Why Electric Vehicle Adoption Is About To Go Through The Roof

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Where Is Electric Vehicle (EV) Adoption Now?

Impediments To EV Adoption

  1. High sticker price compared to conventional vehicles
  2. Range anxiety; due to a mixture of low vehicle ranges and lack of charging infrastructure
  3. Misconceptions and lack of widespread information

It is my own opinion that the first two issues are greater in perception than reality (see reason #3); higher sticker prices are largely offset by lower running costs that people often fail to fully consider, and most people don’t realize how much charging infrastructure exists or how little they typically drive until you own an EV. The third reason can be most obviously seen in a couple stunning statistics; like that 42% of people think that EV’s can’t go through a car wash, or that 82% of people believe an EV battery will require replacement within two years. Simply put, a huge portion of the population either knows absolutely nothing about EV’s or has huge, negative misconceptions about them.

None the less, these are the primary issues holding EV adoption back, so I’m going to explore them — starting with price and range, since they’re highly connected.

Electric Vehicle Prices

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Source for MSRP: The Car Connection

To view the evolution of electric vehicle prices, I took 4 of the earliest available EV’s and tracked them from their inception (2011 or 2012 depending on model) until present day. The good news is that all of them aside from the Tesla Model S (which was never designed to be affordable) did see a price decrease. The bad news? Not by much, and price decreases have been inconsistent. However, this is a lot better than it looks.

Electric Vehicle Ranges

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Source For Ranges: The Car Connection

Now we see some pretty good improvement in their ranges over the last 7 years. The Nissan Leaf range has over doubled (from 73 miles in 2011 to 151 miles in 2018). The Tesla Model S came close to doing the same thing with a range that started substantially higher, going from 139 miles in 2012 to 259 miles in 2018. The Focus and Volt also saw significant increases in range as well.

Now, it’s important to consider price and range improvements at the same time to get a full picture of how quickly EV’s are progressing. For example, the Nissan Leaf dropped in price from $32,780 to $29,990 — but it also saw a large range improvement in that time-span as well. To do this, I invented a very simple composite metric that can factor in price and range improvements so we can get a fuller picture:

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MSRP / Range = Lower Score Means Better Value

To explain fully how the composite works, it’s a very simple formula: Vehicle MSRP / Vehicle Range. The result is how many dollars each mile of EPA range costs in purchase price; meaning a lower score is better. As a quick note, this makes the Volt look worse than it deserves since it’s the only plug-in hybrid, but the metric is meant to show improvement in individual models, not to compare them against each other ultimately.

Here, we are able to see the truly massive improvement these models have undergone. Here are the results in table form for ease of access:

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The basic conclusion is that EV’s have seen huge improvement the last few years; however, if you only look at price or range, you will get a misleading picture of that improvement.

What Has Driven These Huge Improvements?

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Source: Bloomberg New Energy Finance

Battery costs are typically the largest cost in an EV. This is key to understand, because it creates a very important trade-off between the high sticker prices on EV’s and solving range anxiety (reasons 1 & 2). Increasing an EV’s range would typically also substantially increase it’s price. In this case, as battery prices have been falling quickly, automakers have the option to either increase range, or to decrease the price. They have done both to some degree, but they have mainly chosen to increase range.

Range Anxiety

Fast Charger Growth In The US

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Source: Recargo Data / PlugShare

So not only are EV ranges quickly increasing, but fast chargers are rapidly going up as well. This makes for a very exciting mix. At some point — between the increasing EV ranges and growth of public charging locations — range anxiety will become a thing of the past (Appendix B).

Why EV Prices Are Set To Start Falling

Misconceptions and Lack of Information

I simply see these issues as largely self-solving. The crucial lack of EV knowledge is because there are so few EV’s on the road so far. Many people have never had a serious interaction with an EV owner. As EV’s continue to grow in popularity, EV knowledge will spread, causing even more people to become interested in them.

Appendix A

  • BC Hydro Survey from April 2018; cited too expensive as the most common reason (56% of people), and lack of range (39% of people) as the second most common reason.
  • Plug’N Drive Survey from May 2017; cited price as the number one reason (31% of people) followed by range anxiety (13% of people).
  • McKinsey & Company Survey from January 2017; cited purchase price as the first reason (25%), followed by range (24%) and charging availability (18%)
  • Union Of Concerned Scientists Survey from May 2016; cited price as the most common impediment (34% of people), followed by range / charging (~32% between 3 different options).

Appendix B

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The caveat here is that I don’t actually think a 500 mile range will be required for those people. As the general public becomes more aware of EV’s and as charging infrastructure proliferates, I believe the required range for most people will settle somewhere more in the middle. Where exactly, I am not sure.

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