While EVs have been in the news a lot lately, consumer concerns about the cost of an initial purchase are a real thing.
Those worries came to light as part of a survey by OC&C Strategy Consultants, Reuters reported. Consumers around the world are much more interested in purchasing EVs than ever before, the study showed, but remain wary about the price of battery-powered cars, which are generally more expensive than their internal combustion engine counterparts.
The report shows that more than half of potential new-car buyers in Italy and France are interested in purchasing an EV. Numbers in the U.K. and the U.S. are even higher — 81% and 61%, respectively.
This problem is nothing new. U.S. News & World Report reported last year EVs are frequently more expensive up front than comparable gas-powered vehicles. “Sticker shock” can turn shoppers away from EVs, especially since initial prices are more widely considered than the overall cost to own.
But concerns about initial cost remain a barrier.
Of the consumers likely to buy an EV, 69% said they would not pay more than a $500 premium compared to a gasoline-powered car — an unlikely scenario without government subsidies.
Countries with purchase incentives have seen a faster uptick in EV sales and European countries have introduced several generous incentives.
Help might be on the way in the U.S.
President Joe Biden recently unveiled a $2.3 trillion infrastructure plan for the country. Included is a proposed $174 billion to promote U.S. EV manufacturing, sales and the development of infrastructure.
Part of the sales promotion part is to give EV buyers “point of sale” rebates and tax incentives to buy American-made EVs. This reflects the reality that consumers are still worrying about purchase costs.
And OEMs are also aware of the cost problem. One solution is to reduce the cost of EVs, and some are moving in that direction. GM spokesman Phil Lienert said that GM sees a lot of promising technological improvements that will really help reduce EV costs to the consumer.
“Our third-generation EVs will use the Ultium platform,” Lienert said. “This is about 40% less expensive than the Bolt EV platform. We are working to get that number closer to 60% less expensive.”
And as production of EVs ramp up, economies of scale kick in, further reducing EV prices. But despite the dropping costs of batteries and EVs, it is believed that consumers still need incentives to buy more expensive electric cars.
To help with that, Biden plans to extend the current $7,500 federal tax credit, an amount that diminishes for vehicles built by automakers including Tesla and General Motors that already have sold more than 200,000 electric vehicles. Biden could eliminate that 200,000 ceiling as well as enhance incentives for EV buyers in disadvantaged communities.
“EV buyers love their cars, even there are challenges along the way,” said Joel Levin, executive director of Plug In America, an EV owners advocacy group in February.
The phase out of federal tax credits, said Levin. Both Tesla and General Motors no longer can offer the $7,500 incentives after hitting a Congressionally mandated sales threshold. Nissan and Ford are approaching the phase-out point, as well.
“It certainly hurts the market, especially for those who want to buy American,” said Levin.
While the upfront cost of purchasing an EV might be higher than an ICE car, there are other cost factors to consider.
Throughout a vehicle’s lifetime, the cost maintaining the typical vehicle powered by an internal combustion engine will add up to around 6.1 cents per mile, according to research by Consumer Reports. By comparison, BEV owners can expect to spend about 3.1 cents per mile. Surprisingly, the study found that maintaining a plug-in hybrid, such as the Toyota Prius Prime, can be even slightly less expensive, at 3 cents per mile.
“Electric vehicle owners don’t need a coupon to get half-off typical maintenance and repair costs from their dealer, it comes standard,” said Senior Transportation Policy Analyst Chris Harto, author of the study which is based on real-world data from Consumer Reports. “These savings are going a long way to offset the upfront costs for consumers.”
Sell the concept, not individual concerns
GM spokesman Stuart Fowle said the company’s goal is to reach beyond early adaptors and tech nerds. To do that GM plans to launch 30 new EV models by 2025.
“I have two children,” Fowle said. “I need a car bigger than a Bolt but I don’t need one as big as a Hummer. Once you get a line-up that matches consumer needs, you can sell EVs.”
But selling EVs is not about going line by line and saying they are cheaper in the long run or easier to maintain or improving range, Fowle said. It’s about getting the public comfortable with the tech.
As more consumers see friends and neighbors drive EVs, a tipping point will be reached where people will feel left out if they don’t buy an EV.
“That day is coming sooner than many people think,” Fowle said.