The recent announcement by Ford Motor Co. that it was abandoning plans to roll out a large electric SUV seems like another warning flag that the early electric vehicle craze has hit a roadblock.
There have been other signs. Last year, Tesla, the EV trendsetter, was forced to offer deep discounts, as vehicles sat unsold. General Motors announced it was delaying its plans for an EV pickup, and Hertz began offloading electric vehicles. Carmakers are losing millions as customer demand appears to have flatlined after an initial burst of interest.
There was never going to be a straight-line highway from all-gas vehicles to all-electric, and some of the early EV promise suffered from hype — including among some state and federal policymakers who envisioned a massive, rapid shift. But while Detroit’s automakers are making plans to scale back their EV offerings, they are also not going back to entirely internal-combustion vehicles. Most are opting for electric and fuel hybrids, which is a sensible response to market demand. Plug-in hybrids, which operate as electric vehicles within a limited range, provide most of the environmental benefits of all-electric cars, even as they assuage “range anxiety” by switching to gas once the battery runs down.
Those state and federal policymakers writing auto industry mandates should leave room for plug-in hybrid sales in the medium term. Meanwhile, before the eventual all-EV transition, they should avoid making mistakes that could make the EV shift harder than it already is.
The industry is now in the phase that researchers call the “technology-adoption life cycle” or cross-industry adjustment. When a new technology enters the market, there is a chasm between the enthusiastic early adopters who embrace it right away and the critical mass of consumers who need longer to be convinced. In that chasm, traditional industries often struggle to adjust, while newcomers without legacy baggage claim a toehold.
Most of the early EV adopters have already purchased their vehicles. It might take time to bring along the critical mass of wait-and-see consumers. Offering electric-fuel hybrids is a way to ease that transition while providing practical solutions to some common concerns.
The first is price. Most electric vehicles are still relatively expensive, giving some potential buyers sticker shock, even after federal subsidies. As technology and production methods improve, prices will come down. Along with allowing for more plug-in hybrids, the United States needs to avoid an escalating trade war that could keep prices high.
China, which makes most of the world’s electric vehicles, has been able to make them cheaper and sell them at lower prices, thanks partly to generous government support and lower labor costs. But even China is seeing a market slowdown, raising concerns in the United States, Europe and Canada that it is preparing to dump its overproduction of vehicles overseas at lower prices, further undercutting domestic carmakers.
Canada recently announced it was following the United States in imposing a 100 percent tariff on Chinese EV imports starting Oct. 1. The European Union earlier imposed tariffs of as much as 38 percent, but lower for Tesla and Chinese carmakers in joint ventures with EU companies. China has criticized these moves as trade protectionism and threatened to retaliate. A green-tech trade conflict that could complicate sales of finished cars as well as critical materials and parts would do neither consumers nor the environment any good.
In the United States, the other main problem with EVs is concern over the availability of public charging stations. That’s a real worry, especially for urban car-buyers who might not have a garage or private parking space. The Biden administration has tried to ramp up construction of public charging stations. But so far, the effort is falling short.
Encouragingly, Detroit automakers have announced plans to make their charging stations compatible with Tesla’s. That makes sense, since charging an EV should be as easy as pulling into a gas station to fill up the tank — easier, even, as chargers should be in places drivers are already going, such as parking lots. Yet the industry still depends on a massive federally backed build-out of charging infrastructure that is only just accelerating.
In the face of these headwinds, Detroit’s automakers need to adapt and get more creative. They need to offer more lower-cost compact cars and sedans in addition to larger trucks and SUVs, and make cars that can compete with the even less expensive Chinese imports without relying on protectionist tariffs. If they react to this moment of industry challenge with sense and flexibility, state and federal regulators should give them the leeway they need.
The Washington Post
