The journey toward electric vehicles has hit a rough patch. Sales are cooling off
LEILA FADEL, HOST:
The journey toward electric vehicles has hit a rough patch. Buyers are still interested in EVs. Companies are bringing dozens of new models to market. But sales in the U.S. have stopped growing. NPR's Camila Domonoske takes a look.
CAMILA DOMONOSKE, BYLINE: For electric vehicles, it's a real good-news, bad-news scenario. The good news - last year was a record year - 1.2 million sold in the U.S. The bad news - toward the end of the year, EV sales leveled off.
STEPHANIE VALDEZ STREATY: I think we're just going from, we like to say, rosy to reality. We're really starting to see the reality of it, right?
DOMONOSKE: Stephanie Valdez Streaty is with Cox Automotive. She says the reality is that EV sales will rise again.
VALDEZ STREATY: But we did start to see a slowdown. And I think that's just part of the story, right? It's - with any new technology, there's the adoption curve.
DOMONOSKE: The adoption curve - any new tech catches on first with tech geeks, with early adopters. Then it has to win over the mainstream. And making that jump is hard. How hard? Well, consider how strange it might seem for EV growth to slow down now. There are more EV options than ever. They're not as expensive as they used to be. There are big tax credits, more chargers, and according to J.D. Power, more Americans than ever are considering EVs. But considering is not the same as buying. Last fall, just as EV sales were leveling off, I talked to car shopper Sameer Joshi at the Detroit Auto Show.
SAMEER JOSHI: EVs right now - I mean, I look at them, but I'm not going to buy them.
DOMONOSKE: Why not?
JOSHI: Just because of the hassles with charging. And the second thing is cost. You know, they're too expensive. When I get something around 25,000, yeah, I will consider buying them.
DOMONOSKE: And that's the mainstream shopper in a nutshell. Early adopters will pay a little extra. They'll put up with charging hassles. Mainstream buyers want things to be cheaper and easier. Cheaper - that means they want prices to come down. Easier - that means they're waiting for more chargers to be built, maybe better technology. Pat Ryan runs the car shopping app CoPilot.
PAT RYAN: It's - I don't want to call it a niche market for EVs because it's over a million, but you're still in the early adopter, early mainstream.
DOMONOSKE: I asked Ryan how long he thinks before EVs really conquer the mass market.
RYAN: I think it's three to five years. I mean, I think they're going to get to mainstream if they subsidize it - right? - if they're willing to lose money. It depends how much money you're willing to lose (laughter).
DOMONOSKE: And that is another big wrinkle to this story - the tension between prices and profits. Remember Joshi, who's looking at EVs but waiting until they're cheaper to buy one? Cutting prices would speed up this journey up the adoption curve. Elon Musk talks about this a lot. Here he is on a call with investors last week.
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ELON MUSK: It's not that people don't want - we have lots of people that want to buy our car but simply cannot afford it.
DOMONOSKE: But Tesla has already cut prices so much that it's hurting its own profits and putting lots of pressure on rivals. This is something Volkswagen is grappling with. They are one of the world's biggest automakers, but not a best-seller in the U.S. EVs are at the heart of their plan to conquer the American market.
ARNO ANTLITZ: This is a unique chance for us because everybody starts from scratch.
DOMONOSKE: That's Volkswagen's chief financial officer, Arno Antlitz. He explains that Volkswagen, like most companies, makes more money selling gas-powered cars than EVs - for now. In two years, he thinks they'll be even. But that means the next couple years are tricky. The more EVs Volkswagen sells, the lower its profit margins are.
ANTLITZ: Don't get us wrong - we are absolutely committed to ramp up electrification. That's clear. But it might be not as fast as everybody expected.
DOMONOSKE: Ford and GM have recently slowed down their plans to make EVs. They, too, are adamant that the long-term destination is unchanged because they know they need to build them. The clock is ticking. California and other states have set 2035 as the year by which all new cars have to be zero emission. The urgency is because cleaning up cars is a key part of the plan to fight climate change, which means the question of how fast exactly electric vehicles take off - there's a lot at stake for more than just automakers.
Camila Domonoske, NPR News. Transcript provided by NPR, Copyright NPR.
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