Why the EV Market is so Volatile

2023 Rivian R1T charging at one of the two available vehicle charging stations at the University of Maine

Electric vehicles (EVs) have been slowly filtering into the North American automotive market for the past decade. Since the pandemic the number of electric vehicles on the road in the United States has risen by more than 200%, accounting for nearly 7% of all vehicles sold in the last quarter of 2023. With 2023 being the highest selling year for EVs so far (nearly 600,000 sold) the bar was expected to rise incrementally for the following model year, 2024. However, as time has shown many EV buyers, the market is not yet strong enough to predict such sales due to a number of factors. This is reflected in a 14% decrease in EV sales to start 2024. So why is this? The first reason for this hesitancy to purchase an EV is that the U.S. is still missing a large enough charging infrastructure for cross-continental travel to be possible, let alone long road trips. And although this has been an anti-EV talking point for over a decade now, the point still stands, as the majority of states lack charging stations along major interstate highways to make long distance travel possible. Second is that battery technologies are still far too expensive, take too long to charge, are far too heavy and have not proven to be particularly reliable. Although fast-charging technology has been introduced in many new EVs, they are still incredibly expensive to manufacture and purchase. To be clear, “fast” charging is completely relative to the charging times of other EVs, as sub-fifty minute charging times are now possible to reach ¾ battery life. Not to mention the general anxiety that comes along with being limited to 150-300 mile range depending on the model. Lastly, the main driving factor in EV market instability is the cost to purchase, and ultimately the cost to own. Although many manufacturers tout “cheaper running costs” than a gasoline powered vehicle due to lack of fuel expenses, purchasing a new EV with a range of at least 200 miles cannot be done for less than $50,000 (before dealership markups). Depreciation value in EVs greater than that of any other type of vehicle on the market. As of 2024, EVs will lose 50% of their resale value after five years of ownership, regardless of mileage. That is to say, electric vehicles are priced astronomically higher than their gas and diesel competitors and therefore are purchased in much smaller quantities when brand new. On top of this, EV manufacturers are continuously innovating and attempting new and improved forms of battery tech, which is ultimately altering their sale prices. The improvement of charging times and expected range has led to a massive decline in used EV sales as much of the tech from just 5-10 years ago is already considered obsolete. While all of these factors contribute to the instability of the EV market, it is important to consider lifetime expectations of these vehicles. While biased, it is important to consider these cars from a mechanics standpoint; how hard are they to work on? What is the expected lifespan of the parts being used in this vehicle? What does routine maintenance look like in an EV? Can they operate in the same climates as traditional gasoline and diesel engines? How reliable is this new technology and do you trust it with your life? 

2020 BMW I8 Hybrid

On this note, it is extremely important to consider the expected lifetime of a battery pack when buying an EV. Batteries in most modern EVs are expected to last between 60,000-150,000 (depending on the size) under normal operating conditions before needing to be serviced, most of which are covered under warranty. This makes for a completely carefree ownership experience for the majority of EV owners. However, something that is not often considered is what “servicing” an EV battery actually means.  Given some time, EVs tend to lose range capabilities, lose a charge quicker and take longer to charge, as most battery operated appliances tend to do. This essentially means removing the entire battery pack and replacing it with new lithium-ion batteries. This is usually (and hopefully) done within the warranty period of the vehicle. If you are unlucky enough to experience battery failure outside of the warranty period, you will be paying upwards $20,000-40,000 depending on the vehicle. In most cases, that is significantly more than what the car is worth. It is also, ironically, undeniably significantly worse for the environment to continue to produce and replace such large batteries, through processes such as EV nickel mining, but that's a story for a different day.  So why do I mention the importance of a “mechanic’s bias” mindset? Although gasoline and diesel vehicles can be just as unreliable at times, there is one thing that you can continuously count on: a mechanic’s ability to service it (or even your own ability). With EVs, you can only get them serviced at dealerships and it is almost entirely software related and not physical parts that need to be replaced. This, as many in the industry fear, may lead to the death of the mechanic trade due to monopolistic gatekeeping of service software on EVs, but that is a topic for another day. 

There are many reasons as to why the electric vehicle industry is so incredibly volatile. While the majority of these reasons can be solved with lowering EV prices, there are still a large number of consumers who may not trust EV technology for another decade or two. It took 80 years of innovation for vehicles to reach expected lifespans of 150,000-200,000 miles with lots of failures along the way that manufacturers were able to learn from. This should be the realistic expectation of the EV industry- we cannot expect the technology to improve overnight and therefore should not be afraid of failure. However in the meantime, owning gasoline or diesel powered vehicles should not be scrutinized or punished in any way, as some members of congress have suggested through taxation or fines. Technology needs time to develop, perfect and eventually become cheaper; till then all we can expect from the EV industry is instability.