Why are electric cars not taking off?

This year saw how the strong demand for electric cars that occurred in 2022 and 2023 faded away. Sales or registrations of these vehicles continued to grow in Europe, the US and many other markets, but at lower rates.

In contrast, China, with its massive industry incentives, continues to shift more and more drivers from petrol/diesel cars to battery electric vehicles (BEVs) or plug-in hybrids (PHEVs). While until October, electric vehicles (BEVs + PHEVs) accounted for 40 per cent in China, in Europe they stood at 22 per cent and in the US at just 9.9 per cent.

What is happening in the industry and why are Western consumers not responding positively to a wider and more competitive electric vehicle offer?

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1. The price

The price: this is the main reason why many motorists in Europe and the US do not buy electric vehicles. They are simply too expensive compared to petrol or diesel cars. Despite the continuing efforts of car manufacturers to offer affordable models and generous government incentives in some developed economies, today's reality is far from promising. Purchase bonuses themselves have been cancelled in large markets such as Germany, leading to a slump in sales.

According to data from JATO, the average retail price of an electric car in September 2024 was 32 per cent higher than that of a combustion engine car in Europe and 18 per cent higher in the US. The price gap is still very large, especially considering that car prices in general have risen dramatically over the past five years.

Average retail price of a new car

Data: Jato, September 2024

2. Charging

Although the charging infrastructure is improving in Europe, the US and many other countries, it is still a big question mark for many potential EV buyers. According to ACEA, there were a total of 630,000 public charging points (PCPs) across the European Union at the end of last year.

The industry sold around 8.2 million EVs and PHEVs between 2015 and 2023. That is 13 EVs per PCP, assuming all these vehicles are still in use. In the case of the US, the ratio rises to almost 29 vehicles. This is a large number of vehicles per single charger.

3. The residual value

Since electrified vehicles are relatively new in the industry (they have not been around for decades like petrol or diesel cars), there are still many myths and doubts about their reliability. There are also concerns about the lifecycle of batteries, which on average account for 28 per cent of their cost, and a substantial lack of used cars that will bring people closer to electrification and set an example.

Until a culture of electric vehicles spreads and until there are more educated drivers, it will be difficult to dispel these myths that unequivocally affect the residual values of electric vehicles.

4. Range

Stopping to fill the tank of a petrol or diesel car is not a pleasant activity. One has to find the filling station, switch off the car, and wait a few minutes until the tank is full. The whole process can take about five minutes, depending on the queue at the service station. How inconvenient it would be if the time taken increased to 30-50 minutes!

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Fast chargers and better batteries should avoid these long waiting times. But, to date, it takes a motorist much longer to charge an electric vehicle than to fill up a petrol car.

Average range of available cars in Germany in the third quarter of 2024

The author of the article, Felipe Munoz, is Automotive Industry Specialist at JATO Dynamics.

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