After years of sluggish adoption, electric vehicles are poised for a sharp increase in sales, new products and investments that could eventually make the gasoline engine a thing of the past.
Look no further than Wall Street, where investors are positively giddy about the prospect of established automakers offeringfull lineups of electric vehicles, like General Motors, and about the chances of startups like Lucid Motors and Rivian that are promising groundbreaking EVs to come.
In recent weeks, GM, Volvo and Jaguar have announced commitments to phase out gas-powered vehicles within the next 15, 10 and five years. Tesla’s lineup has always been fully electric.
Plus, the arrival of the Biden administration and a Senate controlled by Democrats are giving electric car proponents hope of a new round of tax incentives to encourage electric car buying.
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“The EV industry is entering a golden age,” Wedbush Securities analyst Dan Ives said in a research note, noting that improvements in battery technology, tax incentives and more affordable models could lead to soaring demand.
To be sure, sales of EVs remain a sliver of the overall auto industry, representing only about 2% market share in 2020, according to Cox Automotive, which owns Kelley Blue Book and Autotrader. But that figure is expected to double to 4% in 2021, Cox executive analyst Michelle Krebs said.
She cautioned that automakers’ commitments to switch to electric vehicles can be “squishy” – that is, susceptible to change down the road if sales don’t go so well.
“We have to keep in mind these are intentions,” Krebs said. “There are things that can get in the way of those intentions.”
There are still plenty of signs that the gas engine isn’t going anywhere anytime soon, including lingering concerns about electric vehicle battery range, cost and the availability of public car chargers.
But interest in EVs is picking up. Some 52% of car owners say they probably or definitely will own an electric vehicle within the next 10 years, up from 34% in 2018, according to survey data provided to USA TODAY in advance of its broader publication by car-buying site CarGurus.
What factors will decide the pace of the EV revolution? Here’s what to watch for:
How quickly will electric vehicle prices come down?
This may be the most important factor. While automakers have reduced the cost of battery development, it remains the main reason why electric cars have higher price tags than gas cars: often in the high five-figure range.
The Tesla Model S sedan and Model X SUV can easily top $100,000. Lucid’s new vehicles will also easily go into six-figure territory.
Tesla’s most affordable vehicle is the Model 3 compact car. While the price has changed several times, it’s generally hard to get for less than $40,000.
But even electric cars from non-luxury brands are still fetching a premium over comparable gasoline vehicles. The Chevrolet Bolt electric car starts at about $36,500, which is about $10,000 more than similarly sized gas vehicles from mainstream brands.
Can maintenance and fuel savings make up the difference?
While prices remain high, advocates of electric cars say they often make up for it by saving owners money on gas and maintenance. Electric vehicles have fewer parts, don’t use much or any gas and don’t require oil changes.
Owning a compact electric car costs an average of about $600 more than owning a gas car, according to AAA, though the cost varies considerably depending on electricity prices and usage.
Joel Spurlock, a Salina, Kansas, resident, and his family own a Chevrolet Volt semi-electric vehicle and a Chrysler Pacifica plug-in hybrid. Both of his vehicles can travel dozens of miles on electricity before using gas.
But in 2020, when the pandemic was limiting travel opportunities, Spurlock said he drove 11,000 miles in his Volt without using a drop of gasoline. He also loves the instant propulsion that you get from an electric vehicle.
“People that object have never driven one,” he said. “Then get in, they punch it and it snaps their head back.”
Will there be enough electric vehicle chargers?
The single most influential factor that would convince Americans to buy an electric vehicle is the availability of charging stations in their area, according to the CarGurus study.
The “real-world limitations” of EVs, including limited range and the need to strategically plan out a route ahead of time on longer trips, are significant drawbacks, said Tom Ryan, an attorney who lives in Union County, New Jersey, and works in Manhattan.
Ryan said he remains “a little skeptical” about EVs. His family is currently considering replacing their gas-powered Honda Civic and Volvo XC70, but he doesn’t think an EV is practical for their lifestyle at this point.
“There’s a lot of planning that’s involved in that, and I don’t think the infrastructure is there yet,” he said. “I’m not convinced that it’s widely available up here.”
Will automakers make the kind of EVs that Americans want?
Gas-powered cars have been falling out of favor for years, with automakers discontinuing vehicles like the Honda Fit, Chevrolet Cruze and Ford Focus. In their place are SUVs like the Honda Passport, Chevrolet Blazer and Ford Bronco.
Yet very few automakers are offering electric SUVs. Most are still cars.
The CarGurus study showed that “electric SUVs and crossovers are most likely to be considered (by shoppers), but few of them are available on the market today,” said Madison Gross, director of consumer insights at CarGurus.
The few include crossovers like the Tesla Model Y and the Hyundai Kona EV. But more are coming, including a GMC Hummer SUV, the Rivian R1S and the Ford Mustang Mach-E.
Today, the three most popular vehicles in America are gas-powered pickups made by Ford, Chevrolet and Ram. But electric pickups are on their way, too, including the Tesla Cybertruck, an electric Ford F-150 and the GMC Hummer pickup.
Will electric car tax incentives help?
A long-established federal tax incentive for electric vehicles is worth up to $7,500, but it can no longer be used to purchase vehicles made by Tesla or GM since they’ve surpassed their caps.
But multiple bills introduced by Democrats in Congress since President Joe Biden took office would raise the limits, providing additional incentives that could supercharge the market for EVs.
“Under the new administration and in light of the new U.S. Congressional makeup, we think federal legislation will be passed that will benefit EVs,” CFRA Research stock analyst Garrett Nelson said in a research note.
“While it is too early to predict what form this legislation might take, green energy and electric vehicles were one of the centerpieces of President Biden’s campaign platform, as he proposed new tax incentives, government purchases, and other measures to benefit EVs.”
Can EV startups compete?
In recent years, several electric vehicle startups have begun making big promises. Among them are:
• Lucid, which is led by CEO Peter Rawlinson, a former chief engineer of the Tesla Model S. Lucid has pledged to deliver the Lucid Air electric sedan in 2021, with one option starting at $139,000 and providing more than 500 miles per charge, an industry high. The company is poised to go public later this year, and is valued at $24 billion.
In an interview, Rawlinson said Lucid’s technology is “world-class” and capable of competing with the best in the business, which, he said, is currently his former employer Tesla.
• Rivian, which is poised to begin selling an electric SUV and electric pickup later this year. The company, which has fetched investments from the likes of Ford and Amazon, has raised $8 billion since 2019.
Rivian, which will manufacture its initial vehicles at a former Mitsubishi plant in Illinois, is expected to pursue an IPO valuing it at $50 billion later this year, according to Bloomberg.
• Fisker, Lordstown and Bollinger. All three of these startups are also promising glistening new built-from-scratch electric vehicles in the coming years.
Are electric car investors too exuberant?
Investor interest in EVs soared in early 2021 as they sought to capitalize on the future of transportation. Tesla’s shares briefly topped $900, up three-fold since September, before falling back below $700 in recent weeks.
Volvo CEO Håkan Samuelsson said in an interview that investor interest in electric vehicle companies may have gone “a bit over the top.”
But “I think it shows that the financial sector and investors are really believing the car market will be electric,” Samuelsson said. “So I think it’s encouraging.”
With Lucid valued so highly despite never selling a single car, industry observers are watching closely to see whether the company delivers on its promises, including a groundbreaking combination of electric motors and inverter technology.
The Lucid Air’s arrival was recently delayed from the first half of 2021 to the second half, but Rawlinson said that delay was due to quality issues caused by COVID-19-related delays at suppliers. He argued that Lucid’s vehicles would exemplify the essence of quality.
“We’ve got the capital. This is a one-shot deal to make a real high-quality product,” he said.
Lucid, he said, will not make the same mistakes that Tesla made in the early going on the assembly of the Model 3 when CEO Elon Musk acknowledged that the company invested too much in automated equipment.
“We’ve got a much more manual approach to a general assembly line where we put the car together,” Rawlinson said. “I think that was one of the pitfalls (for Tesla). And we believe in the value of human dexterity for lots of reasons.”
Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.