The drive toward fleets of all-electric cars has cost major manufacturers billions of dollars and will cost billions more. There is no international car company that is not part of the race. The trouble for these companies is that there is mounting evidence that Americans have little interest in owning them.
In comments made recently, the head of Subaru said that the gamble on electric cars would be expensive but not rewarding anytime soon. Any reward in the American market is a decade off, if not longer. “The only EVs that are selling well are from Tesla,” according to Subaru CEO Tomomi Nakamura.
The evidence Nakamura offered was clear. Even Subaru, known for fuel-efficient cars, cannot sell plug-in electrics in the United States, although it has tried. Among the reasons he gave is that electric cars still are relatively expensive compared to gasoline-powered vehicles.
The anxiety is not new. All the large car companies that operate in the United States have electric cars or EV hybrids. Not a single one sells well compared even to mediocre-selling gas models. Gas-powered cars can still get 35 miles per gallon or better. With gas prices at $2.50 a gallon, and price tags on many of these smaller cars below $20,000, electric cars are a hard sell financially.
What does this mean for car manufacturers? Ford expects to have 40 electrified vehicles by 2020. It is part of an $11 billion investment to transform the company. Volkswagen is expecting to launch almost 70 electric vehicles by 2028. GM’s CEO Mary Barra anticipates her company to sell a million electric vehicles worldwide. GM is expected to have 23 electric cars by 2023.
If the head of Subaru is right, the overcapacity to build electric cars will become frighteningly high. Much of the industry could face a cost reckoning. Production of gas-powered cars, if demand stays high, would be constrained. Manufacturing, product development and marketing would all be upended.
Who wants electric cars in the United States? Aside from Tesla buyers, perhaps no one.
24/7 Wall St.Credit card companies are handing out rewards and benefits to win the best customers. A good cash back card can be worth thousands of dollars a year in free money, not to mention other perks like travel, insurance, and access to fancy lounges. See our top picks for the best credit cards today. You won’t want to miss some of these offers.
Flywheel Publishing has partnered with CardRatings for our coverage of credit card products. Flywheel Publishing and CardRatings may receive a commission from card issuers.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
