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Tuesday, June 04, 2024

Why has the gas gone out of the EV movement?

Fun with titles, huh? Turns out the EV movement is slowly losing steam.  In my opinion there are multiple reason for this.  Turns out the cost effectiveness of driving an EV is probably less than most people anticipate.  If you can't home charge, owning one is even more inconvenient.  It could take 15-45 minutes to fill up at a charging station and the price per mile is eerily close to regular combustion vehicles.  I think the early adopters were kind of sold on the idea that this was 100% the future and oil was going away, but here is the thing - oil and its derivatives are used in lots of stuff.  Most projections had the peak of oil productions hitting in 2027, but after Covid it looks like the peak may have gotten pushed back.  I guess at that point there would be some alternative technologies that had matured to the point they could compete economically with oil and eventually oil would be pushed back.  Here is the thing though, there are a lot of businesses that depend on oil for their success.  So as much as the EV cars wanted to end oil, turns out you need it for tires, plastics in the cars, roadways... and all the sudden the need for alternates beyond cars becomes a little more obvious.  Also the infrastructure of the country is not centered around EV's, so you have to change all that as well.  The early adopters were willing to fall on the sword so to speak to be at the tip of the spear and drive the change forward, but now the EV's look like more of a novelty act and less sustainable.  Part of this is due to the pandemic.  The inflation that happened during the pandemic and directly afterwards having driven (no pun intended) car prices through the roof and consequently insurance.  Insurance has gotten completely out of hand because people are driving around houses that you have to be insured against incase you get into an accident.  And if you have one of the cars that is priced like a house, your insurance is even higher.  So the EV's kind of fell into this trend, instead of being the new technology that weasels it's way into the market by being affordable and pulling the masses into the tech, they have been leading the charge (pun intended) in raising prices.  I think the legacy car makers in the U.S. kind of detected this market shift when they were jumping in with both feet and have quietly gone back to focusing on ICE based cars.  For makers like TESLA and Rivian and the like there is no other option.  They have to produce electric vehicles that can compete with ICE cars and be more affordable.  If they are just a niche in the luxury car market, which is kind of where they have ended up, there will be no wide spread acceptance.  The only way for electric car makers to push the issue in the future is to come up with an affordable version of there vehicles that can get in the market at less that $25k new.  If they can't touch that market then they are just a novelty at this point.  And novelties are not going to shape a movement. The 1st quarter of 2024 was the first quarter that Tesla had year on year quarterly sales decline.  Partly an indicator of the market, but also an indicator of how the love for EV's has waned in recent years.  Oh there are issues in cold weather, and charger accessibility, and range anxiety, but the pricing has now greatly outpaced the benefits of the car and the negatives of ownership are more pronounced.  It has resulted in a general feeling (imo) that the EV revolution won't be ready for 2027 and probably not 2028 either, at least not in the U.S. In the emerging markets of China and India the EV is almost more feasible because they don't have the existing infrastructure of combustion vehicles so no great change over.  

So what is the path forward?  Well people have to be interested in the EV.  This change can't be driven (pun also not intended) by the manufacturers or the government.  I mean if this is the future it would make sense if the government switched to EV's. State vehicles, maybe even cop cars and what not.  They could install charger stations at the base, save on fuel charges and help develop the market by being an advertisement everyday.  Unfortunately politics are at work here (not really a pun, but kind of) and the government will never adopted a non-union made vehicle even if it makes total sense and is for the betterment of society as a whole.  And that is the impasse we are currently at my friends. Either someone takes the hit to develop the infrastructure, lower the price of the vehicles, or makes the vehicles so mainstream they are unavoidable or the whole thing limps along at the 10-15% market share that it has until change is forced by a lack of oil.  But here is the kicker, as long as these other countries opt for electric, we can push out the combustion engine life and oil will still be needed for the other products. If we only had "flying EV's"...

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