Weekly Brief: Automakers Losing Battle on Affordable BEVs

Electric vehicle start-up Lucid launched a new “ultra-high-performance” brand called Sapphire at Monterey Car Week.

The first EV under the Sapphire moniker will be a fully electric “luxury super-sports sedan” called the Lucid Air Sapphire that features carbon-ceramic brakes and three motors that help it rip from zero to 60mph in less than two seconds. Production is slated for the first half of 2023. The price tag is a modest $249,000.

Meanwhile EV start-up Rivian announced last week that it will discontinue its cheapest trim level for its all-electric SUV, the R1S, and pickup truck, the R1T, owing to flagging customer demand. The entry-level trim level was called the Explorer package and started at $67,500. The next trim up, the Adventure package, starts at $73,000 and delivers additional perks like Meridian 360 premium sound, ventilated seats and extra off-road protection for a sturdier ride on unpaved roads.

Rivian claims that the move will help it establish a more efficient supply chain that gets vehicles to customers more quickly. That may be true, but it also continues a worrisome trend that’s pushing EVs into the land of uber-luxury vehicles and further away from accessible means of transportation for the masses.

In theory, the EV market should be primed for a boom after President Biden signed his Climate Bill into law last week. Combined with last year’s Infrastructure Bill, the two pieces of legislation are tantamount to a Green New Deal and represent the largest ever federal investment in alternative energies and green transportation. The Climate Bill reinstates the $7,500 federal tax credit for all EV makers, even those like General Motors and Tesla that have crossed the 250,000 EV threshold and creates a new $4,000 tax credit for some used EV purchases.

At the same time, the bill establishes new limits for those vehicles that qualify, including that they must be largely made-in-America and can’t cost more than $55,000 for sedans and $80,000 for SUVs and pickups. The Biden administration acknowledged last week that those vehicles that qualify for the federal tax credit, across all EVs on the market in the US today, instantly dropped from 72 to 17, a jaw-dropping 70%. Part of the problem may be how the strenuous limits in the legislation but the onus is also on manufacturers to put more affordable EVs on the market.

“Unfortunately, the EV tax credit requirements will make most vehicles immediately ineligible for the incentive,” said the CEO of the Alliance for Automotive Innovation, John Bozzella. “That’s a missed opportunity at a crucial time and a change that will surprise and disappoint customers in the market for a new vehicle.”

Charging infrastructure is another challenge that may disappoint customers that make a switch to EVs. The new Infrastructure Bill promises to provide millions in funds to states that build out their EV public charging infrastructure. Massive investments are already underway in the private sector. Volkswagen and Siemens pumped $450M into Electrify America this year to help expand its network. Daimler Truck North America teamed up with BlackRock Renewable Power and NextEra Energy Resources to launch a $650M joint venture to build charging infrastructure for electric and hydrogen fuel cell medium- and heavy-duty trucks.

Last week a new company called Voltera launched with the aim of providing critical EV charging infrastructure for companies that want to deploy and operate fleets of EVs at scale. To support those needs, Voltera plans to invest several billion dollars on deployments that are both customer-driven (in a particular location for a particular customer) and thesis-driven (proactive development in the strategic locations customers will need to be).

These large investments should help improve access to charging stations. Indeed, they already have begun to, according to a new study that J.D. Power published last week. The study, which included 11,554 owners of EVs and plug-in hybrids across America, found that it’s never been easier to access charging stations in major EV markets like California, Texas, and the Pacific Northwest. A growing number of charging stations pepper smaller markets across the Northeast, the South, the Midwest and the Great Plains as well.

However, the same respondents said that the quality of the charging experience was plagued by malfunction issues that often rendered whole stations inoperable. One out of every five respondents ended up not charging their vehicles during their visits. Of those who didn’t charge, 72% indicated that it was due to the station malfunctioning or being out of service.

To put that in perspective, imagine if one out of every five gas stations didn’t work and there was no way to know which one was out of service until you were stuck at the pump with an empty tank of gas. Chaos would ensue. That’s the reality facing EV drivers today.

“Just adding stations isn’t the answer,” said Brent Gruber, executive director of global automotive at J.D. Power. “Stations need to be added to areas where there are currently gaps in heavily traveled routes and in high-density areas for people who don’t have access to residential charging … then, we need to make sure those stations are reliable.” Paul Myles has more details on the J.D. Power findings.