Patrick Anderson is “a car guy” so when the Detroit Auto Show announced its return after a 3-year hiatus, there was no doubt he would be there. The real question was what ride he would take?
A week in advance, he started planning the logistics for an electric road trip from Lansing to Detroit. Anderson is an early adopter of electric vehicles having purchased one in 2018 and recently upgrading to a 2020 Porsche Taycan.
“It’s an awesome vehicle – once it’s fully charged,” he said.
The path to electric was on full display last week at the auto show, including a visit from fellow car guy President Joe Biden, but getting there was a long winding road itself for Anderson.
The aspirations of the car companies are disjointed from the reality EV drivers face on the streets. For most people, electric vehicles are too expensive. For those who do drive electric, there is insufficient infrastructure.
Despite a heavy focus on electric vehicles, the Auto Show, open to the public through Sunday, does not have any chargers onsite at Huntington Place or directions for EV drivers looking for nearby charging stations. Drivers should use apps to find chargers, spokesperson Frank Buscemi said.
Anderson charged his Porsche at home for two days and got to nearly a full charge. He scouted out stations on both on mobile apps and in person once he arrived in Detroit on Friday.
When he was ready to charge to go home on Saturday morning, he found chargers at Detroit’s Eastern Market, but couldn’t navigate the jammed parking lot. After looking up the prices – he estimates five times more than what he pays in non-peak hours, he passed.
Ultimately, he stopped in Ann Arbor and sat for an hour to get enough charge to drive home.
“In many respects, [it’s] an absurd situation for actual customers and something that can’t be tolerated if we expect ordinary Americans to drive electric cars,” he said.
What comes first the cars or the infrastructure?
Anderson, who runs a research and consulting firm Anderson Economic Group in Lansing, has been tracking the adoption of electric vehicles and the infrastructure needed to reach the Biden administration’s goals.
Biden ambitiously wants to see 50% of U.S. sales to be electric by 2030. The Bipartisan Infrastructure Law, passed last year by Congress, aims to set up 500,000 chargers to support the transition to electric.
During his Detroit visit, Biden announced the federal government approved $7.5 billion in charging network funding for plans in 35 states, including Michigan. The White House estimates these networks will cover 53,000 miles of highway with chargers.
Creating infrastructure for cars that only make up 5.2% of the market is a chicken and the egg scenario, said Michelle Krebs, Executive Analyst at Cox Automotive. Cox owns AutoTrader and Kelly Blue Book.
“I cannot tell you, and I don’t think anybody truly can tell you, when we’ll reach the inflection point that EVs sell equal to what ICE (internal combustion engine) vehicles are or surpass them,” she said. “But we certainly are going to see continued growth.”
The electric market saw record high sales during the second quarter of 2022. Nearly 200,000 EVs were sold, marking a 66% increase from last year, according to Cox Automotive.
Related: EV sales are hitting record highs. Will the Chips Act continue momentum?
Government-issued goals will either accelerate that inflection point or result in missed deadlines.
California has stepped forward as the country’s guinea pig with its ban on the sale of new gas-powered cars after 2035. Californians who still do not want to go electric will then be relegated to the used car market.
In her hometown of Los Angeles, Jessica Caldwell, Edmunds executive director of insights, said the ban has already generated conversation among car buyers.
“It may not be for everyone right now, but it’s at least getting the wheels in their mind turning,” she said. “I’ve heard the comment many times, especially here in California, ‘I’m going to have to buy one sooner or later, I will start looking now.’”
The electric market in California already outpaces the national average with electric sales making up 15% of the market. Approximately 39% of EVs nationwide are in California, according to federal data.
That’s no small feat considering manufacturers have just started to roll out options for EVs, and most still generate long waitlists, Caldwell said.
Can’t see the chart? Click here.
Guiding customers through the transition
After attending the Detroit Auto Show, Caldwell noted accessibility will be key to adoption and that means guiding buyers through the process at the dealership.
“If someone’s willing to walk me through the entire process, then I think that’s a value add that really can’t be underestimated,” she said. “Time and brainpower seem to be a very precious commodity these days.”
This month, General Motors launched a buyout plan for Buick dealers that don’t want to invest in transitioning exclusively to an all-electric lineup by 2030.
The company offered similar buyouts to Cadillac dealers in 2020, according to CNBC reporting.
About 320 of those 880 retailers accepted the offer rather than spend at least $200,000 upgrading dealerships for electric vehicles.
Related: Driving is expensive in 2022. Is gas or electric more affordable?
Dealers will also have to explain tax credits, which Anderson said are too confusing for the average American right now.
The Inflation Reduction Act’s electric vehicle tax credits will negatively impact the sales of EVs for the first two years, according to The Anderson Economic Group’s assessment.
The act, signed this year, includes tax language most Americans would never use in their annual filings and therefore will require expert advice to decipher, according to the assessment.
“When you have to tell someone to go talk to their lawyer to see whether they can get a tax credit to buy a car, they’re going to correctly presume there’s a high chance they don’t get one,” Anderson said.
The Inflation Reduction Act tightly regulates production from overseas to support American manufacturing. In counterbalance, at least three-quarters of recent electric vehicle purchases in the U.S. would not qualify for purchase tax credits, according to Anderson Economic Group.
The international restrictions will be difficult to meet as most batteries are produced in China and most materials are mined in Asian or Eastern European countries like Ukraine and Russia.
Electric vehicles are still at a luxury price point
Raw materials needed for batteries more than doubled in price during the pandemic and those costs have resulted in price markups at General Motors, Ford and Tesla.
The electric market is still considered luxury given the lowest starting price point is $60,000.
In the second quarter of 2022, 78% of electric sales were luxury cars and SUVs compared to the 22% of midsize cars and SUVs, according to the Anderson Economic Group.
Related: ‘Take that Elon Musk.’ Ford’s EV presence increases but so do the prices
Chevy, touting its $30,000 starting point, announced the Equinox EV will be available in fall 2023.
This is a step in the right direction as the financial hurdle continues to be the toughest to clear, Krebs said.
“We have to see more affordable ones, or we won’t have widespread EV adoption,” she said.
The caveat, Krebs points out, is that new technology is always expensive when it first comes out and battery-powered vehicles are evolving.
“This is the most transformational moment in automotive history since Henry Ford and the moving assembly line,” she said. “Everybody’s trying to reinvent themselves.”
More on MLive:
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For a full list of stories from the Detroit Auto Show, click here.
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