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What you need to know about electric vehicles as President Biden, automakers announce EV goals

What you need to know about electric vehicles as President Biden, automakers announce EV goals

FINANCIAL NEWS

What you need to know about electric vehicles as President Biden, automakers announce EV goals

Gas will be out of gas if President Biden has his way.The White House on Thursday announced a goal of making half of all new cars, trucks and SUVs sold in the U.S. zero-emission vehicles by 2030, including battery-powered electric vehicles and hydrogen fuel cell cars.The goal drew support from the automotive industry’s largest players, including General Motors, Ford, Toyota, Honda, Volkswagen and Stellantis, the company formerly known as Fiat Chrysler. Supporters of Biden’s electric vehicle plan manufacture and sell the world’s most popular gas-powered vehicles, from the Ford F-150 pickup to the Toyota RAV4 SUV and the Honda Accord sedan.Biden promoted the transition from gas to electric vehicles as crucial to combating climate change, which is worsened by emissions from internal combustion engine (ICE) vehicles.But getting from here to there will take years and involves numerous challenges.► Charging access poses hurdle: More electric car charging stations needed to juice EV sales► Welcome to the ‘golden age’ of EVs: Are electric vehicles poised to kill the gasoline engine car?Biden: ‘When they make the first electric Corvette, I get to drive it’Biden says General Motors CEO Mary Barra promised he can drive the first electric Corvette.Associated Press, USA TODAYThere are more than 276 million vehicles in the U.S., according to the Bureau of Transportation Statistics – and nearly all of them are powered by gas or diesel fuel.Change is happening, but it’s slow in the making. In the first half of 2021, electric vehicles made up 2.2% of new-auto sales, up from 1.4% in the same period of 2020, according to car-research tool Edmunds.“What’s possibly the biggest hurdle ahead is consumer acceptance: What will it take for Americans to be willing to change their car ownership habits to go electric?” Edmunds analyst Jessica Caldwell wrote in an analysis of the announcement.Here’s what you need to know as a consumer about the EV future.Can I buy an affordable electric car?Not yet.By and large, EVs are still luxury vehicles.Take Tesla, for example. Elon Musk’s EV maker sells only four models, two of which routinely price at more than $100,000. The cheapest, the Model 3 compact car, was originally envisioned as an affordable car but usually sells for at least $50,000, which is about 80% of U.S. median household income.EV advocates point out that they save money on gasoline and maintenance, since a full charge of electricity is typically cheaper than a comparable tank of gas. In addition, EVs typically don’t require as much upkeep since they have fewer parts than gasoline-powered cars.Still, the initial sticker price is enough to scare off many Americans.Biden’s goal would likely require automakers to achieve affordability on some level. But with the average new vehicle costing more than $40,000, according to Edmunds, affordability is relative.When will gas-powered cars be completely off the road?A long time. Think decades.To be sure, automakers like GM, Mercedes, Volvo, Jaguar and Honda have committed to transitioning to only electric vehicles, each one at different intervals but all by 2040.The days of the gasoline engine are almost certainly numbered.Climate change and EVs: How will future cars stem global warming?Electric vehicles have become a hot trend. But how much better are they for the environment than standard gas or diesel-powered cars?Just the FAQs, USA TODAY“Recently auto stalwarts such as GM, Ford, VW and many others have doubled down on their EV initiatives over the coming years signaling a clear shift in the EV tide among traditional auto players looking ahead,” Wedbush Securities auto analyst Dan Ives wrote Thursday in a research note.If and when half of the new vehicles sold are EVs, most cars and trucks on the road will remain gas-powered for years to come. The average age of a vehicle is more than 12 years, an all-time high, according to IHS Markit. That means cars are lasting longer than ever due to improved reliability. So Americans are likely to keep their gas vehicles for quite a while.There’s one caveat: If the government puts up a cash-for-clunkers-style offer, providing an incentive for Americans to turn in gas vehicles in exchange for an EV, that could make a difference. But there’s no indication such an offer is under consideration anytime soon.Electric cars on way, but buyers may not be readySome automakers are staking their futures on the notion that consumers will soon be ready to buy electric vehicles. The risk is as hazardous as it is simple: What if consumers reject EVs for many years to come? (March 15)APWill the government offer EV incentives?It already does. And it could get extended, expanded or both.New EVs from companies typically come with a $7,500 tax credit. But Tesla and GM cars are not eligible anymore because those companies have already reached their quota.Which is one reason why advocates want Congress to redo the tax credit formula. Biden is on board, but Republicans may not go along with it.Peter Rawlinson, CEO of Lucid Motors, a start-up EV maker, advocated tying the tax credit to the efficiency of the vehicles. The more mileage an EV gets out of its battery capacity, the more credit the buyer should get, he argued.But where will I charge my EV?Most EV owners do most of their charging at home – about 80% of it happens there, in fact, according to the Electric Drive Transportation Association.But many Americans don’t have access to a charger or can’t afford one on their own, since they can cost thousands of dollars.Only about 4 in 10 Americans have garages, said Michelle Krebs, executive analyst at car-buying site Autotrader.“Some of those so-called garages are sheds,” Krebs said. “I have a 1946 garage – I’d have to upgrade wiring to get a charger into mine. So yes, a lot of people will charge at home – but not everybody.”The good news is that many states and utilities offer tax incentives or grants to install chargers, so that could help.But for drivers who live in multi-family dwellings or park their cars on the street, they’ll need access to shared charging stations.In some areas of the country and along some routes, those charging stations are easy to find. But you need to plan accordingly.Biden’s plan calls for an investment in what the White House calls “the first-ever national network of electric vehicle charging stations.”At one point, the administration said it was aiming for 500,000, which would reflect a 10-fold increase in the number of public stations. It’s unclear if that is still the figure the administration is shooting for.Either way, the electrical grid will also need some help to handle the extra charging demand. The Boston Consulting Group estimated that the U.S. will need to invest $1,100 in grid upgrades by 2030 for each additional EV sold.“Our consumer research shows that inadequate charging infrastructure remains a key deterrent for customers who might otherwise pick EVs,” according to the Boston Consulting Group report.Indeed, about 65% of car shoppers say additional stations would help convince them to buy an EV, according to a February survey of car owners by car-buying site CarGurus.“We’re heading towards a battery-electric vehicle future, a fuel cell vehicle future, a hybrid future, plug-in hybrid vehicle future,” Toyota North America executive vice president Chris Reynolds said on a recent conference call with reporters. “Let’s make sure we have the infrastructure to support that.”Who will make EVs?Biden wants it to be Americans. And it probably will be, for the most part, since automakers like to make vehicles on the continents where they sell them to avoid overseas shipping costs and tariff wars.The automakers say they’re investing billions in technology to change plants that make gas vehicles into factories that build EVs. For example, GM is transforming its plant on the border of Detroit and Hamtramck, Michigan, into an EV manufacturing hub.The United Auto Workers union, which represents hourly workers at GM, Ford and Stellantis who currently make largely gas vehicles, is also backing Biden’s EV agenda.To be sure, some EVs will be imported, which the UAW and many politicians on both sides of the aisle have decried. For example, Volkswagen is currently importing the ID.4 electric SUV. But VW says its long-term plan is to make the vehicle at its plant in Chattanooga, Tennessee.Biden has said that China is winning the EV race, and he wants the U.S. to prevail.“The global market is shifting to electric vehicles and tapping their potential to save families money, lower pollution, and make the air we breathe cleaner,” the White House said in a statement. “Despite pioneering the technology, the U.S. is behind in the race to manufacture these vehicles and the batteries that go in them.”Will fuel efficiency standards be changed?Likely, yes. The EV goal fits within that roadmap.The Biden administration has set in motion a review of federal fuel economy standards that is likely to lead to the implementation of requirements that are stricter than President Trump’s standards. Trump had cut back gas-mileage requirements after the Obama administration made them tougher.By making EVs a key piece of their manufacturing plans, automakers can offset the emissions attributable to their gas-powered vehicles and achieve the federally required average standards.You can follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey and subscribe to our free Daily Money newsletter here for personal finance tips and business news every Monday through Friday morning.


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