In the face of energy shortages and rising fuel prices, people are still reluctant to make the shift to electric vehicles (EV). So, what needs to change for consumers to buy into the EV future?
We’ve seen the media coverage of backed-up fuelling stations and doctors unable to make it to their patients because of the scarcity of diesel and petroleum, and yet the majority of the world’s cars continue to rely on these fuel sources despite the growing accessibility to EV. Despite a 60 percent rise in searches for electric cars in the weeks following the recent U.K. fuel shortages, not all consumers are convinced that an EV is the answer.
One of the major obstacles is the lack of EV infrastructure available. Governments around the world are making big plans for the future of EV, with the rollout of charging stations in major cities already taking place. But rural areas in North America and Europe, where EV uptake is increasing, are still lagging behind urban areas in EV infrastructure.
A 2017 U.S. Department of Energy analysis determined that rural areas house around 19 percent of the U.S. population and yet there is a severe lack of EV charging infrastructure in non-urban locations. In addition, the average rural driver has to travel longer distances on a daily basis than urban drivers, meaning out-of-home charging points are vital for EV uptake.
The case is even direr in several emerging economies that want to encourage the shift to EV but simply don’t have the infrastructure to back it up. India is the prime example of a country that has rolled out an EV strategy in its “Faster Adoption and Manufacturing of Electric Vehicles Phase 2 programme” but has, to date, failed to install the 4,400 charging stations in cities and on highways it initially promised.
Another concern around EV infrastructure is whether charging points can keep up with demand. In Europe, EVs share of auto-registrations has risen to around 10 percent, a huge leap from under 2 percent in 2018. While the U.K. is leading the way with EV charging infrastructure, experts worry that if consumers shift to EV faster than anticipated, the infrastructure may not be able to keep up.
A lack of charging points and the prevalence of slow charging options have left some reluctant to make the shift. In fact, Allegra Stratton, spokesperson for the COP26 climate summit, made headlines when she stated, “I don’t fancy it just yet,” in reference to swapping her aging diesel Volkswagen Golf for an EV alternative. She justified the statement by saying that she has elderly relatives that live “200, 250 miles away”, and the need to stop and charge would take too much time, particularly when traveling with her children. If even the voice of the world’s climate change summit is unwilling to shift, this says a lot about consumer needs.
Worries over charging infrastructure also indicate the failure of EV manufacturers to have achieved a greater range for their EVs. Newmotion by Shell has highlighted “range anxiety” as a key deterrent for EV purchase. While European drivers commute just 25-50 miles a day on average, across 2.5 trips, making it the prime market for EV uptake with electric car batteries available that easily cover this range, public perception is what matters, and the public is scared of getting stuck on a journey with no charging point in sight.
Another factor is cost. EVs are still comparatively much more expensive than their petrol equivalents. Despite decreasing production and battery costs, electric cars are still much more expensive on average than traditional cars. There is a lack of low-budget EVs on the market, whereas there are both low-cost versions and second-hand options of traditional cars. Yet, analysis by BloombergNEF suggests this could all shift in the near future, with the “upfront cost parity” of EV and internal combustion vehicles in the U.S. expected to arrive in 2024.
Because of high costs, and international pressure to push green policy, governments across Europe have been offering heavy subsidies for the purchase of EVs. Germany, France, and Spain have been leaders in EV purchase incentives for consumers. But several other governments in Europe and North America have, so far, failed to incentivize the purchase of EVs, meaning the initial investment is simply too high for many consumers.
An alternative option is to lease a new car, paying monthly installments until the cost of the vehicle is paid off. Leasing often lasts two to four years, with the consumer coming out of the contract with an electric car at the end of it. But due to the higher costs of EVs, buyers are often tied to the lease for longer than when leasing traditionally-fuelled vehicles, which is something to consider. A new car is no longer a new car at the end of it, but the trade-in value could be significant.
Other companies, such as Onto and Elmo, are offering monthly rental options for consumers to test out EVs before taking the plunge, with insurance included. While this could incentivize trialing EVs ahead of making a long-term investment, this option is not cheap, at over $500 a month.
So, if severe fuel shortages, rising costs, and the intention of many governments to eventually stop the sale of gas-powered vehicles don’t encourage consumers to make the shift, what will? The ever-improving EV technology and the increased production of EVs by auto majors from around the world will inevitably lead to greater battery life, lower costs, more fuelling stations, and greater range, but it seems that until this point many consumers will remain on the fence.
By Felicity Bradstock for Oilprice.com
More Top Reads from Oilprice.com:
- High Natural Gas Prices Could Lead To 2 Million Bpd Extra Oil Demand
- Is America Doomed To Replicate Europe’s Energy Crisis?
- A Cold Winter Could Send Oil Prices Soaring Past $100