Three truths about electric vehicles

There’s lots of chatter about EVs, and some of it paints an inaccurate picture of the industry’s views.

There was an article with the above-noted title written by a staff member with the Union of Concerned Scientists in the United States that wanted to insure that readers had these “truths,” as opposed to whatever disinformation that automotive and oil industries were espousing.

It was an interesting read. I am not sure where the author was getting his information from about the automotive industry’s perspective on electric vehicles, but I agreed wholeheartedly with the three “truths” he was suggesting — I think pretty much everyone in the automotive industry does as well. So I thought it might be interesting to review these three truths for this article.

The first truth is:

EVs aren’t the perfect solution for the future of transportation, but they’re just much, much better than gasoline vehicles.

In the automotive industry for many years we have been saying there is no perfect solution for the future of transportation, and that it is going to take a myriad of different initiatives to reduce emissions from the existing road fleet and as transportation evolves into the future.

Transportation in the future is likely going to incorporate a number of different forms of mobility including bikes, scooters, cars and other mobility options that have not yet been categorized.

In fact, that is why many vehicle manufacturers have characterized their business as being that of a mobility provider as opposed to a vehicle manufacturer. EVs are definitely part of the solution but they are not “the” solution, and as to whether they are the “perfect solution” — one would have to ask: perfect for what?

EVs aren’t the perfect solution for the future of transportation, but they’re just much, much better than gasoline vehicles.

Right now the challenge most automakers (and more importantly consumers) have with their product offerings — at least in North America — is that they are out of sync with consumer demand.

Last year 80 per cent of the vehicles purchased by Canadians were sport utility vehicles or light-duty trucks, while most of the EVs for sale currently are smaller passenger cars. We are just starting to see manufacturers foray into electric SUVs and later this year the first electric pick-up trucks will be on the market.

So while I would agree that an electric vehicle is a much, much better vehicle than a gasoline vehicle from an emissions reduction perspective, from a performance perspective, and from a lifetime cost perspective, we are likely to see price parity before we see “utility parity” in the consumer’s eye when they compare electric vehicles to gas vehicles. Until we reach utility parity it will be a challenge to move the market in the direction of EVs in a big way.

The second truth is:

EV sales are a small fraction of auto sales now, but that’s going to change.

The automotive industry agrees with the second truth. It is clear to all vehicle manufacturers that the key to long-term business viability is the decarbonization of their product lineup and to diversify their mobility options.

Has anyone seen the new Volkswagen ad promoting EVs? Or the Kia ad? Or the Chevy ad? Or the Mach-E ad? The reality remains that in the very near future there will be more EV offerings for consumers to choose from than there is current demand for the vehicles, according to a recent J.D. Power report.

The author of the article suggested that the industry uses the tired argument that EVs make up such a small percentage of overall sales that don’t make a difference in overall emissions, or that there are so few EV sales because EVs are not popular.

To the first part of that statement, I would suggest that it is all relative. Is the goal to decrease emissions now, or at some point in the future? If the answer to that question is “now,” then the automotive industry is guilty of suggesting that ZEV mandates and an almost obsessive focus by governments and environmental groups on electric vehicles, will not reduce emissions from the on-road vehicle fleet in any appreciable way any time soon.

However, if the issue is reducing emissions in the long term then, yes, EVs will be an important part of that effort and EVs are quickly becoming available across the product spectrum for two key reasons:

First, decarbonization and climate change are not new — the industry has been working on solutions for years and more recently more than $300 billion has been committed globally by the vehicle manufacturing sector to develop electric vehicles.

Second, part of the rationale for that commitment has been increasingly stringent greenhouse gas emissions regulations in jurisdictions around the world, which will necessarily drive the development and production of EVs in order to ensure compliance. This has led to a situation where there will be more than 125 electric vehicle offerings in the Canadian market by 2025 — just from the companies that my association represents.

Let’s hope that more educational efforts are undertaken to ensure that there will be consumers willing and able to purchase all of the products soon coming to market, on top of the 45 electric vehicle models that are available in Canada.

The third truth is:

EVs are much more than the Tesla Model S.

With respect to this truth, the automotive industry could not agree more! To give credit where credit is due, Tesla was a catalyst for showing consumers (and frankly, the rest of the automotive industry) what was possible with electric vehicles.

The author of the article I referenced raised the point about Tesla, because he was suggesting that the industry uses the argument that electric vehicles are all high-priced luxury vehicles that are not attainable for the masses.

The reality is that numerous surveys completed recently in Canada, including one undertaken by the Privy Council Office within the Government of Canada, have identified that price is the number one barrier keeping consumers from purchasing electric vehicles.

That is the primary reason why about 80 per cent of the vehicles sold in Canada occur in the provinces of British Columbia and Quebec, where consumers can take advantage of both a federal incentive and a provincial incentive to somewhat bridge the price gap between the cost of an EV and a regular internal combustion engine vehicle.

Ontario provided a very demonstrable lesson for all governments when it removed the $14,000 incentive that had been in place to encourage the uptake of electric vehicles. EV sales all but evaporated when the incentive disappeared.

Battery costs are coming down quickly, but it is not a persuasive argument to most consumers to tell them that they will be able to save several thousands of dollars in fuel and maintenance over the lifetime of owning their EV when they only have $400 in their budget for a vehicle today, and moving to an electric would cost them another $200 a month.

One of the key tools that governments can continue to do is to ensure that incentives remain in place for at least a few more years when price parity will be a lot closer if there is a public policy goal of getting more electric vehicles on the road. There is a fiscal reality however, in that governments likely cannot afford to provide incentives on the number of vehicle sales in order to reach the EV sales targets they set for themselves. If that is the case, then perhaps a more focused effort of broader incentives for fleets to adopt electric vehicles makes more sense.

This approach would provide at least four key benefits:

It would reduce overall emissions more now than selling electric vehicles to individual consumers. Whether an individual owns an EV or a regular vehicle, they both sit parked for about 95 per cent of the time. The on-road utilization rate for fleets is much higher, so there will be that much more of a contribution to immediate emissions reductions.

Fleet managers are hard-wired to look at the lifetime ownership costs of vehicles, in which case EVs rate far more favourably than gas or diesel powered vehicles.

Perhaps the financial incentives do not have to be as large, or they can be offered in conjunction with other incentives, because fleet managers look at overall lifetime savings of EV technology as part of their purchase decision.

Depending on the fleet application, it can broaden consumer awareness and understanding of electric vehicle technology simply by taking a ride in, say, an electric taxi or ride-hailing vehicle and have the driver tell the passenger all about how wonderful the technology is.

Let’s hope that more educational efforts are undertaken to ensure that there will be consumers willing and able to purchase all of the products soon coming to market.

Far from criticizing or berating vehicle electrification, the automotive industry has embraced this technology like never before and this transition will begin big-time later this year. It is high time that governments and environmental organizations stop dealing with vehicle manufacturers as if they were a collection of knuckle-dragging luddites that have no interest in making this technology available, and require the stick of zero emission vehicle mandates to do so.

Hopefully, governments will be there with policy measures to address the situation when there are more electric vehicles available than there are consumers willing to purchase them. That’s the truth about electric vehicles.

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