Volkswagen is spending $2 billion in America to correct its “Dieselgate” cheating scandal — and to move beyond the typical upscale electric car shopper that tends to be much more interested in driving a Tesla Model S or Model X.
Electrify America, Volkswagen’s subsidiary carrying out the Dieselgate settlement by supporting electric vehicle purchases and charging infrastructure, has been making deals to bring fast chargers to shopping malls. After making an agreement this month to bring 100 charging locations in 34 states to Walmart, more retail outlets were just added. That includes Target, Sheetz, Casey’s General Stores, and Alltown convenience stores.
Walmart and Target shoppers tend to be quite different than Tesla owners, and those driving other electric vehicles from BMW, Chevrolet, Nissan, and other makers. Driving around upscale neighborhoods is usually the best place to find a Model S or Model X parked in the driveway of a high market-value home.
The average consumer car shopper — along with fleet managers overseeing acquisitions of a large part of new vehicles sales — have been tough to reach. Buying and driving their first EVs can raise concerns over driving range, safety, and how reliable the new technology will be over their typical lifecycle ownership.
Building a charging infrastructure under Electrify America, Tesla Superchargers, and other charging networks, is considered critical for reaching mass adoption of EVs. Bringing down the purchase price is another wall to climb — as demonstrated by Tesla investing heavily in its Model 3 with a $35,000 starting price, and General Motors focusing on the Chevrolet Bolt that starts at $37,500. Federal and state incentives bring those costs down even more.
The average pre-incentive price of 10 electric cars with the longest per-charge driving ranges was nearly $42,000 last year. That compares with about $34,000 for an average new car and $20,000 for an average new compact car.
Purchase incentives such as rebates and tax credits have been critical for electric vehicle sales to increase in the U.S., China, and Europe. But who’s tapping into these incentives?
A new study by Pacific Research Institute analyzed where tax credits in the U.S. have gone to. Reviewing the latest figures on tax credits for EV purchases, 79 percent were taken by consumers with annual household incomes greater than $100,000 per year. Extending that out a bit showed that households with $50,000 per year or more made up 99 percent of EV tax credits.
California has taken the lead in EV incentives, and has accounted for about half the electric car sales in the U.S. Another $140 million was set aside for electric car subsidies in the 2017-2018 state budget. Much of the rationale behind EV incentives in the state has been to clean up air quality in low-income communities living near traffic-congested freeways and heavy-truck intensive harbors.
The state’s generous incentives are being used by wealthier residents, which the state has taken criticism over in recent years.
Tesla faces a similar challenge selling its vehicles in the U.S., Europe, and China. The Model 3 is seeing strong sales, but the company is struggling to bring in the needed capital to ramp up production and meet promises made last year by CEO Elon Musk. The automaker is working with Chinese government officials to set up a free trade zone, where Tesla can avoid the hefty tariffs it pays to bring its electric cars to its showrooms in China. So far, Tesla’s customers in China have been wealthy consumers willing to pay more for the Model S and Model X.
German automakers have worked hard at becoming more Tesla-competitive and to meet stringent anti-diesel rules coming from the European Union. VW, BMW, and Daimler have made serious commitments to electrifying their vehicle offerings through 2025. Like Tesla, that so far has been seeing most of its gains coming from luxury and performance EV sales.
BMW shows a clear example of it with its pricier i-Series models and offering several of its luxury sedans with plug-in hybrid variations.
Some analysts have praised increases in global EV sales as a sign that EV adoption is increasing significantly. Last year, with 1,223,600 EVs sold globally, a 58 percent sales increase was reached over 2016. China led the way for battery electric and plug-in hybrid vehicle sales with a 73 percent growth surge last year.
However, that still only represented 1.3 percent of total global new passenger vehicle sales last year. The total has been estimated at 93.5 million light-duty vehicles sold in 2017.
Automakers, government officials, and technology suppliers will have to invest heavily in affordable EVs of all types, fast charging, and a much larger charging infrastructure. For now, gasoline stations and affordable, fuel-efficient passenger vehicles are beating EVs by a wide margin.
By Jon LeSage for Oilprice.com
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