EVs’ Future May Be Up in The Cloud

It’s no secret that Americans love their cars but what will it take to get them to love EVs?

Currently US motorists are less likely to buy an electric  vehicle of any kind than in other industrialized nations. A recent survey found that just 53% of American respondents would consider purchasing a car with an electrified powertrain. That stands in sharp contrast to France at 77% and China at 94%.

The industry is not in dire straits but experts say the solution may resemble Mark Knopfler and his bandmates’ classic tune, albeit with a touch of creative license: “money for nothing and a charge for free…”

Critics and supporters of EVs agree that subsidies, while not quite money for nothing, have been helpful in offsetting the high sticker price for EVs. After all, the luxury segment, early adopters and fervent backers of EVs are less price sensitive than the general public but experts say in order to reach greater market penetration in the US the biggest barrier to entry is the additional cost versus other models. That particularly holds true for famously price-sensitive Millennials and Gen Z consumers.

“The number one thing is price. If EV manufacturers can’t come back with a price close to comparable ICEs, then from a mass-market perspective, EVs will always be challenged. People are price conscious,” asserts Bruce Belzowski, who is retired from the University of Michigan’s Transportation Research Institute and is now managing director of research firm Automotive Futures.

Belzowski adds: “The luxury segment is different and fervent EV folks will pay more for a vehicle. Tesla gleans both of those folks: early adopters who are fervent in their interest in that technology and the luxury car buyers.”

The analyst credits the sleek designs and integration of technology in the head unit for much of Tesla’s success, especially when compared with other EV makers. “What Tesla has done has changed the relationship when you get into the car. Other auto manufacturers haven’t figured that out and don’t seem to be trying that hard. Other companies are designing new electric vehicles that are compliance vehicles, to show the government they are making them.”

The bottom line is, literally, the bottom line at this point in the adoption cycle, according to Belzowski: “People don’t like change, especially if you’re going to charge them more.”

Tesla has made the $35,000 price tag a point of emphasis in trying to market the Model 3 as an upscale EV at a sedan price. That sticker price, albeit with just the basics, is just about bang in line with Kelley Blue Book’s 2019 U.S. average of $37,000.

Yet the price point is still a bit rich for the masses, according to Eric Noble of the CarLab, a research, design and consulting firm based in Orange, California. Noble said: “As a product that can save money for those willing or able to spend a bit more upfront, EVs are ideal for upper-middle class households, the same ones that save on household products by buying them in bulk, ahead of time, at Costco.  Poor people can’t afford to spend more to save later – the poverty trap.”

Noble notes that EVs remain a good economical choice for commuters with special benefits, especially if they are living in metropolitan areas with HOV lanes that allow single-passenger EVs into those lanes. They are also good for those with enclosed garages with a charger and/or people whose offices offer subsidized or free charging at work. The infrastructure challenges, including costs, are a story for another day but suffice to say that analysts see this as a major technological hindrance and barrier to entry for many consumers.

Speaking of technology, long-promised developments may aid EVs on the road, but it’s unclear that these advancements will help sell more of them in the near-term. Noble says: “Artificial intelligence (AI) and cloud technology should help BEVs operate super efficiently.  AI for things like expected daily duty cycle, weather, time of use, terrain, road conditions, etc. should all help maximize efficiency.  Eventually, aero-training of multiple vehicles as well as traffic light-less intersections, using V2V for management. The cloud’s abilities are most exciting on these fronts, though any V2i is a long way off in most developed countries because of the size of the built environment.”

However, analysts don’t see legacy automakers skipping a generation of lucrative, combustible engine vehicles to put the latest innovations only on EVs as an enticement for consumers to buy them instead of ICEs. Belzowski said: “Those technologies look like they could be adopted to ICEs before you get to EVs, or ICEs as well as EVs. So, it’s not the killer app for EVs.”

This may change in the next few years as the traditional carmakers begin to expand their EV lineups, rolling out electric models of their best-sellers such as pickup trucks, SUVs and sedans. Belzowski predicted: “It could happen in the next couple of years: in 2022 or ’23, definitely by ’25 from our research. There could be 7% EV penetration by 2025, where we are currently around 1%.” Importantly, Belzowski’s firm sees a boost to the EV market as input costs fall and demand grows for the vehicles: “Some EVs will be comparable in price to ICE engine competitors – achieving price equity in 2022 or 2023 according to my sources.”

Noble concurred that an uptick in model availability is coming: “Smart OEMs, nearly all of them at this point on this issue expanding EV lineups, will all be bringing 250 to 300 mile BEVs to market soon, at least handling the range issue that consumers have concern about; which is not ‘range anxiety’ but is ‘range need.’”

This wider availability of less expensive EV models with greater range may be as important to near-term sales as any new technology, although certainly upgrades and the ability to enhance an EV’s features will play a big role in both consumer demand and operation of the vehicles in the next few years.

 


Leave a comment

Your email address will not be published. Required fields are marked *