Opinion: Electric vehicles will be limited until ICE cars go extinct

Question: When an internal combustion engine car become worthless?

Answer: When the cost of buying or leasing an electric vehicle plus paying for maintenance and miles becomes cheaper than using a free gas car.

This has already been the case for high mileage drivers for years, but with higher gas prices we have now reached the point where the cost comparison becomes more acute. It is now noticeable even for consumers who do not travel a greater distance of kilometers.

In a story this week, Bloomberg highlighted the plight of a female Uber driver who had the option of keeping her extremely common ICE vehicle, the Toyota Camry, or renting a Tesla Model 3:

Barnes chose to rent a standard Tesla Model 3 for a month through Hertz, which has an agreement with Uber Technologies Inc. offering drivers a weekly rate of $344 that includes insurance, basic maintenance and unlimited miles. . Even after factoring in the cost of recharging the car, Barnes was paying about $450 a week for “his dream car,” less than the nearly $600 needed to power his Camry.

Clearly, Uber drivers operate on the higher end of the mileage spectrum. But there is much more to consider here. First of all, leasing a vehicle from Hertz is usually not on most economists’ list of profitable vehicle management. There’s at least one more middleman involved, even though Uber helps subsidize that cost. $450 per week extrapolates to nearly $2,000/month.

But also, let’s recognize that the Uber vehicle in question, a Tesla Model 3, even in the standard $47,000 lineup configuration is not a cheap EV. A 2023 Chevy Bolt EV ($26,500) or Nissan Leaf (under $20,000, after full federal EV incentive) with a similar lineup is almost half the price. This radically changes the calculations since the purchase price of an electric vehicle is the outsized cost in a return on investment equation compared to a gasoline-powered car. ICE vehicles typically cost about double per mile to drive and maintain, and that was before gas prices soared dramatically.

With gas prices at $5 and not budging at least for the summer, more and more people are flocking to electric vehicles. But, after many years of excuses from automakers saying there was no demand for electric vehicles, no automaker can now make enough electric vehicles to meet the demand.

We can’t make enough electric vehicles, and the prices will reflect that.

In ElectrekWe used Electric Vehicle Best Price Guide to highlight the best deals we could find at dealerships across the country. We often saved our readers thousands, and sometimes tens of thousands of dollars. Since the supply chain shortage combined with rising gas prices, we now cover cars that you can actually find on lots that are being sold at or near the list price.

Tesla, which does not use a dealership model, has been raising prices for most of the past year, moving the Model 3, which was once priced from $35,000 up to $47,000. Y models have increased further. It doesn’t seem to matter – there’s a months-long wait for Teslas, even with the creation of two new factories.

But I have to imagine that once the supply chain comes back online and more competition emerges, Tesla might lower the prices of its vehicles again. Even if not, cheaper electric vehicles are coming.

Inexpensive real electric vehicles coming soon

Chevy just dropped the price of its 2023 Bolts by $6,000 and has a $30,000 Equinox coming. Ford CEO Jim Farley espoused the need for inexpensive EVs around $25,000 while pricing the base price of the Ford F-150 Lightning at $40,000. Hyundai and Kia both sell vehicles for $34,000 before the $7,500 tax credit. Volkswagen has teased its ID.Life vehicle for as low as $24,000, and every cheap Chinese automaker is salivating at the thought of entering the US market.

Of course, dealers mark up the prices due to the scarcity, but that won’t last forever. At some point, electric vehicle production will begin to meet demand. Or will he?

Who would buy a $26,000 gas-powered Chevy Equinox when a slightly more expensive electric vehicle was available and cost less than half the price per mile to own? If the Build Back Better Bill passes, electric vehicles will be even cheaper. Will the economy keep electric vehicles more expensive than gas-powered vehicles, perhaps until there are no more gas-powered vehicles?

What makes internal combustion engines work?

The biggest hurdle for electric vehicles to overcome is infrastructure, whether explicitly or implicitly required. City dwellers and apartment/condo dwellers don’t always have access to full charges overnight, so the five-minute gas fill is still warranted. But if running a few hundred feet of 240V power lines is all there is to saving a few hundred dollars a month on gas, I have a feeling HOAs will do it (and some states have implemented “right to charge” laws to help tenants charge choice). It’s the same with street parking. Citizens will demand it.

But even us commuters need assurances that we can make the trip to grandma’s house 800 miles away or do the quintessential American road trip. Tesla owners can do it right now with little to no effort.

For other EV manufacturers, this can still be done, but sometimes it takes a little more effort to find charging locations and hope they’re online and charging at optimal speeds. It’s getting better, and the US government is even dropping $5 billion on a nationwide charging network, putting chargers every 50 miles on the country’s highways.

Back to basics

Let’s also not forget that electric vehicles are just a better experience all around. Smoother, quieter, pollution-free vehicles mean happier drivers and, in the case of the Uber driver we talked about earlier, happier customers:

Its new carousel is also a hit with passengers. “They’re much more generous,” Barnes said. “Usually I’m lucky to get tips of $1 to $3, but now it’s $10 or $15, sometimes back-to-back.” In total, she brought in more than $2,600 during her 25-day rental, more than double the $800 to $1,000 she typically made driving the “Beast,” according to screenshots of the income it provided to Bloomberg.

This EV happiness can be seen directly financially. Doubling or tripling tips is another huge benefit to the bottom line.

And while this article has primarily focused on the direct consumer costs of gas versus electricity, there are also the enormous social costs of pollution. Fossil fuels are more expensive than you think, and even oil companies have started (pretending?) to support carbon pricing to bring fossil fuel costs more in line with reality. Society needs to transition to electrified transportation sooner than most of the industry is ready. But it will take a decade even if we move every battery we can into EVs, and it will affect EV stock for many years to come. The solution is for manufacturers to increase production of electric vehicles and stop production of gasoline-powered cars, even sooner than they think possible.

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