Recently, Detroit-based auto giant General Motors had to revisit its plans for electric vehicle production as consumer adoption of battery-powered electric vehicles has been lower than expected. GM originally targeted to produce approximately 400,000 electric cars by mid-2024, however, the company has expressed concerns about the state of this new market.
“As we get further into the transformation to EV, it’s a bit bumpy, which is not unexpected,” GM Chief Executive Mary Barra told analysts during GM’s earnings call. “What we’re moving to is something that we can react in a much more agile way to make sure that we have the right vehicles.”
The move comes as a surprise to many as the automotive industry seems to be moving rapidly, in lockstep, toward mass EV production and the eventual phasing out of gas-powered vehicles. Many prominent auto manufacturers are attempting to seize a first-mover advantage by getting ahead of the curve with EV rollout.
The pace of EV purchases has slowed and prospective buyers are shying away from EVs, presumably because of several critical factors with the new, battery-powered vehicles. Firstly, EVs are considerably more expensive than their gas-powered alternatives. As inflation has run rampant in asset prices and consumers are strapped for cash, demand for EVs could certainly be dampened.
“Most EVs still have higher-than-average starting prices, discouraging plenty of cost-conscious buyers,” automotive expert Lauren Fix said. “There are some lower-cost EVs like the Nissan Leaf, KIA Soul, Hyundai Kona and Chevy Bolt EV. But keep in mind that the average EV is much more expensive. The average price for a brand-new EV is about [$61,488]. That’s considerably higher than the average four-door sedan, which runs about [$48,681], according to Kelley Blue Book. Tax credits and gas savings can save you money. However, it’s going to take a few years to make up a potential $20,000 difference.”
Secondly, the infrastructure surrounding EVs is currently unreliable and insufficient at best despite many initiatives to improve it. A quick Google search will display countless experiences of drivers adding hours to a road trip because of long charging times and taking indirect routes to find charging stations. Depending on the driving needs of the individual consumer, switching to an EV could mean making significant lifestyle changes to accommodate its many inconveniences.
Fix noted that auto companies are investing significant amounts of capital into their EV offerings, where they have a vested interest in consumers switching from traditional cars. “There is a push for every driver to switch to electric, while almost every automaker has invested billions of dollars into expanding their electric vehicle lineups with hopes that you will make the switch,” she said.
However, not every auto manufacturer is completely sold on the EV industry. For example, Toyota has displayed some hesitancy toward fully committing to the EV agenda. “For as much as people want to talk about EVs, the marketplace isn’t mature enough and ready enough … at the level we would need to have mass movement,” said Jack Hollis, executive vice president of sales at Toyota Motor North America, automotive-related press event. Instead, Toyota is opting to focus more on “battery-powered” hybrid vehicles for the time being.
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