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Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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Is The EV Revolution Still Happening?

  • Executives from the auto industry probably surprised many by announcing revisions to their EV plans.
  • BloombergNEF: global EV sales are this year set to hit a record high, topping 14 million.
  • MarketWatch: the U.S. has a broken EV charger problem.
EV truck

During the latest profit season, executives from the auto industry probably surprised many by announcing revisions to their EV plans.

GM gave up its production targets. Tesla's Elon Musk warned about waning EV demand. Honda and GM canceled their joint venture that would have developed more affordable EVs. 

Cars are piling up in dealers' lots. Thousands of chargers are not working, and there are not enough technicians to fix them. The EV dream might be over before it really began.

"As we get further into the transformation to EV, it's a bit bumpy," GM's chief executive, Mary Barra, said at the presentation of the auto major's third-quarter results.

Mercedes-Benz CFO Harald Wilhelm was blunter: "This is a pretty brutal space," he said on the Q3 earnings call. "I can hardly imagine the current status quo is fully sustainable for everybody."

The status quo Wilhelm referenced features rising EV sales, which might make some wonder why the executive is unhappy about it. BloomergNEF recently reported, for instance, that global EV sales are this year set to hit a record high, topping 14 million. China will account for most of these, but Europe, where Mercedes-Benz is based, has been steadily boosting its EV fleet, too, with sales this year set to log a 25% increase, per BloombergNEF. Related: OPEC Is Upbeat On Oil Demand Ahead Of Key Policy Meeting

Sales are on the rise in the United States, too, with new EV ownerships having already passed the 1-million mark for the first time in 2023 and are on track, per BloombergNEF, to book a 40% increase from 2022.

This all sounds like good news, but even BloombergNEF admits there are some issues. Other outlets are even more vocal about these issues.

MarketWatch reported in late October that the U.S. has a broken EV charger problem, for instance. Citing data from Automotive News, which the publication took from the DoE, MarketWatch reported that 4,000 charging stations with thousands of chargers were down in early October.

Not only were thousands of chargers unavailable to drivers, but there weren't enough technicians qualified to fix them, the report noted. This is happening as the Biden administration drafts plans to install another half a million chargers across the country by 2030. That, per Automotive News, would require the training of at least 142,000 certified electricians by that year.

In Europe, meanwhile, EV subsidies are being reduced in the biggest market for the vehicles: Germany. From January next year, prospective EV buyers will receive 1,500 euro less in state support for cars that cost up to 40,000 euro. That's equal to about $1,600. Per BloombergNEF, this might affect sales negatively. Per common sense, the reduction will undoubtedly affect EV sales negatively.

There is also the issue of insurance for EVs. In the U.S., as a total, EV insurance rates are modestly higher than insurance rates for ICE cars, but it varies considerably from state to state. In the UK, EV insurance premiums have soared by two-thirds over the past year, and some insurers are refusing to provide cover for electric cars altogether.

The problem is potentially serious and might have an even greater effect on EV purchases than charger problems do. The reason insurers are not fans of EVs is the higher costs they have to incur on EV claims compared with ICE car-related claims.

First, there is the battery, which might get damaged seriously in even a minor collision. Because there is no way to check whether the battery has been damaged, insurers have had to write off EVs after minor collisions. Electronics in EVs are also much more expensive to fix than electronics in ICE cars. In short, EV coverage has become too expensive for some insurers.

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With demand for EVs slower than expected by forecasters, a thin silver lining has appeared: raw material costs for some of the materials that go into an EV have declined. Unfortunately, the rest of the problems that the industry faces still need a solution.

By Irina Slav for Oilprice.com

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