While both Ottawa and Washington are aiming to eventually eliminate new gas-powered cars from being sold, consumer demand for electric vehicles (EVs) is currently languishing and the true cost to the consumer of an EV is a subject of debate.
“EVs have consistently failed to compete with combustion vehicles on performance and cost, and failed to win broad consumer support despite oceans of government subsidies for manufacturers and buyers alike,” said an Oct. 11 Fraser Institute op-ed.
Even with strikes plaguing the industry, “the bigger story in autos is the EV slowdown,” RBC Capital Markets global auto analyst Tom Narayan told CNBC on Oct. 30.
He said high interest rates affect affordability and EV pricing has to fall, adding that consumers also prefer bigger SUVs and are choosing hybrids over EVs.
An Oct. 31 Fraser Institute report said up to 90 percent of U.S. EV purchase incentives have flowed to the wealthiest 20 percent of households, noting, “To date, most EV buyers in the U.S. and Canada have had incomes well above the respective national average.”
From Natural Resources Canada to RateHub.ca to CleanEnergyCanada.org, Canadians are led to believe that owning an EV is cheaper or more efficient than its gas-powered counterpart. But these analyses fail to consider the extraordinary government support and regulation in place to engineer a monumental transition.
In an Oct. 25 Texas Public Policy Foundation (TPPF) study titled “Overcharged Expectations: Unmasking the True Costs of Electric Vehicles,” co-authors Brent Bennett and Jason Isaac say no one has tried to calculate the full financial benefit of direct subsidies, regulatory credits, and subsidized infrastructure that make EVs viable.
‘Basic Economic Realities’
“Electricity is a long way from becoming a cost-effective transportation fuel compared to gasoline,” the TPPF co-authors say.
They calculate that the true cost of fuelling a 2021 EV, including excess charging costs and subsidies, is US$17.33 per gallon of gasoline. Gas prices in the United States can be found for less than US$4 a gallon currently.
The TPPF study showed that, in the United States, an average model year 2021 EV would cost US$48,698 more to own over a 10-year period without US$22 billion in government support to EV manufacturers and owners.
“The lesson to be learned from this study is that markets, not government, drive innovation and efficiency,” says the study.
A J.D. Power survey of Canadians in June found that just one in three new car consumers are likely to consider an EV in the next two years.
