Will your next car run on electricity?

Will your next car run on electricity? Nearly 9 percent of the new cars sold last year worldwide were electric, up from 2.5 percent in 2019, according to the International Energy Agency. By 2025, 25 percent of all new vehicles sold in the U.S. will be fully electric or plug-in hybrids, the Boston Consulting Group predicts. 

“It’s one of the biggest industrial transformations probably in the history of capitalism,” Scott Keogh, chief executive of Volkswagen Group of America, told The New York Times.

Automakers are rushing to get ahead of their rivals. The industry is on track to invest half a trillion dollars in the next five years to make the transition to EVs, Wedbush Securities, an investment firm, estimates. Companies are planning more than a dozen new electric car and battery factories just in the United States.

The excitement was evident to the huge audience tuned into February’s Super Bowl. As Axios put it, “The suite of expensive ads shows how automakers are increasingly devoting marketing dollars to new and upcoming electric models.” For example, Arnold Schwarzenegger played Zeus in a BMW spot hyping EVs, and in a GM ad Mike Myers revived Dr. Evil. 

If you go electric, you will have a wide range of options. Scores of new electric cars, trucks, vans, and SUVs have already been announced, and more will be soon. Ford decided that its F-150 truck, the long-time leader in vehicle sales, will be available as an EV (named “Lightning”), and it has sold out all 200,000 offered so far. 

One of the buyers is Eddie Berry, the owner of an auto-parts delivery business in Groveport, Ohio. He has long relied on pickup trucks for work and camping trips. He had little interest in EVs until the Lightning. His roughly $75,000 truck will be delivered this spring. Since the Lightning can be used as a power source, it will revolutionize Berry’s tailgate at Ohio State football games. “I’ll be able to set up my big-screen TV,” Mr. Berry told The New York Times. “I can power the electric smoker I use for ribs and pork. I’m superexcited. I’m going to be the guy everybody’s talking about.” 

Around the world, the rapid shift to embrace electric vehicles is creating opportunities for tech companies to join the auto market since EVs are simpler to manufacture than cars carrying internal combustion engines. That explains the partnership announced recently by Sony and Honda, which plan to begin selling their cars in 2025. 

Of course, any industrial transformation on this scale faces challenges. The U.S. will need at least 1 million public chargers by 2025 — up from about 131,000 publicly available plugs today.

Range anxiety has declined because most EVs now have a driving range of at least 250 to 300 miles. But it remains a concern for many potential EV buyers. "Access to charging infrastructure is really the biggest hurdle now," Bonnie Datta, founder of Plug To Grid Strategies, told Axios.

The Biden administration's $5 billion electric vehicle charging plan — while far short of what's needed — is a psychological play meant to ease Americans' anxiety about driving an EV, experts say. The plan is to strategically place 33,000 fast-chargers along desolate stretches of interstate highways, thus reassuring drivers they'll never be stranded. 

Fast-chargers? They can recharge an EV to 80 percent in just 20 minutes — about the time it takes to grab a snack and use the bathroom at a rest area. Ten percent of the federal chargers will be fast, while the rest will be "slow" Level 2 chargers for apartment buildings or for topping off while at destinations like stores, libraries, and churches. Fast-chargers cost about $150,000 — at least 10 times more than a Level 2 charger. 

Another challenge is obtaining a steady supply of the raw materials, such as lithium, to make the batteries. The nation’s best and brightest are working to advance battery technology and thus reduce dependence on sources in China and elsewhere. U.S. automakers and their suppliers “are racing to develop a new generation of batteries that are cheaper, can pack in more energy and charge faster,” The New York Times reported.

Even the nation’s traditional system of sales can slow the transition to EVs. Most Americans cannot buy a car directly from the automaker, The Atlantic’s Robinson Meyer pointed out. In 17 states, laws forbid any automaker from opening a store and selling its vehicles directly to customers. Another 11 states allow only one automaker, Tesla, to open stores and sell directly to state residents. 

Daniel Crane, a law professor at the University of Michigan who studies dealer-protection laws, explained to Meyer that EVs, with their lower upkeep costs, can’t provide the cash flow that dealers need to survive. Dealers’ “economic model is to make all their money on service,” said Crane. “They have a 30 percent margin on service, but only a 5 percent margin on sales…. If you want to see more rapid market penetration of electric vehicles, then prohibitions on direct sales are a major barrier.” 

Congress took a look at the pace of EV market penetration March 8 during a hearing before a subcommittee of the House Energy and Commerce Committee.  “If we want to reduce Putin’s power… then we need to double-down on alternatives, not on the same old failed policies of the past,” said Committee Chairman Frank Pallone Jr. (D-NJ), adding that with the bipartisan infrastructure bill passed last November, “we have the historic opportunity to charge forward on EVs.” The bill set aside $7.5 billion for electric vehicle charging infrastructure and a $2.5 billion competitive grant program with funding designated for rural and underserved communities. Pallone said the U.S. must make “smart investments to usher in the post-oil era as quickly as possible.”

Here’s another way to step up the pace on EVs: Put an honest price on carbon. That will make gasoline-powered cars less appealing. Please encourage those who represent you on Capitol Hill to take that common-sense step.