Electric vehicles are still too expensive for many American households — and the stuttering supply chain means they’re also hard to find, with some automakers warning of possibly yearslong waits to buy their most popular models. Meanwhile, proposals in Washington to help ease the supply crunch or make electric cars more affordable are languishing on the Hill. And polls show that voters largely blame inflation on Biden’s policies, part of a sour political atmosphere that could put Congress back in Republicans’ hands after November.
Sen. Martin Heinrich (D-N.M.) said some Americans can afford a new electric vehicle, “but a lot of people are in a position where they absolutely can’t, and they are just at the mercy of the price at the pump right now.”
Democrats’ stalled policy agenda is hampering electric vehicles from taking off, said Sen. Elizabeth Warren (D-Mass.), who added that she is “very worried” that the party will fail to address climate change unless it passes expanded consumer tax credits and measures to spur domestic production of car parts.
“EVs are one critical weapon in fighting against climate change,” Warren said. “We are collectively putting a lot of hope on the impact of getting gasoline-burning engines off our highways and using more EVs and mass transit to move people around. If we don’t make that transition and make it soon there is no way we can meet our climate goals.”
The national average for regular gasoline hit $4.60 a gallon on Thursday, setting a new record, up from its pandemic-era low of $1.82 per gallon two years ago. On Friday it dropped by a penny. Interest in alternative-fueled vehicles has grown in the same time frame — electric vehicles’ and plug-in hybrids’ share of the automobile market has more than doubled since the beginning of the coronavirus outbreak.
In early March, as gas prices rose toward what was then their all-time peak, Google Trends recorded its highest ever search traffic for electric vehicles. People in the U.S. bought more than 204,000 electric cars and trucks in the first four months of this year, up 60 percent from the year before, according to auto market analyst firm Wards Intelligence, though they still make up less than 1 percent of the vehicles on the road.
Despite growing interest, however, consumers looking to buy an electric vehicle face a major obstacle: finding one to buy.
Global shortages of the computer chips and rare minerals that go into automaking have triggered a huge supply crunch for new cars and trucks — and have hit the electric variety especially hard, given their added dependence on electronics. (An electric vehicle needs about twice as many chips as a gas-powered car.)
Automakers including Ford and Volkswagen have said they’re essentially sold out of their popular electric cars and trucks for at least this year, Insider reported last week, while anyone wanting to order the most affordable Tesla models will need to wait until as late as December. Rivian Automotive, a company building electric SUVs and trucks, slashed its projected 2022 production in half because of supply chain issues, mostly relating to chips. The shortages are so dire that prospective buyers often put their names on multiple waiting lists.
Then there’s the price. An entry-level electric vehicle like the Chevy Bolt can still cost nearly $15,000 more than an equivalent gas-powered car, such as the same automaker’s Malibu sedan. That cost is significantly more than the $5,000 in savings that analysts say electric vehicle owners will realize on fuel and maintenance over 10 years. And finding a used electric vehicle is nearly impossible.
“There probably is going to be more interest in electric vehicles and demand may rise more because of it,” Haig Stoddard, a principal analyst at Wards Intelligence, said about the influence of high gasoline prices on the market. “But it’s not going to be very fast because most of the people that are interested are the people who can pretty much afford to buy what they want.”
Another impediment for some people considering electric vehicles is uncertainty about where to charge them. Last year’s bipartisan infrastructure law provided $7.5 billion for building out charging infrastructure around the country, representing Democrats’ biggest legislative win for electric vehicle owners — but that money won’t show any tangible effects before the midterms.
“It’s going to be a while before those chargers are lit up and people are seeing the benefit of that investment; it’s not the same as stimulus checks going out,” said E.J. Klock-McCook, a principal at the Rocky Mountain Institute, which researches sustainability. “Folks that are much smarter than me are going to need to think about how to communicate around that.”
Charging up consumers
Getting people and businesses to switch to electric vehicles will be the most effective way to combat high gasoline prices over the long term, Biden’s Energy secretary said May 18.
“Ultimately, what we need to do — the strategy that will work best — is to reduce demand by moving to electrification,” Jennifer Granholm said at POLITICO’s Sustainability Summit.
A leader at one electric vehicle advocacy group agreed, while saying his organization doesn’t see high gas prices as “a good thing.”
“The high gas prices highlight the importance of electric vehicles,” said Andres Hoyos, vice president of the Zero Emission Transportation Association. He added, “If we make those right policy choices now, our EV market here has an opportunity to be an amazing success story.”
Biden has proposed a goal of making electric vehicle sales 50 percent of the U.S. market by 2030. Last year, they made up 3.4 percent of new cars sold.
But at the moment, the same volatile gas prices that could encourage more car owners to switch are a political anchor for Democrats in an election year — threatening their ability to enact any significant policies once a new Congress takes office in January.
A POLITICO/Morning Consult poll taken May 13-16 shows that registered voters see Biden’s policies as the biggest driver of inflation, ahead of Russia’s war with Ukraine and a lack of competition among large corporations. People responding to a poll in April placed blame for high gas prices at the foot of Russian President Vladimir Putin and oil companies — but also saw Democratic policies taking a much larger share of the blame than Republicans’.
The GOP is poised to reap the benefits in November: Republicans hold an 8-percentage-point lead in the midterm battleground districts, a poll by the Democratic Congressional Campaign Committee showed last week. Biden’s approval ratings remain underwater, and an AP-NORC poll on May 20 showed them dropping to the lowest point of his presidency.
Democrats know the challenge this creates for the message they’re trying to send to voters.
“I think we’ve got to communicate to our neighbors that we’re the ones fighting for lower costs across the board,” said Rep. Kathy Castor (D-Fla.), who chairs the House Select Committee on the Climate Crisis. “It’s the same with energy costs, whether it’s weatherizing your home to make sure you have the insulation, to electric vehicles. … We are standing up for them and we’ve got to get off the reliance on gas and oil.”
Republicans say easing regulations on oil and gas drilling is the way to lower gas prices quickly, which would help the majority of Americans who cannot afford a new electric vehicle or are likely to purchase a used car. They’ve also rejected Democrats’ attempts to blame the soaring gas prices on Russia, the pandemic or oil industry price gouging.
“Democrats are content to play the blame game rather than help the American people deal with skyrocketing inflation,” Rep. Bill Johnson (R-Ohio) said during a floor speech.
Drivers’ habits slow to change
Complicating matters is that while drivers are suffering sticker shock from gasoline prices firmly above $4 a gallon, they largely haven’t made wholesale changes to their habits — yet.
For now, motorists are still filling up their tanks as summer driving season approaches: 60 percent of Americans are likely to take more vacations this year than in 2020 or 2021, an American Hotel & Lodging Association poll found, although a third said high gas prices would probably make them cancel their vacation plans and not reschedule.
Fuel prices, when adjusted for inflation, are still off their modern high of $5.32 a gallon in July 2008. They are also driving more fuel-efficient cars than ever before, meaning they’re getting more out of a tank of gas than they were during the Carter or Reagan era.
But a tipping point is approaching when the average household will soon start paying more than 3 percent of their disposable income on gasoline purchases, said Kevin Book, managing director at the energy analyst firm ClearView. That’s the point when drivers will probably start seriously looking at cutting miles, carpooling and canceling vacations, and what had been an annoyance for many becomes a widespread economic problem.
“A lot of things will get cut out of family budgets before the gasoline demand stops,” Book said. “A number of vacations probably got canceled for August, but those already booked for May are probably going to go through.”
Even then, the move to electric vehicles will require years to really take off, said Seth Goldstein, an analyst at the market research firm Morningstar. He said the shift will accelerate as costs come down, more varied models hit showrooms and charging stations take shorter times to rejuice a car.
“I think we’ll see EV adoption speed up,” Goldstein said. “The infrastructure bill signed last year should fund the development of thousands of fast charges along highways and in the cities, and that should all help boost EV adoption the next several years. But you know, these things aren’t immediate.”
Certainly not fast enough to help Democrats this November.
In the shorter term, Congress can ease the supply-chain crunch plaguing electric vehicles by passing bipartisan legislation to spur the domestic production of chips and semiconductors, said Hoyos, of the Zero Emission Transportation Association. But even that, he acknowledged, won’t offer an immediate solution.
Hoyos said ZETA is also pushing to expand the federal tax credit for electric and plug-in hybrid vehicles, and having it apply at the point of sale, which would lower the purchase price instead of showing up a year later as a tax savings. The group also wants Congress to expand the tax credits to include used electric-vehicle purchases and remove the cap that reduces the tax credits once a manufacturer has sold 200,000 vehicles.
If Senate Majority Leader Chuck Schumer and Sen. Joe Manchin (D-W.Va.) can come to an agreement that includes some or all of those policy changes, Hoyos said, the American electric vehicle market can become “a huge success story.”
Democrats are negotiating on the tax credits, including whether to include an additional credit for cars made in America and a third credit for vehicles manufactured with unionized labor, Rep. Sean Casten (D-Ill.) said in an interview. Republicans, meanwhile, are seeking to expand oil production. But none of the ideas being pitched will make an immediate dent in energy prices, he said.
“Anything that we do that requires construction or new manufacturing materials will take time,” Casten said. “None of those things are going to be built fast enough to change the trajectory. But I’m hard pressed to find something more effective to do than to give people access to electric vehicles and renewable energy.”