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Why car buyers and dealers are reluctant to embrace growing EV market

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The U.S. automobile market recently saw overall new car sales jump nearly 25% over the last year. But while electric vehicles have received a push from the government and seen a boost in sales, many car buyers remain hesitant to go electric.

Concerns about infrastructure, “range anxiety” and high costs in an uncertain economy have kept EV sales lower than advocates had hoped.

“Right now, the average price of an electric vehicle is about $66,000, the average price of a gasoline powered vehicle is $49,000,” Lauren Fix, automotive analyst and founder of Car Coach Reports, told SAN.

She added that not only do EVs carry a higher sticker price they also, she said, cost more to insure. The reason for that, according to Fix, is because of replacement costs. 

“Don’t let anyone kid you that there’s no maintenance because the tires wear out quicker … and there’s going to be maintenance,” Fix said. “You may have eliminated the engine, but you still have other components that need to be repaired. And when you total it all up, it takes about 10 years to recoup the cost of an electric vehicle over a gasoline powered vehicle.”

The consumer hesitancy naturally has a direct impact on auto dealers, who have to decide what types of vehicles they’re going to keep in stock by weighing government incentives while also preparing for governmental regulations.

In Delaware, for instance, the state is pushing car dealers to sell more electric vehicles and has announced that it wants to phase out gasoline-fueled new car sales by 2035.

Jim Ursomarso, vice president of Union Park Automotive Group in Wilmington, Delaware, doesn’t see buyers’ habits changing in the near future. And it all comes down to cost and reliability.

“The vast majority are still going to choose an ICE vehicle, a gasoline engine vehicle, because it’s less expensive in the price, and then that translates to lower monthly payments,” Ursomarso told SAN.

“They’ve got a budget, a monthly budget for their car payment, and they’re trying to stay within that,” he added.

Dealers don’t have anything against EVs, according to Ursomarso. They simply hope to provide what customers want. Right now, that’s not EVs.

“What works best for them is a car that’s less expensive and that will take them where they need to go when they need to get there without having to worry about stopping for an hour or three hours to charge and whether the charging station will be open or available,” he said.

The fear of running out of power before finding the next charging station, also known as range anxiety, has been and continues to be a major roadblock in the EV market.

Adding to that concern are the ongoing technical problems with existing public charging stations. According to J.D. Power, in the first quarter of 2023, 20.8% of EV drivers using public charging stations said they experienced charging failures or equipment problems that kept them from being able to charge their vehicles.

While the national development of charging stations is ongoing, the infrastructure comes up short in the face of growing demand. One company that is focused on addressing that issue and democratizing EV charging is a startup called Chargenet Stations.

Chargenet Chief Commercial Officer Sharmila Ravula said her company is creating an infrastructure that will make sure every charger the company deploys is always working.  

“We are focused on bringing fast electric vehicle charging in very convenient locations to the entire population of the U.S. in places they live and visit frequently,” Ravula said.

The company, she said, has a “very narrow focus” on fast-food, quick-serve restaurants that are everywhere across the U.S. 

Chargenet Stations has one station currently operating at a Taco Bell between two popular freeways in San Francisco. The company plans to have 25 stations operational by the end of 2024, and thousands of stations across the U.S. by 2035.

The Biden administration declared that it wants to see 50% of all new vehicle sales be electric by 2030. 

But experts told SAN it will never happen. 

“There is no way that you’re going to see electric cars increase to that substantial percentage by 2030 or 2050,” Fix said. “Not a chance.”

Fix pointed to the current situation in California, where the state recently banned the sales new gas-powered cars by 2035.

“The perfect proof is California here today in 2023,” she said. “They can’t even support all the electric grid because there’s not enough wind and solar power. And they’d need nuclear power, coal and natural gas, which California doesn’t want to do.”

Ursomarso said he sees his Delaware customers pushing back against EV requirements.

“We’re hoping that Delaware does not adopt the [zero-emission vehicles] requirement, the electric vehicle requirements,” he told SAN. “If they do, I think it’s not going to go over well.”

“The average person in Delaware is not going to be very happy that they now must spend a lot more to get a vehicle.”

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MAHMOUD BENNETT: IF YOU’RE LOOKING FOR A NEW CAR, YOU’RE NOT ALONE. AUTO SALES JUMPED NEARLY 25-PERCENT FROM THIS TIME LAST YEAR.

 

BUT LIKE DYLAN FANS IN THE 60s, MANY ARE STILL HESITANT TO GO ELECTRIC.

 

TIMES, THEY ARE A-CHANGIN’, AND MORE E-VS SELL EVERY YEAR, BUT CONCERNS ABOUT INFRASTRUCTURE, “RANGE ANXIETY” AND HIGH COSTS IN A QUESTIONABLE ECONOMY MEAN DEMAND IS A SLOW TRAIN COMIN’.

 

LAUREN FIX | CAR COACH REPORTS FOUNDER: “Right now, the average price of an electric vehicle is about $66,000, the average price of a gasoline powered vehicle is $49,000. Now, yes, you can buy cars more expensive, and cars less expensive, whether it be electric or gasoline powered, the price is one factor, but then you go to get your insurance because you’d have to get car insurance. And you find the insurance policy is substantially more, almost twice as much as it is for gasoline powered. So now the cost of the vehicle is higher, the cost of insurance is higher, and you still have to pay for charging.”

LAUREN FIX IS AN AUTOMOTIVE ANALYST. SHE SAYS THE REASON INSURANCE IS HIGHER FOR EVs IS BECAUSE OF REPLACEMENT COSTS. 

 

FIX: “Don’t let anyone kid you there’s no maintenance because the tires wear out quicker. And you can there’s moving parts, there’s going to be maintenance. And that’s not just some of the fluids, you may have eliminated the engine, but you still have other components that need to be repaired. And when you total it all up, it takes about 10 years to recoup the cost of an electric vehicle over a gasoline powered vehicle. And people that are smart are looking into the numbers and saying this may or may not work for me.”

 

JAMES UROMARSO | VICE PRESIDENT UNION PARK AUTOMOTIVE GROUP

0:50ish “The vast majority are still going to choose an ice vehicle, a gasoline engine vehicle, because it’s less expensive in the price, and then that translates to lower monthly payments, whether you’re buying or you’re leasing. And that’s really a big driver for the vast majority of customers. They’ve got a budget, a monthly budget for their car payment, and they’re trying to stay within that.”

 

BENNETT: JIM URSOMARSO IS THE VICE PRESIDENT OF UNION PARK AUTOMOTIVE GROUP IN WILMINGTON, DELAWARE. A STATE THAT IS PUSHING CAR DEALERS TO SELL MORE ELECTRIC VEHICLES. AND EVEN PLANS TO PHASE OUT GASOLINE-FUELED NEW CAR SALES BY 20-35.

 

JIM: “We as dealers, we don’t have anything against or for electric cars, we want to provide a transportation solution that our customers want. And it just so happens that the vast majority of our customers and our friends and our neighbors, look at buying a car, that what works best for them is a car that’s less expensive. And that will take them where they need to go when they need to get there without having to worry about stopping for an hour or three hours to charge and whether the charging station will be open or available. And whether it’ll be working, I think about 20% of the charging stations in the country, at any given moment, are all flying with technical issues. And we experienced that too. In our dealership we have a lot of charging stations that we use for our clients and for our own vehicles as we prep them. And it’s a challenge to keep them up and running.”

 

BENNETT: ‘RANGE ANXIETY’ – THE DREAD OF RUNNING OUT OF JUICE BEFORE FINDING THE NEXT CHARGING STATION – REMAINS A BIG ISSUE FOR POTENTIAL E-V BUYERS.

 

WHILE THE NATIONAL DEVELOPMENT OF CHARGING STATIONS IS ONGOING – THE INFRASTRUCTURE COMES UP SHORT IN THE FACE OF GROWING DEMAND. 

 

SHARMILA RAVULA | CHIEF COMMERCIAL OFFICER CHARGENET STATIONS: “One-third of the charging stations that are out there usually are not working correctly or the charging the chargers that are available in the public domain. What we are focused on is excellent customer service, we want to ensure that everything is working in real time. And we have the support infrastructure to ensure that every charger that we deploy out there is always working.”

 

BENNETT: SHARMILA RAVULA IS THE CHIEF COMMERCIAL OFFICER FOR CHARGENET STATIONS. THE STARTUP IS ON A MISSION TO DEMOCRATIZE E-V CHARGING.

 

RAVULA: “We are focused on bringing fast electric vehicle charging in very convenient locations to the entire population of the US in places they live and visit frequently with a very narrow focus on quick serve restaurants because these are ubiquitous across the entire US.”

 

BENNETT: CHARGENET STATIONS HAS ONE STATION CURRENTLY OPERATING  BETWEEN TWO POPULAR FREEWAYS IN SAN FRANCISCO. THEY PLAN ON HAVING 25 STATIONS OPERATIONAL BY THE END OF NEXT YEAR. AND THOUSANDS OF STATIONS ACROSS THE U-S BY 2035. THE GOAL WOULD ALIGN WITH THE BIDEN ADMINISTRATION’S AIM OF HAVING 50-PERCENT OF ALL NEW VEHICLE SALES BE ELECTRIC BY 20-30. 

 

BUT SOME EXPERTS WE SPOKE TO SAY IT WILL NEVER HAPPEN. 

 

FIX: “There is no way that you’re going to see electric cars increase to that substantial percentage by 2030. Or 2050… Will we be all electric? Not a chance. And the perfect proof? Is California here today in 2023. You will, they can’t even support all the electric grid because there’s not enough wind and solar power. And they did nuclear power, coal and natural gas which California doesn’t want to do.”

 

IN DELAWARE, URSOMARSO SAYS HE SEES HIS CUSTOMERS PUSHING BACK. 

 

URSOMARSO: “We’re hoping that Delaware does not adopt the ZEV requirement, the electric vehicle requirements. If they do, I think it’s not going to go over well, unfortunately, because of the cost issue, it’s just that the average person in Delaware is not going to be very happy that they now must spend a lot more to get a vehicle. That’s not what they’re looking for. / We’re trying to explain to people the tax increase issue. That’s what it really is, if you’re required to buy something, and it’s more expensive. That’s it, that’s sort of a tax increase. So, we’re trying to explain that to people in Delaware so they can see what the impact is going to be.”

 

BENNETT: E-V COMPANIES ARE SEEING CONSISTENT YEAR-OVER-YEAR GROWTH. IN 2022, MORE THAN 750-THOUSAND NEW ALL-ELECTRIC CARS WERE REGISTERED IN THE U-S. THAT’S 57-PERCENT MORE THAN IN 2021. 

 

ACCORDING TO MARKLINES – AN AUTOMOTIVE INDUSTRY PORTAL – SALES ARE EXPECTED TO GROW BY ANOTHER 35-PERCENT THIS YEAR, BUT THEY REMAIN A SMALL PART OF THE TOTAL U.S. AUTO SALES.

 

WITH LAWMAKERS CALLING THE END OF THE LINE FOR GAS-POWERED VEHICLES IN COMING DECADES, COSTS AND INCENTIVES WILL HAVE TO ALIGN FOR CUSTOMERS TO MEET THOSE BENCHMARKS.