Costly electric cars deter drivers from switching

(NYTIMES) – Mr Robert Teglia bought a Tesla Model 3 sedan even though he knew it cost more than many luxury cars.

The commercial real estate appraiser tallied the costs of a petrol vehicle and a Tesla, and realised that even after paying more to buy a battery-powered car, he would end up saving money on fuel and maintenance.

“I’m a Tesla buyer who didn’t buy it for altruistic reasons,” he said. “I bought it just because I think it’s awesome.” His wife, Dianne, bought one too.

Their decision illustrates the challenge automakers face as they push drivers to go electric to help address climate change. These cars cost much more than petrol vehicles and can make it hard for people to purchase one.

At the high end, a Tesla Model S starts at more than US$80,000 (S$109,000), and at the low end, a Chevrolet Bolt starts at US$31,000 – nearly US$10,000 more than a larger petrol-powered sedan like the Chevy Malibu.

As a result, many Americans cannot buy one electric vehicle (EV), let alone two like the Teglias, because they cannot make the large investment needed to reap savings that the cars can deliver on fuel and repairs. Less than 4 per cent of new cars sold in the United States in June were electric, a far lower rate than in China and Europe, which offer more generous incentives and have stricter auto rules.

Automakers have pledged to support the transition with dozens of new models. GM said in January that it would stop producing petrol cars by 2035. Ford Motor, Volkswagen and others are also aggressively pushing into EVs.

Electric cars common in high-income neighbourhoods

Consider Carmel Valley, the Teglias’ well-to-do neighbourhood in San Diego. Vehicle registration data compiled by Drive Dominion, a research firm, found there are more Teslas registered in the 92130 ZIP code, which includes most of the neighbourhood, than in all but two others in California, in Palo Alto and Orange County.

Banks of EV chargers have mushroomed in the neighbourhood, including 18 Tesla Superchargers at a mall’s parking garage.

The New York Times interviewed more than a dozen EV owners in this part of San Diego, and only a few cited environmental considerations as the primary motivator for buying an EV. Many were drawn in by technological novelty or were persuaded by friends and family members.

The people here are not Hollywood stars or billionaire tech entrepreneurs who might own Ferraris and private jets. But they are well off. The median household income in the area exceeds US$165,000, and half the homes are valued at more than US$1 million. Eight in 10 residents have at least an undergraduate degree.

Ms Elaine Borseth, a retired chiropractor, is another convert. Before she bought a Model S, she had never spent more than US$20,000 on a car. “It’s almost one of those cases where the more you see, it just kind of breeds upon itself,” she said to explain why her neighbourhood has so many electric cars.

Research backs up her intuition. Word-of-mouth plays a major role in car-buying decisions.

A 2017 study commissioned by the California Air Resources Board, a state agency, found that neighbourhoods that were early to adopt EVs continued to buy them at higher rates, suggesting that both socio-economic status and exposure to the vehicles play a role.

The places furthest along in switching to EVs typically share three traits, said Mr Gil Tal, director of the Plug-In Hybrid & Electric Vehicle Research Centre at the University of California, Davis: They have high-income individuals, many single-family homes, and early adopters who introduce the idea of going electric to others. People rarely give just one reason for buying electric. They tend to argue that EVs are fun, fast, easy and, as an added bonus, good for the environment.

Efforts to make electric cars more affordable

Interest in EVs is growing, but concerns about how far they can travel on a charge and about the availability of public charging stations keep many Americans from taking the leap. And then there is the cost.

Automakers and their suppliers have steadily reduced the cost of batteries, which are the main reason EVs are expensive. But it will probably be several years or more before EVs can achieve parity with petrol vehicles.

Electric utilities are also trying to encourage use of EVs, which increase demand for power, by installing public charging stations. San Diego Gas & Electric says a third of its chargers are in disadvantaged communities. The utility is also testing whether EVs can send power back to the grid when it is needed.

“You have to make it easy,” Ms Caroline Winn, the company’s chief executive, said about getting people to switch to electric cars. “But you also have to educate.”

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