By Jenny Cooke, MBA ’20
This article was written in response to a presentation given by Hannah Polikov, Director, Public Utility Commission Program, Advanced Energy Economy in an EDGE Seminar on Nov. 4, 2018 at Duke University’s Fuqua School of Business. This article voices one student’s perspective and does not necessarily represent the views of either Duke University or the seminar speaker.
As American’s concern for the environment grows, so does excitement about Electric Vehicles (EVs). Electric vehicles have a lower carbon footprint than traditional gas engines and are viewed as the way of the future. Our news is often filled with mentions of Tesla and other car manufacturers furiously advertising their own EV efforts.
Yet despite all the excitement, EVs still made up less than 1 percent of passenger vehicle sales in the U.S. in 2017, according to the EIA. In a recent EDGE Seminar presentation, Hannah Polikov, Senior Director of Regulatory Transformation at Advanced Energy Economy (AEE), pointed to consumer’s “range anxiety” as one of the primary reasons for lagging EV adoption. Range anxiety is a driver’s fear that they may run out of charge in an EV and be stranded without an available charging station. Polikov pointed out that while driver’s rarely go beyond the standard charge range, range anxiety can often deter customers from buying EVs. She supported charging networks and utility-sponsored charging stations as a critical step to overcoming consumer fears on this front.
While range anxiety does contribute to consumers’ lack of EV adoption, I believe there are other significant factors to consider. Chiefly, the car dealers, cost, and charging times of EVs may contribute to consumers’ preference for traditional gas cars.
Reason #1: Car dealers don’t push EVs
The first thing that may discourage even the most eco-conscious customers from buying electric vehicles are the dealerships. A recent study done in the environmentally-conscious Nordic region (Denmark, Finland, Iceland, Norway, and Sweden) sent undercover shoppers to visit 82 car dealerships. Researchers quantified 126 car-shopping encounters between sellers and buyers and found that in 77% of interactions, car dealership personnel omitted EV options from sales conversations entirely. When EV options were brought up, sales personnel were often dismissive and tended to systematically misinform shoppers about EV specifications. The dealerships’ aversion to EVs could be from a lack of knowledge or because EVs typically take longer to sell. Regardless of the reason, car dealerships and sales personnel serve as a major obstacle to the uptake of passenger EVs.
Reason #2: EVs are expensive
The cost of EVs may be second factor that dissuades customers from buying them. Carlos Ghosn, the CEO of the world’s largest car company, Renault-Nissan-Mitsubishi Alliance, asserted that cost is a bigger barrier than range anxiety with electric cars. The Nissan Leaf, which retails at almost $30,000, is the best-selling electric car in the world. Tesla’s Model 3 has a starting price of $35,000 is about half of the starting price of its previous two luxury models—however, with upgrades the sticker price can easily be over $50,000. EV advocates point out that, on average, running a vehicle on electricity is over 50% more cost-effective than running a car on gas. However, the initial costs required to purchase an EV are typically higher than what is needed to purchase a comparable gas-powered car with a cross-over point only coming at around 50,000 miles. Federal and local tax credits could potentially help offset the sticker shock, but as of now the upfront costs may be daunting to budget-conscious consumers. Additionally, gas prices in the US have remained low in the past few years and the potential replacement cost of batteries in aging EVs is unknown.
Reason #3: EV charging can be daunting
Finally, another major obstacle to customers purchasing EVs is “charging time trauma.” Filling up a traditional gas vehicle at the pump takes less than five minutes. Modern EVs often need an entire night to charge at home or an hour or so at a commercial fast charging station. Few drivers want to stop and wait for an hour in the middle of a road trip to allow their vehicle to fully charge. EV companies are heavily investing in charging R&D which will enable faster and more efficient charge times. Experts claim that in a few years charging times will shrink to ten minutes. Unfortunately, that is not the case right now. Further, not all chargers are compatible. A Tesla charger cannot be used on a Chevrolet, Nissan, or Volkswagen car. Even if EV charging stations multiply, consumers may still opt to drive gas guzzlers because of the convenience of quick fueling.
EVs must overcome more than range anxiety to make it to mainstream
EV manufacturers are furiously working to combat consumer’s range anxiety. Mitsubishi is currently developing generators which can charge EV batteries while they are being driven. Governments are investing in charging station networks. However, range anxiety may not be the only reason why consumers are hesitant to make the switch from traditional gas guzzlers to EVs. Dealership pressure, high costs and long charging times are all factors that may tip customers towards traditional car purchases. Electric vehicles may be good for the environment but to make them good for consumers, manufacturers will need to do more than just building more charging stations.
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