Timothy G. Nash Jason Hayes Tom Rastin
introduce
You don't need a government agent to tell you what you want or when you want it.
Milton Friedman explained that “market processes” allow individuals to interact and exchange goods and services voluntarily. The prices they charge on these exchanges guide production and consumption decisions, ultimately achieving the most efficient allocation of resources, maximizing customer satisfaction, and increased purchasing power, all without the need for government intervention.
As far as electric vehicles are concerned, due to the lack of “market process”, consumers' wishes and needs are ignored and consumer needs are misunderstood. Demand only exists when consumers need and/or want a product and can afford it. However, when government mandates and subsidies push EVs instead of more desirable cars, we can't tell whether manufacturers are producing optimal numbers of EVs.
With the national debt approaching $36 trillion, we know the federal government cannot continue to spend recklessly. No matter who wins the White House, deep spending cuts will be needed. We suggest that they first cancel electric vehicle subsidies for manufacturers and consumers.
As U.S. consumers become increasingly hesitant to buy electric vehicles, the market has sent a strong negative signal toward electric vehicles. As a result, government policies are wasting tens of billions of dollars (soon to be hundreds of billions or more), forcing this immature technology into markets that consumers are not yet ready to buy.
Americans have many reasons to hesitate before purchasing an electric vehicle.
- consumer confidence
A recent Gallup survey showed that only 7% of Americans own an electric vehicle. Another 9% are seriously considering purchasing, 35% say they would consider buying an electric car, and 49% are not interested in electric cars (including 1% who have no opinion). The survey showed that customer demand for electric vehicles has dropped by 11% since 2023. Edmunds said that in the second quarter of 2024, 40% of all EV trade-ins were used as down payments on internal combustion engine vehicles.
- Procurement cost
Edmunds also reports that there will still be a 42% gap between the average prices of electric and gasoline-powered vehicles in the first quarter of 2024. In the popular and relatively crowded SUV category, the gap widens to 58.5%. A compact electric SUV sells for $53,048, while equivalent ICE competitors have an MSRP of $35,722. The smallest MSRP gap is 18% in the large pickup segment, where the average price of electric pickups is $76,475.
- range anxiety
Range anxiety is the fear of running out of battery before reaching your destination due to limited battery range or insufficient charging infrastructure. Other factors that influence range anxiety include knowledge of charging locations, charging times, battery degradation, and changes in performance related to weather conditions.
- Grid capacity
Electric vehicles will put pressure on an already overloaded power grid. Fleet charging requirements for larger batteries for delivery trucks and public transportation will exacerbate this pressure. Utilities need to manage the complex timing and location of new EV charging infrastructure. These complexities will be compounded by hasty transition timelines, such as the Biden administration's goal of electric vehicles accounting for 67% of all new vehicle sales in the United States by 2032. will exacerbate this burden.
- Safety issues and weather conditions
The main safety concern with electric vehicles is that they may cause greater injuries in a crash due to their increased weight compared to internal combustion engine vehicles. There are also concerns about the changing nature of vehicle fires associated with lithium-ion batteries. Defects in the battery system can cause fires that result in the release of flammable and toxic gases, damage to the battery system from collisions, or exposure to salt water from floods or hurricanes. The performance of electric vehicles tends to be inconsistent, especially in climates with a wide range of temperatures (extremely hot or cold).
- Resale and/or trade-in value of electric vehicles
The average age of a U.S. car, light truck or SUV is 12.6 years old and continues to grow, which means business in the U.S. aftermarket is looking positive. However, the prospect of buying a used electric vehicle has many consumers worried. By 2024, electric vehicles will depreciate faster than internal combustion engine vehicles, and the ability to find good service centers to handle growing maintenance needs will become more apparent and costly. Finally, it is recognized that at the time of trade-in or at the end of the life of an electric vehicle, its value may be negative. When considering a purchase, the thought of owning something that might have a negative value is not flattering.
- Car rental companies around the world are making a signal on electric vehicles
Over the past few years, many rental car users have been reluctant to drive electric vehicles, forcing companies in Europe and the United States to reduce their electric fleets. The companies report high repair costs, low resale value, a lack of customer charging centers and the learning curve required to educate first-time users.
in conclusion
The list of reasons why consumers are hesitant about electric vehicles is not exhaustive, but it does provide some clear reasons why companies and government regulators are adjusting their transition strategies. Without government mandates and subsidies, even 50% of consumers are unlikely to choose electric vehicles by the date arbitrarily determined by the government in 2032.
There is a market for electric vehicles, but government mandates and subsidies (where regulators predict winners and losers) will do more harm than good. By forcing widespread use of the technology before it matures, governments are causing consumers to boycott electric vehicles. Instead, government regulators should allow consumer demand, competition and “market processes” to guide EV adoption.
Dr. Timothy G. Nash is director of the McNair Center at Northwood University.
Mr. Jason Hayes is Director of Environmental Policy at the Mackinac Center.
Dr. Tom Rastin is a retired business executive from Ohio.
This article was originally published by RealClearEnergy and provided via RealClearWire.
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