles by 2035. “But in the meantime, deploying plug-in technology in strategic segments will deliver some of the environmental benefits of electric cars, while the country continues to build its charging infrastructure,” she said.

Other signs of EV deflation have emerged. Hertz said last month it would sell a third of its global EV fleet, or about 20,000 cars, citing weak demand and the cost of repairing the vehicles.

Tesla has cut Model Y prices in the United States by more than 21 percent over the past year, to less than $50,000 in January, amid increasing competition and periods of weaker demand.

“Since most people don’t like buying cars in the middle of winter, Tesla is offering a $1,000 incentive to do so,” said Tesla CEO Elon Musk. Posted on X this month, announcing another price cut for the Model Y.

Even in California, long an EV stronghold, sales of all-electric models fell 10 percent between the third and fourth quarters last year, to 89,933 vehicles, according to the California New Car Dealers Association. EVs continued to make significant inroads in the state in 2023 as a whole, rising to 21.4 percent of new vehicle registrations, up from 16.4 percent a year earlier.

Kristin Dziczek, a policy adviser at the Federal Reserve Bank of Chicago, said the electricity market appears to be going through a rough patch as it tries to transition from early adopters and technology enthusiasts to mainstream consumers.

Improving charging and battery range and making electric vehicles more affordable will be key to broadening their appeal, she told an auto conference in Detroit last month. Ordinary consumers “won’t have much patience for the inconveniences that come with the technology,” she said. “It has to work and improve their lives at a reasonable price.”

The bipartisan infrastructure bill that Biden signed two years ago provided $7.5 billion over five years to state and local governments to subsidize charger construction, a campaign that is only now beginning to lead to the opening of new charging stations. Experts say it has taken so long because charging providers had to jump through many hoops to build a charging station, including working with local utilities to secure power, obtaining permits and purchasing and installing hardware.

For the time being, the American network relies heavily on Tesla. There are about 35,000 public fast-charging ports in the United States, about two-thirds of which are owned by Tesla, according to Atlas Public Policy.

But other automakers are boosting their charging investments. GM, Honda, Hyundai and several others said last summer they were working together to install 30,000 new fast chargers in North America, with the first stations expected this summer. And Mercedes has pledged to invest more than $1 billion with a joint venture partner to install 2,500 chargers in the United States and Canada by 2030.

“We are all aware of the problem we are trying to solve… about 50 percent of potential EV buyers still do not buy electric cars because of charging,” Mercedes head Andrew Cornelia said during a media briefing event this month.

Tom Lewis, a retired steelworker touring the Pittsburgh auto show, said he sticks to gasoline-powered models when shopping for a new vehicle. The availability of electric technology and charging is “not there yet,” he said. “Let someone else handle the headache.”

“Down the road, before I’m dead, I bet we have an electric vehicle,” he added. “But I’m not dying yet.”

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