President Biden’s electric car order doesn’t make it easier to buy one. Here’s why

Source: By Gillian Brassil, Sacramento Bee • Posted: Tuesday, August 17, 2021

President Joe Biden this month signed an executive order to encourage more sales of electric cars, aiming for half of new sales to be zero-emission vehicles by 2030. Alongside him, several automakers promised to increase manufacturing of battery electric, fuel cell and plug-in hybrid vehicles.

But buying those cars might not become any easier for the average car owner for some time, some experts and senators said.

Ford, GM and Stellantis (which owns Chrysler and Fiat) pledged that they would increase production to meet Biden’s 2030 goal.

BMW, Honda, Volkswagen and Volvo had already set similar aims in 2019 when they negotiated a plan to meet California clean vehicle standards. Gov. Gavin Newsom’s aim is to have all new vehicles sold in California be zero-emission in 2035.

But those automakers, which already manufacture electric cars, cannot force consumers to buy them.

“The most direct, forward-facing change for consumers is more variety in electric cars,” Ashley Nunes, an expert in how innovation affects economic markets at R Street, a public policy research organization, said in a phone interview. “And that certainly will incentivize people who were previously slightly reticent about the technology to adopt it, in some capacity.”

Yearly sales of electric vehicles across the U.S. have skyrocketed over the past decade, according to data from the U.S. Department of Energy, which tracks alternative fuels. And California had 42% of America’s electric vehicles as of Dec. 31, 2020 — the most of any state.

Electric vehicles, which often are viewed as luxury cars, only made up about 2% of new car sales last year, according to Pew Research Center.

Electric vehicles are expensive to buy

So far, electric cars cost more upfront than gas-powered vehicles.

In 2019, the Tesla Model 3 accounted for 50% of electric vehicle sales, according to the U.S. Department of Energy. The starting price for that car, Tesla’s cheapest, is more than $39,000, according to Kelley Blue Book, which tracks car value. That is almost twice as much as the average small car in 2021.

The cheapest electric vehicle on the market is the 2021 Mini Cooper SE at just under $31,000, according to Edmunds, which tracks car prices.

That’s about $10,000 more expensive than other small cars that rely on gasoline.

Counting new and used cars, 44% of electric vehicle purchases in California were by households earning less than $100,000 a year between 2011 and 2015, according to a 2019 UC Davis study.

There are federal tax credits up to $7,500, depending on the brand and type of vehicle, that buyers get for buying electric cars. California offers rebates of up to $4,500 per vehicle for purchasing an electric vehicle, depending on the type, too.

Some of those incentives could end for high-income households. The Senate passed a non-binding amendment as part of the $3.5 trillion budget proposal early Wednesday morning to cut tax credits for families with incomes over $100,000 a year, and for cars that cost more than $40,000.

“I don’t think we ought to be subsidizing rich people,” Sen. Rick Scott, R-Fla., told McClatchy. “That’s what we’re doing. Half of the people who buy electric vehicles make over $70,000 a year and we give them a tax break.”

If a car buyer buys electric, however, there are savings in addition to the government’s subsidies. According to a 2020 Consumer Reports study, battery-powered car owners could save up to $10,000 over the lifetime of owning their vehicle compared to similar gas-powered cars.

The high prices come from batteries, which U.S. automakers have slowly reduced the cost of making over the past decade. Biden wants American automakers to continue that trend. He told McClatchy after signing the executive order on Thursday that the U.S. focused on gas-powered vehicles and fell behind in producing batteries.

“China now owns the market,” Biden said. “So we’ve just got to get back in the game.”

Electric vehicle infrastructure is not ready

The $1.2 trillion bipartisan infrastructure bill, which passed the Senate on Tuesday and heads to the House for consideration, allocates $7.5 billion for building electric vehicle charging stations along highway corridors — with a particular focus on “rural, disadvantaged and hard-to-reach communities,” according to the White House.

There were more than 42,000 publicly accessible charging stations in the U.S. as of May 25, 2021, according to Pew Research Center. Almost one-third of them are in California.

The infrastructure bill could provide more than $384 million over the next five years to support an electric vehicle charging network in California, according to Brian Deese, the White House Director of the National Economic Council.

That would aid people living in apartments, condos or affordable housing units, as well as people who otherwise would not be able to afford installing a charging station in their home.

Still, Sen. Ed Markey, D-Mass. — who is the chairman of the Subcommittee on Clean Air, Climate and Nuclear Safety on the Senate Committee on Environment and Public Works — told McClatchy that he was concerned the infrastructure bill would not go far enough and pledged to work in other areas for “a more robust electric vehicle infrastructure.”

Are car dealers ready to sell more ZEVs?

Hang Ren, a professor of consumer behavior and sustainability at George Mason University’s School of Business, told The Bee that working with dealers, who are the “middlemen” between automakers and customers, on how to sell electric vehicles might be one of the most important obstacles to overcome.

“For many dealers, they don’t really have all the knowledge, they don’t really have the infrastructure to sell EVs,” Ren said in a phone interview. “For them, they have to do a calculation to see if it’s worth it in their dealership.”

The National Automobile Dealership Association came out against Newsom’s 2035 goal, announcing that there were too many obstacles for getting people to buy zero-emission cars in the way of going all-electric than can be met with an “arbitrary deadline.”

David Lightman and Francesca Chambers of McClatchy’s DC Bureau contributed to this story.