The headlines are brutal: EVs “aren’t working,” and demand for them is “falling.” Dealers had 97 days of supply of new EVs at the start of October, and year-over-year prices declined by 20%. What’s going on?
Kelley Blue Book reported that the average price of a new EV last month was $50,683, a $6,057 premium over the average mainstream (non-luxury) vehicle. Theoretically, it is not an insurmountable premium if the value proposition covers it. In many cases, the total cost of ownership factoring tax, fuel, and maintenance savings nets out favorably. But is that really how people buy cars?
Sure, some people do. But for many, the missing piece of the puzzle is the value of their EV’s ability to charge on the road quickly and reliably. Outside of Tesla’s supercharger network, finding detractors is much easier than promoters of the destination charging experience. 80% of charging happens at home, but try telling that to someone who’s being pitched a product that’s more expensive than the alternative and has valid concerns about getting stranded or stuck in a charging line for hours.
When I ask people what percentage of an EV’s value they think should be tied to its charging network, the most common answer is 75%! If consumers really weigh destination charging that heavily while their perception of the broader infrastructure is in disarray, then no wonder it’s hard to sell EVs for a premium. What consumers are saying with their wallets is that these products are incomplete in the absence of a trustworthy DC-fast charging network. Given the magnitude of delivering on such infrastructure, there is truth to the argument that some EVs came to the market in large numbers too quickly.
Dealerships are disproportionately shouldering the problem. As highly influential members of their communities, it has been put on them to be the promoters of products seemingly launched ahead of being feature-complete. Now, unsold inventory is taking up space on an increasing number of lots. However, there are some out there who are doing extremely well with EVs and whose communities are ready for them. Let’s not forget that Q3 saw record-high EV sales.
Help is coming. North American Charging Standard (NACS) adoption is sweeping the industry, and large-scale energy companies are entering at a meaningful scale. Unifying the charging port is a big step, and what’s also encouraging is the focus on the payments and navigation experiences. As someone who has racked up thousands of supercharger miles between Northern and Southern California, I can tell you the experience is amazing when it’s done right.
While unifying the charging standard is a big step forward, charging networks have an immediate opportunity to move this entire industry forward by working cohesively to win the confidence of EV buyers and dealers by providing transparency into uptime, charging speed, wait times, and trending data to show improvements, and unifying the payment and navigation experience and eliminating the fragmented universe of apps.
Eventually, the pricing premium for EVs must be eliminated, but that won’t happen without volume production. Automakers are not in a position to take heavy losses on EV units in the wake of manufacturing disruptions and high-interest rates. We need to see demand improve with a better customer experience for this to work.
EVs are not dead. We are in an awkward transition period. Reliable destination charging infrastructure is critical in customer-driven value propositions. Some people are still willing to pay green premiums and sacrifice some utility value in the interim, but many can’t or won’t.