Over two days in late October, two headlines grabbed my attention. First, General Motors announced it was delaying production of its Chevy Equinox electric vehicle (EV), its Silverado EV RST and its GMC Sierra EV. Just a day later, we learned that GM and Honda had scrapped plans to co-develop affordable EVs with price tag of less than $30,000.
Why the pullback, especially when the federal government is offering oversized incentives encouraging the building and purchasing of EVs and the adoption of electrification?
If you thought it was due to the labor strike, think again. CNBC captured the reason perfectly: a yawning market.
The two major automakers, CNBC reported, canceled the partnership “as they face slower-than-expected demand and changing market conditions.
“The unwinding of the tie-up roughly a year and a half after it was announced is the latest in a string of decisions by automakers, specifically GM, to scale back or cancel previously announced EV plans.”
Does this mean that EVs are dead? Far from it. But the predictions that electric vehicles could make up 10% or more of the total fleet by 2030 seem farfetched, if not unlikely.
True, Tesla is soon to release its Cybertruck. And Rivian’s R1T continues to sell. But the lack of public clambering for EVs is palpable. Even Ford has scaled back production of its F-150 Lightning, noting sales for the pickup have fallen by nearly 50% in recent months.
In an interview with MSN, Karl Brauer, an executive analyst for iSeeCars, nails the challenge.
“There seems to be a threshold of around 7%-10% share before EV sales drastically slow down," he said. "That’s the situation in California, Oregon and Washington, where those states have the largest EV share but also the slowest growth in EV share.
“We’re seeing the start of an overall market pushback against electric vehicle sales now that early adopters and environmentalists have their vehicles.”
Put another way, other than the EV diehards, the market has failed so far those hedging to take the EV plunge. Despite tax breaks and myriad incentives, electric vehicle sales appear weighed down by still-too-high sticker prices and, perhaps more foreboding, the public’s lack of confidence concerning charge reliability.
Instead of banking its greener transportation strategy almost exclusively on electrification, it’s time for the Biden administration to pivot toward a comprehensive carbon-reduction plan that rewards all market-based solutions that curb greenhouse emission, from EVs to biofuels, hydrogen and carbon-capture technologies.
Until then, current policy has the federal government forcing consumers hands in a direction they don't want to go, at least not yet.