Why Electric Vehicles Won’t Sell

It’s basic economics at work

Researchrecap explains, (bold emphasis mine)

A new survey from Deloitte shows that 78 percent of consumers in the United States would consider purchasing an electric vehicle (EV) when fuel prices reach $5.00 per gallon. The study, Gaining traction: Will consumers ride the electric vehicle wave?, surveyed 12,000 consumers globally, including more than 1,000 in the US, and finds that the higher the price of fuel, the more interested consumers are in EVs.

“Offsetting the fuel factor is the finding that the better the fuel efficiency of internal combustion engine (ICE) vehicles, the less interested consumers become in EVs,” said Craig Giffi, vice chairman, Deloitte LLP and U.S. automotive practice leader. “A total of 68 percent of consumers in the U.S. and 57 percent in China are less likely to consider an EV if they are able to find ICEs with a fuel efficiency of 50 miles per gallon.”…

More than half of U.S. consumers surveyed are not willing to pay any price premium for an EV compared to a regular car (ICE) while only 8 percent are willing to pay a price premium of more than $3,000.

Moreover, the overwhelming majority of these consumers (77 percent) expect to pay less than $30,000 net of government incentives. In Europe and China however, it becomes an even more significant challenge as the majority of consumers expect to pay less than $20,000 for an electric vehicle and more than 50 percent of consumers in these markets refuse to pay any kind of price premium for an electric vehicle.

Consumers have continually been weighing on the tradeoff between utility “better the fuel efficiency of internal combustion engine (ICE) vehicles” and prices “when fuel prices reach $5.00 per gallon”.

Currently, fuel prices have not been high enough to sway consumers towards Electric Vehicles (EV). And this has been happening in spite of US government’s interventions (via incentives).

That’s because prices determine people’s actions, as Friedrich von Hayek wrote, (bold highlights mine)

prices are signals which enable us to adapt our activities to unknown events and demands, it is evidently nonsense to believe that we can control prices. You cannot improve a signal if you do not know what it signals.

Bottom line: government intervention has failed to modify people’s behavior. Prices will.