Electric Cars and Plug-in Hybrids (PHEVs) Enter the Market in Low Numbers

Automotive manufacturers in the U.S. and around the world are investing very heavily in research, design and factory capacity for new electric vehicles (EVs) of all types. This includes fully electric cars and trucks as well as hybrids. Plug-in hybrids (PHEVs) are similar to standard hybrids (in that they can run on their gasoline-powered engines or battery power), but they enable the owner the option of plugging-in at home overnight to recharge the battery. This will eliminate the need to run the car’s gasoline engine, using only battery power as long as the relatively short range isn’t exceeded. (Standard hybrids recharge only by running the gasoline-powered side of the car, and by drawing on the drag produced by using the brakes.)

In the U.S., the Schumer-Manchin tax bill includes EV subsidies in which certain purchasers qualify for a $7,500 tax credit. The bill eases a previously established cap of 200,000 total all-time EVs sold per manufacturer that could qualify for credits and establishes an income limit of $150,000 per year for an individual, $225,000 for a head of household, or $300,000 for married couples who purchase the cars and want the tax credit. It also sets qualifying price limits of $80,000 for pickups, SUVs and vans and $55,000 for sedans. In addition, credits are being adjusted so that EV batteries must be made of materials mined or processed in the U.S. or in countries with which the U.S. has free trade agreements.

Competition is driving price drops to some extent, as Tesla now has lots of competitors in EVSs, ranging from well established companies like Ford and Volvo to startups like Rivian. Also, new, cheaper battery technology is being developed to make this possible.

Challenges For EV Makers’ Lofty Production Goals

The EV market is facing very significant challenges. EV sales represent a modest market share in most nations. Charging station networks are not well developed, and many potential buyers are concerned they will not be able to recharge when needed, particularly on long trips. Batteries remain costly. EV sales are so small compared to the expenses involved in manufacturing EVs that some manufacturers, including Ford and Rivian, are estimated to have been losing tens of thousands of dollars on each EV sold as of 2024. Tesla is faring better, with its substantial sales base, but its ability to earn a profit has largely hinged on the fees it earns by selling by selling “carbon offset credits” (nearly $2 billion in some years) to other car companies that do not meet emissions standards set by the State of California. Meanwhile, the world’s reliance on much of the EV supply chain coming from China, as well as controversy over the environmental challenges in mining and utilizing cobalt, nickel, manganese and other metals in batteries, pose other challenges to this sector. The bottom line is that it remains to be seen whether or not either governments’ goals or car manufacturers’ goals for EV production and market share can be met over the mid-term.

Hybrids continue to attract some consumers who are reluctant to buy pure EVs. Many buyers are choosing hybrids over EVs due to their fuel efficiency without the recharging concerns relating to fully electric vehicles.

SPOTLIGHT: EVs Could Transform Detroit

The shift away from internal combustion engines (ICEs) is changing the face of automotive manufacturing in America and elsewhere. Vehicles that run on batteries require fewer parts than ICEs, making them less labor intensive to produce (needing about 30% fewer manufacturing workhours from start to finish). Yet another facet to the EV industry is the relative ease of production compared to that of internal combustion engines. According to Volkswagen, EV production takes 30% less effort that internal combustion vehicles. Ford concurs, saying that the simplified production of EVs could lead to a 30% reduction in labor hours per vehicle (which is not good news for the United Autoworkers Union). On the other hand, EVs rely on electrical engineers, software developers and other technicians and researchers, which may offset at least some of the job losses.

Tesla has a massive network of Tesla-owned charging stations. Tesla’s Supercharger network (where Tesla owners can get a rapid recharge of batteries) has tens of thousands of stations worldwide. Tesla agreed to open part of its U.S. charging network to certain non-Tesla owners. Another player in this sector, Electrify America is a charging station competitor. The U.S. Government is providing massive financial incentives to qualified installations of new charging stations in America, both in homes and at commercial facilities.

SPOTLIGHT: Charging Stations

There are three levels of EV charging stations.

= Level 1 (120 volts), approximately five miles of range per hour of charging, typically at home.

= Level 2 (240 volts), approximately 25 miles of range per hour of charging, again typically at home.

= Level 3 (Fast Charging), approximately 100 to 200+ miles of range per 30 minutes of charging, typically at public charging stations.

Internet Research Tip: Electric Cars

For the latest on electric car manufacturers see:

Electric Drive Transportation Association, www.goelectricdrive.org

Global Electric Motorcars, www.gemcar.com

Tesla Motors, www.teslamotors.com

Electric Vans and Long-Range Trucks: Tesla has developed heavy-duty electric trucks capable of hauling major loads up to 500 mile. The problem with electrifying 18-wheeled trucks is the weight of including enough batteries to allow long driving range. Other truck industry firms, including Daimler, Volvo, Peterbilt and BYD are active in electric truck research or manufacture. A diesel-powered engine weighs about two tons while an electric version with its batteries would weigh between four and nine tons, depending on range. However, long-range heavy electric trucks face massive challenges, including the lack of the specialized, high-capacity charging facilities needed at truck stops. Many types of electric vans and buses are also on the market.

Improvements in EV technology are enabling the development of larger electric vehicles. Retail giant Amazon is purchasing electric delivery vehicles from Rivian Automotive. (Amazon owns a stake in the company.) Amazon hopes to have 100,000 EVs on the road by 2030.

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