Electric Vehicles: Not So Fast!

The Biden administration is proposing new automobile pollution limits that would require as many as two-thirds of new vehicles sold in the United States to be electric by 2032!

On a state level, California has taken it further, as they are requiring 100% of ALL new cars sold in 2035 and beyond be zero-emission vehicles, which include battery electric vehicles, plug-in hybrid electric vehicles, and fuel cell electric vehicles.  Oregon and Washington are following suit. 

The fact that 47 other states have not yet made a commitment, and with the average lifespan of a car in the United States pegged at about 12 years, there will still be a need for gasoline for decades to come.  The gasoline demand should start to drastically reduce by 2030 going forward.

You might be asking yourself at this point, what does this all mean?  There will be many hidden costs during our national quest to go 100% electric:

1. Gas Service Stations Will Close:   California’s shift away from gas-powered vehicles could mean as many as 80% of gas stations would be unprofitable by 2035!  The state currently has about 250,000 station owners and employees.  There will be many job losses across America during this transition.
2. Crumbling Infrastructure: Recently, a lower Manhattan parking garage collapsed as a four-story Ann Street structure caved in, leaving cars stacked atop one another and rubble down to street level.  The garage manager was killed, and 5 employees were injured.  One of the reasons was too much weight on the rooftop.  This problem will not be going away as electric cars, due to their heavy car batteries, weigh much more than gas-powered vehicles.  For example, the battery of an electric GMC Hummer weighs 2900 pounds, roughly the entire weight of a Honda Civic.
3. New Regulations Are Needed: Because electric cars weigh much more than gas-powered vehicles, building regulations and standards must be reviewed and the bar raised for parking garages, bridges, and the double-decker roads that are found in most big cities across the country.
4. Electric Battery Replacement and Disposal:  Depending on what source you trust; the typical EV battery will need to be replaced every 3-10 years.  Batteries may degrade faster in hotter climates as heat adversely affects EVs.  EV battery replacement costs range from $5,000 to $20,000 based on the pack, size, and manufacturer.  A Tesla Y battery costs $20,000.  The length and wording of electric vehicle warranties will be critical going forward!  If a battery fails during the warranty period, the dealer will have to replace that battery free of charge. 
5. Precious Metal Shortages:  The lithium-ion batteries found in EVs depend on 5 critical minerals; lithium, cobalt, manganese, nickel, and graphite.  Ramping up EV production quickly will create domestic supply shortages.  China knows this and has been siphoning natural resources (metals and minerals) from Africa for decades.  This has enabled China to lead the world in EV production.

The combination of the Manhattan parking garage collapse and a casual conversation I had with a nurse named Grace triggered the writing of this column.  Grace just purchased her Tesla Y in January of 2023 because her Mercedes came off lease, Tesla had decreased their prices and she “wanted to save money!” 

I asked her how it was going, and she gave me a surprisingly long answer and made several key points I didn’t think about, as I still drive a gas-powered car.  I expected to get a quick response that she was happy and saving money.  The points that she made were:

1. Geico Raised Her Premiums by Almost 30%: This was a surprise to hear.  I asked why and she said she called Geico, and they said it was because of the increase in the price of parts for Evs.
2. The Cost of Home Charging Installation: Grace said in the past, when customers bought Teslas, they received a home fast-charger with the car.  This was not the case for her.  She bought an aftermarket trickle charger that took days to charge as it charges only 3% per hour.  She also couldn’t use a blow-dryer while charging her car without blowing fuses.  She was quoted $1500 by an electrician to install the system, which did NOT include materials, permit, inspection, and a warranty.  She decided to abort that mission and tries to charge her Tesla at the North Shore Hospital garage (there are only 6 charging stations in total) during the 3 days she is working 12-hour shifts.  I know of parking garages that charge an extra $100 per month and charge the car for you.
3. She IS Saving Gas Money Weekly:  Nurse Grace was spending $50-$60 per week for gas commuting to work.  She now pays about $15 per week (measured in kilowatts) to charge her car at work when she can find a charging station. 

My Take is that we do need to transition to electric cars; however, for my Financial Wave readers, it is a little early to buy one now and expect to save big chunks of money every week. 

Over the next 2-4 years, there will be a proliferation of new EV cars introduced to the market which will bring down new EV car sticker prices.  As charging stations get funded and built and the technology advances, the kilowatt charges and charging times will lessen making the EVs a better purchase in the near future than they are now.