What’s Holding Back the Dream of the American Electric Car?

electric car, EVs, charging station

Electrification in the automotive industry is no longer a trend on the cusp; it is now a reality. But just how big is the market? Electric vehicles are moving beyond their nascent period with respect to technology, but they are still far behind in terms of production scale—especially in North America.

China has, by far, become the leader in the production of the three primary types of electrified vehicles: Mild Hybrid Electric Vehicles (MHEV), Plug-in Hybrid Electric Vehicles (PHEV), and Battery Electric Vehicles (BEV).

China produces around 28 million vehicles annually—close to a million of which will be electrified by year’s end (accounting for less than 4% of its total production). That’s a very small number relative to total output, but it still makes China the worldwide leader over Europe, followed by North America.

A major contributor to China’s dominance of the EV market is due largely to government sponsorship and support for an electric infrastructure. The Chinese government has free reign to place charge stations wherever it wants to without having to cut through massive amounts of political red tape. For example, unlike in the United States, they wouldn’t need the approval of an agency like the EPA for station placement.

Where is North America on the timeline of electrification?

The answer, quite simply, is that we’re behind. Let’s take “start-stop” systems as one small example. This is the technology that shuts your engine down at a stop light, then starts it back up when you hit the gas. It’s a relatively new technology in North America integrated into about 20% of total vehicle production. By 2025 it’s expected to reach more than 60% of total production, but that’s still about five years behind where Europe and Asia are at.

What’s holding us back?

Number one, gasoline prices, The price of oil has remained relatively low for the past few years, negatively impacting the demand for EVs. Higher prices at the pump would certainly translate to more consumers going electric.

Another hurdle is the price tag. Some consumers are able to do the cost-per-mile calculations and justify the significantly higher cost of an EV. Others can’t, and the sticker shock is a deterrent, which equates to slow adoption.

There are also the classic misconceptions around electric vehicles, like that the gas mileage really isn’t as good as it’s hyped to be, or that the range isn’t great and you could find yourself stranded on the side of the highway with a dead battery. With EV technology constantly getting better and better, these issues may become a thing of the past. But, the specter of questionable ROI and reliability does scare away potential electric car adopters.

Finally, manufacturers can’t currently reach the volume of EV production that they require to reduce costs and create some economy of scale. In order to achieve this, vehicle OEMs would need to enact wholesale platform changes to their production strategy and infrastructure. Manufacturers are only now starting to consider this path. However, a potential sticking point to this strategy is the current administration’s relaxed views on fuel efficiency standards. There’s no onus on manufacturers to make these platform changes. If there were a potential tightening of current regulations, then there would be a greater chance for more OEMs to invest in changing their production models.

While the U.S. as a whole is slower to electrification, we are seeing specific high volume areas of usage that can serve as proper case studies for industry-wide success.

In California, the state emissions board has proactively pushed an agenda to put more electrified vehicles on the road. In addition, it’s safe to say that Californians are already very pro-environment and therefore very pro-electric. As a result, California alone accounts for more than 50% of all electric vehicle sales in the U.S. today. To put that in context, New York is a very distant second at just 4% of overall EV sales. This just proves that demand is primarily dominating in one key region of the U.S.

charging stations at major retail store

And while the federal government hasn’t stepped up like in China to prioritize electric-first infrastructure improvements, some in the private sector are taking the lead. With mega brands such as Target and Walmart already installing charging stations at their stores—not only in California, but in New York, Oregon, and Washington as well—it won’t be long before others follow suit.

In the end, many stars will need to align for the U.S. to catch up. But, we need only look to the Pacific—to both China and California—as prime examples of electrifying success stories.

To discuss your next automotive project, please contact us.

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