After years of sluggish adoption, electric vehicles are poised for a sharp increase in sales, new products and investments that could eventually make the gasoline engine a thing of the past.
Look no further than Wall Street, where investors are positively giddy about the prospect of established automakers offeringfull lineups of electric vehicles, like General Motors, and about the chances of startups like Lucid Motors and Rivian that are promising groundbreaking EVs to come.
In recent weeks, GM, Volvo and Jaguar have announced commitments to phase out gas-powered vehicles within the next 15, 10 and five years. Tesla’s lineup has always been fully electric.
Plus, the arrival of the Biden administration and a Senate controlled by Democrats are giving electric car proponents hope of a new round of tax incentives to encourage electric car buying.
“The EV industry is entering a golden age,” Wedbush Securities analyst Dan Ives said in a research note, noting that improvements in battery technology, tax incentives and more affordable models could lead to soaring demand.
Americans more open to electric vehicles
Percentage of Americans who say they will probably or definitely own an electric vehicle within the next 5 or 10 years:
To be sure, sales of EVs remain a sliver of the overall auto industry, representing only about 2% market share in 2020, according to Cox Automotive, which owns Kelley Blue Book and Autotrader. But that figure is expected to double to 4% in 2021, Cox executive analyst Michelle Krebs said.
She cautioned that automakers’ commitments to switch to electric vehicles can be “squishy” – that is, susceptible to change down the road if sales don’t go so well.
“We have to keep in mind these are intentions,” Krebs said. “There are things that can get in the way of those intentions.”
There are still plenty of signs that the gas engine isn’t going anywhere anytime soon, including lingering concerns about electric vehicle battery range, cost and the availability of public car chargers.
But interest in EVs is picking up. Some 52% of car owners say they probably or definitely will own an electric vehicle within the next 10 years, up from 34% in 2018, according to survey data provided to USA TODAY in advance of its broader publication by car-buying site CarGurus.
What factors will decide the pace of the EV revolution? Here’s what to watch for:
How quickly will electric vehicle prices come down?
This may be the most important factor. While automakers have reduced the cost of battery development, it remains the main reason why electric cars have higher price tags than gas cars: often in the high five-figure range.
The Tesla Model S sedan and Model X SUV can easily top $100,000. Lucid’s new vehicles will also easily go into six-figure territory.
Tesla’s most affordable vehicle is the Model 3 compact car. While the price has changed several times, it’s generally hard to get for less than $40,000.
But even electric cars from non-luxury brands are still fetching a premium over comparable gasoline vehicles. The Chevrolet Bolt electric car starts at about $36,500, which is about $10,000 more than similarly sized gas vehicles from mainstream brands.
Can maintenance and fuel savings make up the difference?
While prices remain high, advocates of electric cars say they often make up for it by saving owners money on gas and maintenance. Electric vehicles have fewer parts, don’t use much or any gas and don’t require oil changes.
Owning a compact electric car costs an average of about $600 more than owning a gas car, according to AAA, though the cost varies considerably depending on electricity prices and usage.