In 2022 the year America finally goes all in on electric vehicles?
Analysts at Bank of America certainly seem to think so, as they are predicting a “major year of commercialization" for the market, as reported by Axios.
85 new electric vehicle models are set to launch within the next four years, including the Chevrolet Equinox SUV (GM) - Get General Motors Company Report, the Kia EVs (KIMTF) and the Subaru Solterra (FUJHY) - Get Subaru Corporation Report. The last one is the first electric vehicle offered by Subaru.
Is This The Year Of The Electric Vehicles Tipping Point?
It would seem that the automobile industry is committed to increasing the supply of electric vehicles. But is the consumer demand there? That’s a tricky matter to parse.
Tesla’s electric vehicles get most of the press coverage and cultural attention, to the extent that a casual observer might conclude they’re the only player in the game, even though that’s absolutely not true.
With it’s sleek design and assortment of computer-y doo-dads, the Tesla is marketing as a high-end, luxury vehicle. Which is all well and good, but as cultural analysts point out, the high price point for EVs (the 2020 Model S sedan has a base price of $74,990, and the Model X starts at $79,990) keeps it out of reach of many consumers.
Without more of an effort from manufacturers and the government - tax credits - to make these vehicles accessible to the general public, the end result could be richer people who own homes with home charging enjoying the benefits that EVs offer, while the less well-off are relegated to an increasingly dilapidated fleet of used internal combustion engine cars that cost more to keep on the road every year, experts say.
Meeting People Where They Are At
Electric vehicles represent only 3% of the automobile market, while as we previously noted, hybrid cars (meaning cars that run on a combination of fossil fuels and electricity) account for “about 5% of the overall U.S light vehicle sales.”
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At the moment, it’s clear that consumer demand for electric vehicles is not as high as manufacturers’ commitment to electric vehicles. But the wave of upcoming electric vehicles shows that manufacturers are making a push to try to change consumer habits.
The first step is to get the overall price point down. In 2020, the average price of a mid-size car was $27,545, while a mid-size pickup truck stood at $36,203 and a mid-size SUV /crossover was $39,969, according to Experian. By comparison, an Electric vehicle started at $42,620. But those EV price points are starting to slowly come down, as the Chevrolet Equinox SUV will cost $30,000.
There’s also an ongoing attempt by EV manufacturers to give people what they want. Luxury vehicles are nice and all, but nationwide the top-selling makes of cars are crossover SUVs and pickup trucks, according to Statista. It's clear these are the cars and truck the majority of Americans want, so if manufacturers want people driving electric vehicles, then they need to make the electric vehicles that America wants to buy.
This is why we can expect to see a wave of larger scale EVs, including the upcoming GMC Hummer EV (GM) - Get General Motors Company Report and the Rivian R1T (RIVN) - Get Rivian Automotive, Inc. Class A Report pickup truck. The long-delayed release of Tesla Cybertruck, which as many have noted looks like the Batmobile, keeps getting pushed back, but maybe one day it will also be available to meet the consumer need.
Are EVs Inevitable?
President Joe Biden has made a commitment to reducing greenhouse emissions, and has set an an “ambitious target of 50% of electric vehicle EV sale shares in the U.S. by 2030.”
While this is one reason why manufacturers are ramping up production, the Big 3 auto-manufacturers (Stellantis (STLA) - Get Stellantis N.V. Report, company formed from merger of Fiat Chrysler and French Peugeot, General Motors (GM) - Get General Motors Company Report and Ford (F) - Get Ford Motor Company Report) don’t want to fall too far behind the curve and continue to let Tesla (TSLA) - Get Tesla Inc Report dominate the EV sector, as that would just be bad business.
The traditional manufacturers have had mixed results of late, with GM’s stock stalling out of late while Ford recently outpaced Tesla, with shares soaring 140% last year, and the company has plans to shift “more resources to build electric vehicles like the upcoming F-150 Lightning pickup.”
It’s clearly EV is a growing sector that just hasn’t gone mainstream… yet, but it seems safe for investors to assume that the industry is going to do what it needs to do to get an EV in every garage.
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