More On: EV
Demand and manufacturing in the United States are lacking, while overseas supply is increasing.
Established automakers are scrambling to add more electric vehicles to their lineups in the face of tighter emissions restrictions throughout the world. According to a Reuters report, major automakers such as Audi, BMW, Hyundai, Fiat, Volkswagen, GM, Ford, Nissan, Toyota, Daimler, and Chrysler plan to invest $300 billion in electric vehicles over the next decade. The majority of electric vehicles will be built in countries remote from American ports.
Outside of the United States, more than 50 million automobiles are produced annually today than there were in 1950. China grew from zero to 28 million people, outnumbering the United States and Japan combined. India, Germany, and South Korea rose from obscurity to yearly automobile sales in the millions. Over the previous 69 years, foreign manufacturers have dominated the manufacturing sector.
Bringing such foreign-built automobiles to the United States may pose an insurmountable insurance challenge. In March 2022, the Felicity Ace, a 650-foot cargo ship carrying hundreds of millions of dollars in luxury cars, sank. Electric vehicle batteries, according to the salvage crew working on the flaming ship, were part of the reason it was still blazing after several days. The Felicity Ace was estimated to be worth $24.5 million on the open market, with the total value of the 3,965 vehicles potentially exceeding $500 million.
With the possibility of EV battery fires, who will be responsible for insuring their safe passage from foreign manufacturers to American ports - cargo ships or manufacturers?
With California accounting for more than 40% of all electric vehicles sold in the United States, Governor Gavin Newsom has issued an executive order prohibiting the sale of gas-powered automobiles by 2035. The popularity of electric vehicles in California spurred President Biden to want the rest of the country to follow California's lead and issue a new executive order calling for electric vehicles to account for 50% of all new cars sold in America by 2030.
EV user experiences in California, despite the state's wonderful year-round weather, do not auger well for predicted EV sales in the United States. There is an important nuance here that neither Mr. Newsom, Mr. Biden, nor the mainstream media seem to recognize.
Californians, who were once again Mr. Biden's inspiration, drive just around 5,000 miles per year on electric vehicles. Why? The electric vehicle is usually a second vehicle for those who can afford one, rather than the family workhorse vehicle. The primary owners of electric vehicles are highly educated and financially well-off individuals who do not reflect the vast majority of the American middle class, low-income individuals, or those on fixed incomes.
EV-owner incomes are among the highest in the country, which could be due to homeowners who have greater access to charge their EV from their multi-car garages or people who live in new apartments with more convenient EV charging options. The majority of motorists park on the street. In California, which has nearly half of the country's electric vehicles, a growing percentage of EV owners are returning to gasoline automobiles, sending a message that may further undercut EV growth estimates.
Tesla owners are predominantly Caucasian, with 87 percent being Caucasian. Hispanics account for only 8% of Tesla owners, leaving 5% for all other ethnic groups. The major reasons why EVs aren't catching people by the tailpipe are pricing, charging and range functionality, and the potential for bad weather exposure.
The overwhelming majority of Americans will likely stay skeptical of the EV evolution until current elite owners can demonstrate to the American middle class and those on fixed incomes that their EVs are their primary family workhorse vehicles in all weather conditions. Growing the EV supply chain without equivalent increases in demand could be a recipe for disaster.