Article about electric vehicles
Posted: Fri Jul 12, 2024 6:19 pm
This reads like all these things are good. But they sound terrible. And terrible for the environment.
…Could electric vehicles bring back those glory days of brisk sales and rapid obsolescence? In some ways, EVs resemble cellphones: Technology on them keeps improving rapidly and they are powered by batteries that degrade over time and depreciate quickly.
It is still early days. EVs make up 6.8% of U.S. auto sales but just over 1% of light-duty vehicles today. As they become a bigger part of the fleet, they could once again rev up dealers’ business—through not only faster replacement cycles but also more frequent repairs. While EVs have fewer mechanical parts, a recent study from J.D. Power showed that owners of battery EVs and plug-in hybrids took their new vehicles to the dealership for repairs at a rate three times higher than gas-powered vehicle owners did.
One reason to think EVs could accelerate replacement cycles: EV technology is improving a lot more quickly than technology for gasoline-fueled cars, which have been getting optimized for at least a century.
“The incremental improvement you see every year on [gas cars] is relatively small. When you look at incremental improvement on EV technology, that’s actually quite phenomenal, especially the battery but also the energy management in the vehicle,” said Philipp Kampshoff, a senior partner at McKinsey who leads its Center for Future Mobility in the Americas.
Consider battery life: The median range on electric vehicles was 270 miles for 2023 model year cars, up 27% from five years earlier, according to the U.S. Department of Energy. The improvement is even more remarkable on high-end EVs: Back in 2018, the longest-lasting battery could hold 335 miles of charge. Last year, the highest battery range hit 516 miles. Like iPhone and iPad makers, EV manufacturers are able to do a lot of updates over the air, but these have limits when the physical components can’t keep up with the newest updates.
Expensive repairs are another reason EVs might get cycled out faster. They require more mechanical labor hours. EVs also have been depreciating at a faster rate than gas cars, which gives owners even more reason to opt for replacement rather than repair.
An EV bought brand new at the beginning of 2022 went for about half the manufacturer’s suggested retail price after about two years and one month of ownership, according to data from KBB and Manheim. Internal combustion engine cars and hybrids retained about 66% and 73% of their MSRP, respectively, after that period.
The recent depreciation for EVs was exaggerated by a series of price cuts on EVs that started last year with Tesla. High maintenance costs also can contribute to steep depreciation: Luxury cars, for example, lose value quickly precisely because they are so expensive to maintain and repair, notes Karl Brauer, analyst at iSeeCars.
The same math applies to EVs that get into collisions: They are more likely to be declared total losses and sent to the scrapyard than fixed. In the first quarter, total loss frequency for EVs up to three years of age exceeded that of gas cars, according to data from Mitchell, a provider of software and data to insurers and the collision-repair industry. Up until 2023, total loss frequency had been lower for EVs because of how expensive they were relative to gas cars.
Ryan Mandell, director of claims performance at Mitchell, said he expects to see higher total loss frequency for EVs going forward, partly because cheaper EV models—such as those made by Kia—are becoming more popular. When the baseline used EV price is lower to begin with, it becomes more likely that the cost of reimbursing a driver for a similar car is lower than the cost of repairing it.
Battery degradation is another issue. Federal law requires automakers to give warranty on EV batteries for at least eight years or 100,000 miles, whichever comes first. About 13% of EVs outside that warranty window (2015 model or older) reported battery replacements, according to Recurrent, a provider of a battery-monitoring tool for EVs. In many cases, a replacement might cost more than buying a used EV. Recurrent notes, though, that most EVs have been on the road well under six years, making it difficult to form judgments. Predictive modeling from the National Renewable Energy Laboratory suggests that EV batteries should last 12 to 15 years under moderate climates.
There is already some indication that EVs are getting cycled out more frequently than gas cars. The average age of all cars on the road has been growing, and hit a record high of 12.6 years in 2024, but the average EV age has declined from 3.9 years in 2021 to 3.5 years this year, per S&P Global Mobility. Part of that is because new EV registrations have grown, but it is also because more EVs are off the road. About 6.6% of EVs registered in the U.S. left the fleet between 2013 and 2022, according to S&P Global Mobility data. That compares with a roughly 5.2% scrappage rate for gas vehicles. Scrappage includes cars that were sent to the junkyard, exported or simply parked without being used.
Given how much younger the EV population is, the scrappage rate is “higher than what we’d expect,” said Todd Campau, associate director of aftermarket solutions at S&P Global Mobility.
EVs have hit a speed bump lately: U.S. sales have slowed considerably to a growth rate of 2.6% in the first quarter year over year, according to Cox Automotive. A McKinsey survey published in June showed that 46% of EV owners in the U.S. said they are likely to switch back to a conventional car, primarily blaming the lack of charging infrastructure and the high total costs of ownership.
That surely frustrates dealers at the moment, but EVs could work out very nicely for them in the long run.
https://www.yahoo.com/finance/news/deal ... 00632.html
and that just about describes my opinion on electric cars.