Electric cars are too expensive for many, even with climate bill aid

Battery-powered vehicles are considered essential in the fight against climate change, but most models are aimed at the more affluent.

< p class="css-at9mc1 evys1bk0">Washington policymakers are promoting electric vehicles as a solution to climate change. But an uncomfortable truth remains: battery-powered cars are way too expensive for a vast majority of Americans.

Congress has started trying to fix this problem. The climate and energy package adopted by the Senate on Sunday, the law on reducing inflation, would grant a tax credit to buyers of used electric cars.

But automakers complained the credit would only apply to a narrow slice of vehicles, at least initially, largely due to domestic sourcing requirements. And experts say broader action is needed to make electric cars more affordable and put enough of them on the road to drastically reduce greenhouse gas emissions.

bottlenecks will take years to unclog. Automakers and battery and chip suppliers need to build and equip new factories. Commodity suppliers must open new mines and build refineries. Charging companies are struggling to install stations fast enough. In the meantime, electric vehicles remain largely the preserve of the wealthy.

To some extent, automakers are following their usual game plan. They have always introduced new technologies at a luxury price. Over time, features and gadgets find their way into cheaper cars.

But emission-free technology has an urgency that voice navigation or massaging seats don't. had not. Transportation accounts for 27% of greenhouse gas emissions in the United States, according to the Environmental Protection Agency. Battery-powered cars produce far less carbon dioxide than gasoline- or diesel-powered vehicles. That's true even when accounting for emissions from power generation and battery manufacturing, according to numerous studies.

Just a few years ago , analysts predicted that electric vehicles would soon be as cheap to buy as gasoline-powered cars. Given the fuel and maintenance savings, going electric would be a no-brainer.

Instead, soaring prices of raw materials like lithium , a key ingredient in batteries, has helped drive up the average list price of an electric vehicle rose 14% last year to $66,000, $20,000 more than the average for all new cars , according to Kelley Blue Book.

Demand for electric vehicles is so strong that models like the Ford Mach-E are effectively sold out, and there are long waits for others. Tesla's website advises buyers that they cannot expect delivery of a Model Y, with a purchase price of $66,000, until between January and April.

< p class="css-at9mc1 evys1bk0">With such demand, automakers have little reason to target budget-conscious buyers. Economy-car stalwarts like Toyota and Honda are yet to sell significant numbers of all-electric models in the United States. The scarcity has been good for Ford, Mercedes-Benz and other automakers that are selling fewer cars than before the pandemic but are posting big profits. because the demand is greater than the supply,” said Axel Schmidt, senior managing director at Accenture who oversees the consultancy firm's automotive division. "The general trend right now is that nobody cares about low prices."

Advertised prices for electric vehicles tend to start around $40,000, with no include a federal tax credit of $7,500. Good luck finding an electric car at this semi-affordable price.

Ford has...