Americans' love affair with automobiles seems to hit a speed bump when it comes to vehicles powered by batteries. Despite the proliferation of charging networks and an increasing array of electric vehicle (EV) models, a July poll by the Pew Research Centre revealed that less than two-fifths of Americans would consider buying an EV – a slightly lower share than the previous year. As we delve into the numbers, it becomes apparent that America's EV revolution might be losing some steam.

Demand Woes and Industry Reassessments

In the third quarter of 2023, battery-powered vehicles constituted only 8% of all car sales in the United States. Comparatively, less car-centric Europe saw over half a million more EVs sold in the same period. Chinese drivers outpaced Americans almost fourfold in EV purchases. General Motors (GM) struggled to make an impact in its home market, selling a mere 20,000 EVs between July and September, while over 600,000 fossil-fueled vehicles found new owners.

The disappointing demand is compelling American automakers to reevaluate their ambitious electrification plans. In October, Ford announced a $12 billion delay in EV investments, and GM postponed a $4 billion plan to convert a factory to electric pickups. Manufacturers like sk Battery and lg Energy, involved in building battery factories in the U.S., are also feeling the pinch, with layoffs and reduced output.

The hurdles in the American EV journey are putting a dent in the country's broader decarbonization efforts. As passenger cars contribute to a fifth of total carbon emissions, the automotive industry's ability to navigate these challenges will play a pivotal role in the success of the energy transition.

The Price Predicament

The primary obstacle to widespread EV adoption in America remains the cost. According to Cox Automotive, the average EV in the U.S. sells for $52,000, a figure not far from the $48,000 Americans typically pay for petrol vehicles. However, when factoring in total ownership costs over five years, the typical EV, at $65,000, becomes $9,000 more expensive to own than a petrol car. High costs related to home chargers, insurance, and relatively inexpensive gasoline in the U.S. contribute to this disparity. Even with a new tax credit of up to $7,500 for EV purchases, buyers face complexities, including the need for components manufactured in North America or using critical minerals from specific trade partners.

Quality Concerns and Limited Options

Quality problems further dampen enthusiasm for EVs. Recent recalls due to faulty battery packs, coupled with issues like faulty door handles, are discouraging potential buyers. While affordable EV options offer better value for money, they are scarce in the American market, with most automakers prioritizing higher-margin premium models over mass-market EVs.

Discount Dilemma and Future Prospects

The reluctance of American consumers to splurge on expensive EVs has led automakers to offer steep discounts, with Tesla reducing prices multiple times in the past year. On average, EVs are now being sold with almost 10% discounts, more than twice as generous as discounts on petrol cars. However, this is exacerbating profitability challenges for EV manufacturers.

Despite the current hurdles, American automakers are not abandoning their EV plans. Postponing investments rather than canceling them, many companies plan to unveil dedicated electrified platforms in the coming years. Teething problems with EV quality may be resolved as production matures, and improvements to the EV tax credit system might make it more accessible for buyers.

America's EV revolution might be navigating a roundabout, facing challenges in consumer acceptance, pricing, and quality. However, with ongoing adjustments, evolving technology, and a commitment to electrification, the wheels of change may turn more smoothly in the near future. The fate of the American automotive industry's energy transition and its contribution to the country's decarbonization efforts hang in the balance, waiting for a breakthrough on the road to widespread EV adoption.