Not long ago, electric vehicles seemed poised to take their place in the U.S. mainstream. Just as the Ford Model T slowly pushed aside the horse and buggy, EVs were expected to shove internal combustion engine cars to the road shoulders on the journey to a greener planet.
The tax incentives are there, as is data showing how EVs help lower greenhouse gases, are cheaper to own in the long term than gas cars and are more efficient.
Bad News with Mixed Signals
But in the past year, sentiment has shifted, particularly in the U.S., and some EV automakers are struggling. EV startup Fisker declared bankruptcy in June, and Tesla has cut back on production of its electric pickup truck and has excess inventory.
Used EVs are piling up on lots, fewer people are leasing EVs and General Motors is even considering shifting its focus from EVs to plug-in hybrids.
In June, McKinsey & Company’s 2024 Mobility Consumer Global Survey indicated that almost half of EV drivers want to switch back to gas cars. Even more unsettling for EV advocates is that 63% of respondents in AAA’s annual EV consumer survey said they were “unlikely or very unlikely” to select an EV for their next car purchase.
At the same time, consumers are flashing mixed signals. U.S. sales of EVs grew by 11.3% from the second quarter last year, according to Cox Automotive. Increased availability, significant discounts and preference for leasing were cited among the reasons. EV sales are up, just not as up as EV advocates had hoped.
And interest in hybrid electric vehicles (HEVs) and plug-in hybrid electric vehicles (PHEVs) is on the rise, according to the AAA survey. More consumers indicated they would consider purchasing a hybrid vehicle, with 1 in 3 U.S. adults (31%) saying they would be “very likely” or “likely” to buy a hybrid.
Hybrid vehicles allow people to enjoy the benefits of electrification, such as decreased gasoline costs, without anxiety about disrupting their lifestyles or travel plans, because they can drive longer distances and are not as dependent on charging stations. Both HEVs and PHEVs have gas engines, electric motors and lithium batteries, but HEVs do not require an external charging source.
Thinking of buying an EV or hybrid? Get to know our EV resources.
So, what all this means is that the EV market may not be crashing; it’s stalling. Consumers are putting on the brakes before driving down the EV highway or looking to slowly merge in with hybrids rather than EVs.
And the Environmental Protection Agency may postpone requirements for automakers to sell more EVs and possibly rethink its timeline for the country to abandon gas-powered vehicles.
Don't Push the Panic Button
The corporate woes are not unusual; companies often struggle when industries are just starting up, said John Paul, AAA’s Car Doctor and senior manager for traffic safety at AAA Northeast.
“If you look back at the early days of the automobile, most companies failed,” said Paul. “Today, with tech companies entering the market, they don’t know their customers as well as traditional car companies.”
The survey results were not surprising, according to Alec Slatky, managing director for public and government affairs at AAA Northeast. “A lot of the enthusiasts and early adopters already have EVs,” he said. “Getting a big chunk of the mass market interested was always going to be a challenge.”
After the first wave of EV buyers, came the middle-of-the-road and middle-class buyers, added Paul, and costs and economic uncertainty may be holding back more of them now.
“Electric cars are expensive, and the technology is changing rapidly, which could scare off some buyers,” Paul said. “Leasing is a better option for an EV as of now, since you don’t know where the future is and what the new models will be like and how your EV may depreciate.”
Collaboration and Infrastructure Could Increase Interest
What has dimmed the spark? Nothing new, observers are saying. The same major concerns that have been around since the early EV days remain: Cost, fires, range anxiety and the lack of available charging stations. A few high-profile mishaps did not help.
“There have been a lot of stories in the news over the past year about issues with charging stations,” said Slatky. “When the Ford CEO and the Energy Secretary can’t find convenient charging options, it makes consumers think they won’t be able to either. A winter freeze in Chicago resulted in high-profile issues with charging stations as well.”
A united front is what the industry needs, as in public-private collaborations to grow EV inventory, and, more importantly, the national infrastructure to support them. A prototype electrified road in Detroit, which charges EVs as people drive, is one significant innovation. A permanent electrified road is under construction in Sweden, so it can be done. EV owners continue to worry about finding places to charge their car during long trips and those who live in apartments and condos often lack options for charging an EV at home, and those who can cite the high electricity costs.
The federal government recently took a huge step in support of the EV industry, when the U.S. Department of Energy committed $1.7 billion to support the conversion of 11 closed or failing auto manufacturing and assembly factories into facilities to build EVs and supporting products.
“The bottom line is that all levels of government, auto manufacturers and the EV charging industry will all have to step up their efforts to make sure that not only are chargers available throughout the country, but that they’re operational, convenient to use and not often blocked by others waiting in line,” Slatky said.
Even before that, the country needs to ensure the electrical grid can support the additional load, according to Paul. “Right now, when you see brown outs and states asking people to limit air conditioning use and EV charging, that indicates a problem,” he said. “This is especially true since the climate seems to be getting warmer. Add to this some reluctance to embrace solar, wind and hydroelectric power, and you can see how there is a problem.”
The increased consumer interest in hybrids, Slatky added, shows people are open to alternatives to traditional combustion engines – as long as they’re affordable and convenient for their lifestyles. “Some consumers specifically want a ‘green’ car, and others specifically don’t want one, but most consumers want the same thing in any car, whether gas, electric, or hybrid: reliability, safety, comfort, performance and affordability.”
AAA’s Recommendation: Whether you own an electric vehicle or a gas-powered car is up to you – and you should consider lots of factors in making that choice. No matter what type of vehicle you’re choosing, we recommend visiting a dealership, test driving one, and asking as many questions as possible to make an informed decision.
