Reason Foundation: 2024 Update on the Decline of Electric Vehicles

Robert Poole's article titled The (Not So?) Surprising Decline of Electric Vehicles gives a useful update on the reduction of EV sales and manufacturing in the US.  All the text below is from Robert's newsletter.

Recent headlines in business media report trouble with the electric vehicle market. Last month, (all-EV) Tesla reported a 45% profit decrease in the most recent quarter, due to lower sales and the lower prices it’s recently been charging due to increased EV competition. GM announced delays in two planned EV factories—one for electric Buicks and the other for electric trucks. And Ford CEO Jim Farley announced that the company would focus more on smaller, less-expensive EVs, since its large ones are selling poorly. Ford’s EV unit had a $1.1 billion loss for the second quarter of this year.

What accounts for EVs’ declining popularity? A survey of electric vehicle owners by J.D. Power found that their battery electric vehicles (BEVs) and plug-in hybrids went back to the dealer for repairs at three times the rate of gasoline-fueled cars. And despite early claims that EVs would be low-maintenance due to fewer moving parts, etc., repairs and maintenance average more labor hours (possibly because mechanics are still getting familiar with them).

Kelly Blue Book and Manheim found that the residual value of BEVs after two years is significantly lower than that of gasoline cars, while hybrids held slightly more value than gas cars after two years.

Finally, when an EV gets into a collision, it is significantly more likely to be declared a total loss, rather than being repaired.

My engineer friend in Sweden, Michael Sena, editor of The Dispatcher, reported in the Summer 2024 issue the results of a survey of EV buyers by McKinsey & Company’s Center for the Future of Mobility, released June 12. They found that 46% of BEV purchasers say they will go back to an internal combustion vehicle for their next purchase. Their main concerns were about charging, the high cost of ownership, and the complexity of long-distance travel. Respondents were also upset that the range of the BEVs they purchased is considerably less than what it says on the sticker. They were also surprised by poor performance in very cold and very hot weather. Sena also reports the result of a different survey of residual value, by Cox Automotive, whose results paralleled those reported above—a faster decline than for internal combustion vehicles.

These may be short-term problems, due to the technology being new and charging networks still being rudimentary. But these findings certainly put down a caution flag for an expected total EV replacement within the next several decades.

Sample Savings of Buying a Used Car

 Excluding collectibles and a handful of specialized car models, buying a used car is cheaper than new.

Now that supply chain problems and electronic chip shortages are in the past, the used car market in the US has largely returned to pre-Covid-19, sane used car valuations.

The September issue of Consumer Reports includes a sample of eight 2021 model gasoline cars with their new car price in 2021 and their used car price in 2024. The savings are substantial, as shown below.

The CU article does not include any Electric Vehicles, but several of these have even lower price differences as used cars.

A Student's 3 Good Questions About Honolulu Rail

I receive about a dozen requests for interviews from students in Hawaii, mostly from the Univ. of Hawaii, working on papers or presentations about Honolulu's rail. Some of them are pure "make work" for me as the student lists 10 to 20 questions and expect me to write their paper for them. This recent inquiry from a high schooler was brief and on point. His request and my response below.

===

Dear Mr. Prevedouros,

I am a student at ‘Iolani School and would like to ask questions and gather information about the Hawaii rail system and its impact on traffic congestion. I read the transcript of your interview with Mr. Akina and read the article you wrote about the rail, and wanted to understand more about your perspective on the Hawaii rail system. Below are a few questions I would appreciate your insight on:

1. As many people know, you were opposed to the rail. You mentioned many red flags that you believed were going to be problematic. Now that the rail has opened, what are the top three indicators that proved you were right? 
2. Do you know where I can find data that shows whether or not the rail has succeeded in diminishing traffic as was promised? I haven’t been able to locate any statistics that prove the money was well-spent or that the investment was worth it for tax-payers (if that is possible)?
3. Considering your past criticisms on the rail, do you see any potential for the rail to become successful in the long run? And if so, what changes would be necessary to achieve that goal?

Thank you for taking the time to read and answer my questions!

===

Here are brief answers to your important questions, but first, I should clarify that as a conscientious engineer, I oppose stupid infrastructure proposals, not rail as a mode for metropolitan transportation. In fact, in my textbook, I recommend metro rail for dense communities over 5 million people; and high speed rail for connecting large urban centers located 100 to 500 miles apart.

1. Exorbitant costs for what it is (length and capacity) and very low ridership. The costs shouldn't have exceeded $6.4 billion but it'll exceed $12 billion (double or more than my high estimate of $6.4; at the time Oahu voted for it, its cost was stated at $4.6 billion). I also estimated that, when completed, rail won't carry the 105,000 daily riders forecast by the city-paid consultants, but up to 50,000. Post-Covid, 30,000 looks like the new maximum. So... the cost per passenger will be almost 6 times higher than originally planned!
2. Presently the rail carries 3,000 person trips (riders) a day. Its daily productivity is equivalent to 6 to 10 city buses, so its effect on traffic is minuscule and imperceptible. Recall that the city's EIS stated that the weekday number of trips on Oahu exceed 4 million. If you divide my estimate of rail trips by that you get... 30000/4000000=0.75%... that's less than 1% of Oahu's trips served by the rail, so even when rail is completed, its effect on traffic congestion will be practically zero.
3. Only after pigs fly! Unfortunately, until it is demolished or replaced, it will be a constant and major drag for Oahu's economy, i.e., a constant loss of taxpayer money to keep it going. Fares, at best, will cover 10% of its operating expenses and none of its construction and replacement or renovation costs that come due every 20 years or so.  After 30 years of operation, the delayed refurbishment of BART cost nearly $15 billion!

The Riveting Events of Ms. Chao's Drowning in a Tesla X

Click for the full article by Michael L. Sena 

Wiki: Ms. Angela Chao was chairwoman and chief executive of her family's shipping business, the Foremost Group, which operates a global fleet of bulk carrier ships. The Chaos have a net worth of $14.2 billion, according to Forbes.

<quote>This incident became international news for two reasons: 1) the person who drove the car was well known and very wealthy; 2) the person was the sister of Elaine Chao, who is both a former U.S. Secretary of Transportation and the wife of the current U.S. Senate Minority Leader, Mitch McConnell. The fact that the car was a TESLA added to the interest because the reason the car ended up in the water was linked to TESLA's unconventional gear-shifting design.

Approximately 400 people die each year in the U.S. in car accidents involving vehicle submersion. That is, the car enters the water and the person cannot get out before the inside of the car fills up with water and the person drowns. Four hundred is around 1% of all U.S. traffic-related deaths. We don't know how many of those deaths were intentional, or 'autocide' to use the official term, with the driver using the vehicle and water rather than intentionally colliding with an oncoming car or purposely steering their car into a tree. What we do know is that it is effective, because once a car is in the water and sinking, it is not easy for the driver or occupants to get out of the car, especially with most newer-model vehicles that have power windows and automatic door locks. That's the problem. A great deal of care is dedicated by car designers to how we enter and exit cars under normal conditions, and doors and windows are controlled, but cars are not designed for easy exit once they have entered into and are submerged under water, as the Angela Chao incident illustrates. 

It is not often that a car accident is described in such detail as the one involving Angela Chao. The entire event had many witnesses as the drama played out over two hours between when the car entered the water and when the victim was pronounced dead. Among the witnesses was Ms. Chao herself, who made a phone call to a friend as soon as the car was in the water, and she continued to talk to this person for eight minutes, relating the status of the water level rising inside the car and providing details of how the car ended up in the water. What we know about the incident is what was released by the police in a public report. Ms. Chao had invited seven close friends to the 4,500-acre ranch owned by her and her husband for a weekend party to celebrate the Chinese New Year. 

The party took place in a cottage on the ranch some distance from their home. The cottage is in close proximity to a pond. At around 11:37 p.m., security footage captured Chao walking alone and unsteadily to her vehicle, a Tesla Model X, wrapped in a blanket and holding a phone in her right hand. As she attempted a three point turn, the vehicle suddenly "shot backwards" down an embankment (or over a retaining wall; there are two variants of the story) and into the pond at 11.38. A toxicology report, ordered as part of the investigation into her death, revealed that Chao had a blood alcohol concentration of 0.233, well above the legal driving limit of 0.08 in Texas. Chao called one of her friends who was at the party at 11:42 p.m. At this point she had not followed the first rule of surviving a water-related accident, and the call violated the second rule.

Rule #1: When a car is entering the water, open a window and prepare to exit the vehicle as soon as it hits the water. The vehicle's electrical system should continue to function for at least a few minutes, so even electric window controls should work.

Rule #2: Don't waste precious time calling the emergency services until you are out of the vehicle. They won't get to you in time to keep you from drowning. A car can fill up with water in 60 seconds; the Tesla Model X took eight minutes.

The vehicle at this point was apparently floating but sinking slowly during the eight-minute phone call. Chao told her friend she had put the car in reverse instead of drive—a mistake she had made before, she told her friend—causing the vehicle to go over an embankment and into the pond. She told her friend that the water was rising inside the car, and she was going to die.

Someone (Another friend at the party?) called 911. Emergency units arrived at 12.23. a.m. We don't know if the inside of the car had filled with water at this point. Rescuers stood on top of the submerged vehicle and tried unsuccessfully to enter the vehicle, attempting to break the windows with a pole. A tow truck arrived, but the Tesla was over 20 meters from the shore, too far into the pond for the truck's chains to reach it. Additional emergency responders then arrived with diving gear and managed to break a side window, extracting Chao from the vehicle at approximately 12:56 a.m. EMS responders performed "advanced life support" for 43 minutes in an attempt to resuscitate her, but she was ultimately pronounced dead at 1:40 a.m. <end quote>

What Are the Best things Drivers Can Do to Improve their Driving Record?

My brief expert opinion in WalletHub:

Why is it important for drivers to check their Driving Record?

Much like people's credit scores and records, drivers need to inspect their driving records and be aware of relevant laws. There may be errors in the record that need correction. Also, incidents that occurred many years ago may still be listed although applicable law requires them to be expunged after, say, five years.

How often should drivers check their Driving Record?

Drivers should inspect their driving record if there is a change in their insurance premium if they plan to shop for and change insurance carriers, or every five years at the latest.

What is the best thing to do if drivers see an error on their Driving Record?

Drivers need to contact the DMV or relevant authority to request a correction and inform their auto insurance carrier of the error.

What are the best things drivers can do to improve their Driving Record?

Traffic safety clinics and defensive driving schools are good places to start improving a problematic driving record. Issues with drugs and alcohol must be dealt with; at a minimum, alternatives need to be found to avoid impaired driving at all times. Drivers with a propensity to speed would benefit by joining car racing clubs which provide safe ways to drive at high speed at race tracks and other venues off the public roads.

Is it Fair for Car Insurance Companies to Consider Gender, Age and Driver Occupation?

My brief expert opinion in WalletHub:

Insurance companies are under substantial strain from increasing losses due to many reasons such as extreme weather (e.g., floods that damage vehicles), increasing number of crashes and fatalities, increasing rates of distracted and impaired drivers (e.g., more states have legalized marijuana), etc.

These losses have necessitated increases in premiums. A fairer distribution of increases is done by assessing risk factors and assessing higher premiums for higher-risk drivers. Young male drivers and occupations with driving as a major part of the job (e.g., Uber, delivery workers) are examples of groups associated with higher crash involvement rates.

I have a good example of risk-based car insurance premiums in my own household. My spouse and my daughter have their own car and insurance. Both are insured by the same insurance company, and both drive 2018 model compact cars of similar market value. My spouse is a white-collar worker in her late 40s. My daughter is a 21-year-old college senior; her premium is 65% higher than her mom's!