Why This Could Be a Critical Year for Electric Cars

Last year saw sales of only battery-powered cars increase in the United States, Europe and China, while deliveries of fossil fuel vehicles remained stable. The demand for electric cars is so strong that manufacturers require buyers to make a deposit months in advance. And some models are effectively sold out for the next two years.

Battery-powered cars have a progressive moment and will enter the mainstream this year as automakers begin selling an electric version of one of America’s favorite vehicle types: the pickup truck. His arrival represents the biggest upheaval in the auto industry since Henry Ford introduced the Model T in 1908 and could have far-reaching consequences for factory workers, businesses and the environment. Telepipe emissions are one of the major contributors to climate change.

While electric vehicles still account for a small share of the market – about 9 percent of new cars sold worldwide last year were electric, up from 2.5 percent in 2019, according to the International Energy Agency – their rapid growth could accelerate to 2022. Bani, erasing the suspicion that the internal combustion engine is heading towards obsolescence.

The proliferation of electric cars will improve air quality and help slow global warming. The air in Southern California is already a bit cleaner due to the popularity of electric vehicles there. And the boom is a rare piece of good news for President Biden, who has struggled to advance his climate agenda in Congress.

The auto industry is on track to invest half a trillion dollars over the next five years to transition to electric vehicles, according to estimates by Wadebush Securities, an investment firm. That money will be spent on refitting and building factories, training workers, writing software, upgrading dealerships and more. The companies are planning more than a dozen new electric car and battery factories in the United States alone.

“It’s probably one of the biggest industrial changes in the history of capitalism,” Scott Keogh, chief executive of the Volkswagen Group of America, said in an interview. “The investment is huge, and the mission is huge.”

But not everyone will benefit. Manufacturers of mufflers, fuel injection systems and other parts can leave the business, leaving many workers unemployed. Nearly three million Americans make, sell and service cars and auto parts, and industry experts say the production of electric cars will require fewer workers because cars have fewer components.

Over time, battery components such as lithium, nickel and cobalt may demand more than oil. Prices for these materials are already skyrocketing, which could limit sales in the short term by raising the price of electric cars.

[As big automakers ramp up electric vehicle production, some start-ups like Rivian are struggling to meet production targets.]

The transition may also be limited by the lack of space to plug in an electric car, making vehicles less attractive to long-distance commuters or apartment dwellers who cannot charge at home. There are fewer than 50,000 public charging stations in the United States. The infrastructure bill that Congress passed in November includes $ 7.5 billion for 500,000 new chargers, although experts say that number is too small.

And it may take time to see the climate benefits of electric cars: replacing the 250 million current fossil-fuel cars and light trucks unless governments offer big incentives to car buyers. Cleaning heavy trucks, one of the largest sources of greenhouse gas emissions, can be more difficult.

Nevertheless, the boom in electric cars is already reshaping the auto industry.

The biggest beneficiary – and the biggest threat to established order – is Tesla. Under Elon Musk’s leadership, the company delivered nearly one million cars in 2021, 90 percent more than in 2020.

Tesla is still small compared to the auto giants, but it commands the segment with the fastest growth. The Wall Street company is valued at about $ 1 trillion, 10 times more than General Motors. That means Tesla, which is building factories in Texas and Germany, could easily expand.

“The rate at which it is growing now will be even greater than that of GM in five years,” said John Cassessa, a former Ford executive who is now senior managing director of Guggenheim Securities, at the Federal Reserve Bank of Chicago forum in January.

Most analysts believe that electric vehicles will not take off until they become as cheap as the gasoline model – a landmark that is still a few years away for a reasonably priced car that most people can afford.

But while extreme weather makes the catastrophic effects of climate change more tangible, and electric cars are easier to maintain, cheaper to refuel and more fun to operate, affluent buyers are increasingly turning to electric.

Porsche’s Taycan, an electric sedan that starts at about $ 83,000, sold more than the company’s signature 911 last year. Mercedes-Benz sold about 100,000 electric cars and vans in 2021, up 90 percent from the previous year.

Ford will soon begin selling the Lightning, an electric version of the F-150 pickup truck that has topped the U.S. sales charts for decades. He initially planned to earn 75,000 a year. But the demand is so strong that the company is rushing to double the production of Lightning, which starts at $ 40,000 and lasts for more than $ 90,000. Ford stopped taking reservations after collecting 200,000.

“We will be able to sell to everyone what we can,” said How Thai-Tang, Ford’s chief product platforms and operations officer.

The growing selection of electric pickups and sport utility vehicles has been attracting buyers without interest in Tesla’s minimalist cars, the most popular in coastal cities and suburbs.

Take Eddie Barry, owner of an auto-parts delivery business in Groveport, Ohio, near Columbus. It has long been associated with pickup trucks for work and camping trips. Until Lightning he had little interest in electric vehicles. About $ 75,000 of its trucks will be delivered this spring.

“There’s a lot about this truck that will help me,” Mr. Said Barry. The locking front trunk, where the engine normally sits, will give it a safe place to carry parts. It will not cost 80 for fuel every few days.

And lightning can be used as a power source, so it will revolutionize its tailgate at the Ohio State Football Games. “I’ll be able to set up my big-screen TV,” Barry said. “I can power the electric smoker I use for ribs and pork. I’m incredibly excited. I’ll be the person everyone talks to.”

Sales of electric cars may be higher in 2021, but production is hampered. Volkswagen sold about 17,000 ID.4 SUVs in the United States, but it could have sold four times as much, Mr. Keog said.

Mike Sullivan, owner of dealership chain LAcarGUY, sold his ID.4s in the week of his arrival. “It’s the best-selling model when we have it,” he said. Supply will increase this year when Volkswagen will start producing ID.4s in Chattanooga, Tenn., Instead of importing from Germany.

On the upside, electric vehicles are already competitive in price and can save buyers thousands on maintenance and gasoline. (Electric cars do not require a change in oil, and electricity is usually cheaper per mile than gasoline.)

The Tesla Model 3 and Jaguar XF P250 sedans retail for about $ 46,000. But the cost of owning Tesla for five years is 16,000 less, according to the Kelly Blue Book, a vehicle appraisal company.

If Europe and China meet any criteria, sales of electric vehicles in the United States will continue to explode. In December, battery-powered cars surpassed diesel cars for the first time in Europe. More than 20 percent of new cars in 18 countries, including Britain, were electric, according to Matthias Schmidt, an independent analyst in Berlin.

In 2015, more than half of Europe’s new cars ran on diesel, a result of tax policies that make diesel cheaper than gasoline. But penalties for car manufacturers that do not meet government incentives and emission targets for electric cars have changed the equation.

About 4 percent of new cars in the United States were electric last year, up from about 2 percent in 2020.

The issue with electric cars is to reduce tailpipe emissions, the leading source of carbon dioxide and the pollutants that cause haze. According to the South Coast Air Quality Management District, in Southern California, electric cars have already had a small impact on air quality, resulting in a 4 percent reduction in nitrogen oxide emissions from passenger cars. Los Angeles.

Of course, battery-powered cars also have an environmental cost. But even considering the energy and raw materials they need, electric vehicles are better suited to the climate than conventional cars, according to a study by the Yale School of the Environment.

Inevitably, this significant transition will cause chaos. Most new battery and electric car factories are planned by automakers in southern states such as Georgia, Kentucky, North Carolina and Tennessee. Their benefits could come at the expense of the Midwest, which would lose internal combustion production jobs.

That hasn’t happened yet, as gasoline vehicles still dominate sales. But as the battery power market share, the traditional model will benefit less from the cost savings that come from stamping the same vehicle thousands of times.

The next few years could be dangerous for car makers who are slow to offer electric vehicles. Toyota, a leader in hybrid vehicles, will not offer battery-powered cars until the end of this year. Ram has no plans to release Ford’s Lightning competitor by 2024.

Chinese companies like SAIC, which owns the British MG brand, are using the technological shift to enter Europe and other markets. Young companies like Lucid, Revion and Neo aim to follow Tesla’s playbook.

Old line car makers face a tough learning curve. GM recalled its bolt electric hatchback last year due to the risk of a battery fire.

Companies with small machine shops in Michigan or Ontario that produce piston rings and other parts are most at risk. At the moment, these businesses are busy due to the demand for all vehicles, said Carla Bailo, chief executive of the Center for Automotive Research in Ann Arbor, Mich.

“Many of them have blinds and they don’t look down the road,” she said. Bailo said. “It bothers me.”

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