By Ronald Stein
Ambassador for Energy & Infrastructure, Irvine, California
With half of the EV’s in the entire country being located in California, the recent 2021 California study may be a downer for the EV excitement as it shows that EV’s are driven half as much as internal combustion engine vehicles. The study illustrates that EV’s are generally second vehicles and not the primary workhorse vehicle for those few elites that can afford them.
To date, zero and low emission vehicles are generally from the hybrid and electric car owners which are a scholarly bunch; over 70 percent of EV owners have a four-year college or post-graduate degree. This likely explains why the average household income of EV purchasers is upwards of $200,000.
If you are not in that higher educated echelon and the high-income range of society, and a homeowner or resident of a NEW apartment that has charging access there may not be an appetite for an EV. EV’s have yet to attain the status of being the family’s primary vehicle workhorse with their limited usage.
Another challenge for the EV growth is the EV charging dependence on intermittent electricity from wind and solar. Adding EV charging loads onto the grid that is becoming more unstable is like putting salt in the wound. Power outages are now commonplace in California and Texas with more to follow throughout the nation as we adjust to a life dependent upon the time of day and the weather.
The highly educated, and well compensated EV owners that take advantage of State and Federal subsidies are sparingly using their “green” vehicles. With them setting the pace, how will the middle-income and those on fixed incomes be able to buy into the EV evolution?
The California EV market is looking for the less fortunate to belly up and join the EV train. That may prove to be a financial challenge with 45 percent of the California population – that’s a whopping 18 of the 40 million residents of the state – being Hispanic and African American – having average incomes of less than half of present EV owners. Additionally, California has the highest homeless population which is the fifth largest percentage of homeless (behind D.C., New York, and Hawaii, and Oregon), and has the second highest poverty rate.
The unintended consequences Governor Newsom’s recent Executive order to ban the sale of gas-powered vehicles by 2035 may be an incentive for those least likely being able to afford a new car, or a second car, to continuously re-register their existing internal combustion vehicles.
Governor Newsom may have forgotten that whatever type of vehicles uses the roads, there are huge funding requirements for both California’s transportation infrastructure, and for the numerous environmental compliance programs that have come from the gas pumps. The state and federal subsidies help lower the price of EV’s, but EV owners do not pay any gas taxes for California’s almost 400,000 miles of roadways that are heavily dependent on road taxes from fuels that contribute more than $7 billion annually, the same tax base that will be diminishing in the decades ahead.
EV buyers hope to save from the cost of fuels as the all-in posted price of fuel at the pump includes non-transparent costs added to the actual fuel costs, such as: federal tax, excise tax, state tax, local sales tax, cap and trade program compliance costs, low-carbon fuel standard program compliance costs, and renewable fuels standard program compliance costs.
California’s Newsom may also have forgotten that his own Democrats overwhelmingly defeated Senator John Moorlach’s sponsored SB 1074 in 2018 “Disclosure of government-imposed costs” at the pump. The Supermajority Democrats in the legislature remain content with non-transparency of the numerous costs that are “dumped” onto the posted price of fuel, as they are content with keeping the public blissfully ignorant of the many taxes and regulatory costs that drive up prices, to the point that Californians continue to pay almost $1.00 more per gallon of fuel than the rest of the country. An Exxon gas station recently expressed their “transparency opinion” at the pump.
EV buyers beware that the “tax equalizer”, the “VMT” is coming. The Vehicle Mileage Tax (VMT) that has been discussed for years sounds like a logical idea – requiring the users of the highways to pay the fees to maintain those highways. The VMT tax will be needed to replace the $7 billion annually from fuel sales that will be diminishing in the decades ahead.
The challenge for a VMT will be how to implement that great idea which may require annual odometer readings! Lookout for Governor Newsom’s next Executive Order for a VMT requiring annual odometer readings so that each person pays their fair share to maintain the roads they are using to replace the diminishing fuel taxes!
In the United States there were17 million vehicles of all types sold in 2019. EV sales were a dismal 2 percent of the total, i.e., about 350 thousand. California new car sales were more than 10 percent of the nation as California vehicle sales have exceeded 2 million for three straight years.
In a recent Los Angeles Times article, citing Edmunds data, The number of battery-electric models available more than doubled from 2018 to 2019, but EV sales budged in the wrong direction. In response to the major efforts by manufacturers, the horrific EV sales data shows that only 325,000 electric and plug-in hybrid vehicles were sold in the U.S. in 2019, down from 349,000 in 2018. As mentioned previously, half of all EV’s in America are in one state – California. The rest of the country seems to be less enthralled with EV’s. Are EV carmakers driving off a cliff?”
If the California trend of EV’s being low mileage driven second vehicles, and not being the family workhorse vehicles for the higher income owners, when and how will the lower income earners join the EV excitement?
Ronald Stein, P.E. Ambassador for Energy & Infrastructure