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With incentives and tax credits, the price of an EV can be less than half its sticker price. But the sticker price still makes buying an EV difficult for many drivers. And there are a number of drawbacks to owning an electric car, including range anxiety, low mileage, and lack of charging infrastructure. In this article, we look at how state-sponsored incentives and tax credits can help electric car drivers make the switch.
EV tax credits
Electric cars have long been a popular choice for motorists, but some are concerned that the cost of owning one is prohibitively high. States are starting to introduce electric vehicle registration fees as a way of boosting their economic development and reducing their budget gaps. While a few states have implemented such fees, others have not. Even if states do adopt these fees, they will do little to help drivers and will only make a small dent in state budgets.
Utility companies are already moving down the road of EV adoption. They’re starting to consider the benefits of these vehicles for carbon management and peak demand reduction. They’re also participating in standard-setting bodies to prepare for the inevitable increase in energy and peak variability. To encourage consumer adoption of electric vehicles, companies are putting advertising and incentives in charging stations. Consumers may also receive coupons or free charging if they spend a certain amount. Moreover, companies that get to market early may have a chance to secure prime commercial locations that allow them to attract consumers and drive sales.
Lack of charging infrastructure
The federal government issued funding guidance for BIL to build and maintain the nation’s electric vehicle infrastructure. However, the policies and funding are expiring in five years. While the government is promoting electric vehicles through tax breaks and other incentives, charging infrastructure costs remain high and the number of public charging stations has decreased. Without these investments, it will be nearly impossible for EV adoption to take off.
While California leads the way, rural America is not as ready. Although the federal government has provided $5 billion to build 500,000 charging stations, states are required to submit plans by late summer. These federal funds come with strings attached. To ensure that EVs get the fastest and most reliable charging, states must prioritize building charging stations along the interstate highway system. Charging stations also must be non-proprietary, meaning that they can be connected to more than one auto brand.
High sticker price
The shortage of electrically powered vehicles is driving price increases and long wait times for EV buyers. Luxury automakers like Mercedes-Benz, Hyundai, Porsche, Kia, and Audi are selling plug-in electric cars at premium prices. For example, a Mercedes-Benz EQS starts at $66,000, while a Ford Mustang Mach-E goes for $52,000. These luxury cars are priced more than their gas-powered counterparts, which is why the sticker price is so high.
While EV sales have increased exponentially in recent years, their sticker prices remain high. This limits the use of EVs, despite their lower overall cost of ownership. EVs are predicted to reach sticker price parity with internal combustion engine vehicles in the next decade. The timing will depend on the price of battery packs, which are expected to account for about a quarter of the total vehicle cost.
Range anxiety
While auto executives predicted that all three price-related drivers would spur the switch to electric cars, the truth is that consumers do respond differently to each of these factors. While most are motivated by the prospect of lower fuel costs, some are more interested in government subsidies and innovations in packaging and pricing. In addition, some consumers are concerned about range, which makes a higher up-front price a deterrent.
Despite the national trend, adoption of EVs lags in some states. While California leads the way with 11% of its registered vehicles, EVs make up just a fraction of vehicles in the Golden State. Despite the early adoption of EVs, the United States is a long way from reaching the “tipping point” for electric car adoption. In fact, the EV revolution is only just beginning, and it’s happening in super-slow motion.
Volkswagen’s electric cars
As the lagging demand for hybrid and electric vehicles grows, Volkswagen is speeding up its plans for EVs. VW wants to be the brand that “embodies sustainable mobility” – the same position Tesla has seized. It recently announced that more than 70% of its Volkswagen brand’s European sales will be electric cars by 2030, up from 35% last year. By 2040, VW expects that nearly all of its sales in the U.S. and China will be electric or hybrid cars.
VW’s executives are trying to convince customers that their electric cars are the future of mobility. VW is already deploying charging stations through Electrify America and participating in the Ionity charging network in Europe. However, executives are not convinced that EVs will replace internal combustion engines. While VW is trying to entice consumers, it’s not yet ready for that.