Kelley Blue Book Executive Editor Brian Moody joins Yahoo Finance Live to break down the reasons for growth in the EV space as EV sales jump amid rising gas prices.
Video Transcript
– Making the switch by flipping a switch. A recent survey by AAA has found that a quarter of American drivers plan to go electric when it comes to picking their next car. Many have already made the switch according to new numbers from Cox Automotive’s Kelley Blue Book compared to Q2 of last year. Sales of EVs have jumped 66.4%, while sales of all electric powered cars jumped a record 12.9%.
– Let’s bring in Kelley Blue Book executive editor Brian Moody, along with our senior auto correspondent, Pras Subramanian, with us here at the desk. So these numbers are certainly not surprising when you look at the cost benefit right now with gas prices so high. My question to you is, is the supply there to meet the kind of demand we’re seeing?
BRIAN MOODY: There is, and there will continue to be. There are more electric cars for sale now than there ever have been before, and that will continue to increase as time goes by.
PRAS SUBRAMANIAN: Hey Brian, this is Pras here. I’m kind of curious about what you thought about some of the survey data, talking about how people are concerned about fuel prices and high prices at the pump. But what we’re seeing actually, sales of hybrids and plug-in hybrids, actually down. Is that also more of a supply concern, or is it more of, like a, from what I think, they’re not so popular as a desirable product.
BRIAN MOODY: So I think that’s an education thing. It’s an interesting point that you took that from the data. I saw the same thing and I thought it was curious, but I think it’s a little bit of an education thing. Because plug-in hybrids specifically for most people will function like an electric car most of the time, and they’re also less expensive, and they don’t present any issues if you’re going on a long road trip. So, of course, electric cars get all the headlines, but plug-in hybrids may be a great solution for just the average consumer, let’s say.
– Yeah, which has kind of been the bet for companies like Toyota, right? Who have long said, that’s kind of the transitional car that’s necessary.
BRIAN MOODY: Exactly.
– When we talked about mass adoption, I mean, the issue has always been having the infrastructure follow as well. When you see where these EVs are being sold right now, are we still talking about the major cities, those that have the infrastructure in place? Or are you starting to see a bit more of a diversification?
BRIAN MOODY: Well, here’s what we’re seeing, and I think that this one particular data point tells you a lot. For example, we know that about 80% of electric vehicle owners charge their car up at home. So what does that tell you? That tells you a few things. A, that you can afford a home, or that you can afford a way to modify your home to charge it up, or that you live in a place that’s safe enough to plug it in without someone messing with your plug and all that kind of stuff.
So I think there’s a lot of growing to do with regard to the infrastructure. It’s getting better. You definitely can do it. I think one of the things that’s telling in this, is that maybe Tesla was really on to something by developing their own charging network, something that maybe we didn’t appreciate years ago. But all of a sudden, it seems like a really smart move.
PRAS SUBRAMANIAN: Well, Brian, let’s talk about Tesla though, because that hasn’t necessarily helped them hold on to the market share that they had because there are so many other options now from Audi, BMW, Lexus, so many other car manufacturers. What are you seeing in terms of their market share declining, and is that trend going to continue?
BRIAN MOODY: I think a couple of things with regard to Tesla. It’s going to continue to decline somewhat as their overall share of EVs, because more players are going to come into the market and more people will consider those cars. But think of this. Tesla is the dominant player in the US, not just in electric cars right now, but in luxury cars. That means they’re outpacing well-known brands like BMW. So that’s one thing to consider.
I also think there may be a slight dip in Tesla’s market share as those other cars come on. But once the average consumer realizes, oh, they have their own charging network and they charge up super fast, I think it’s going to dip and then it’s going to go back up past beyond what it was to begin with. That’s a smart move that I don’t think the average person quite understands, how convenient it is to have the supercharging network at your disposal.
PRAS SUBRAMANIAN: So Brian, your data shows about 5.5% of the market right now is EVs according to Q2 data. We referenced a study today about how 25% of Americans say they will buy an EV when their next car purchase comes up. When do you think we’ll get to that point in a few years time, where we’ll actually see that 25% of the market being pure EVs?
BRIAN MOODY: So here’s what I think will happen. So you’re exactly right. One thing that we’re seeing is, consideration is up. So, for example, people are saying, I’m open to the idea of getting an electric car or a plug-in hybrid, but that doesn’t always translate into sales. And I think what happens is, people look at the price and they say, OK, maybe next time.
So as soon as the price starts to get a little bit more in line with what you would pay for the average car today, then I think you’ll see that take off. Because right now, the average price of an electric car, let’s just say for June, was over $66,000. That’s quite a bit of money when you think about where we are today, even with gas prices. Remember, factor everything in with your car purchase– not just the gas, the depreciation, the insurance, the cost of purchasing it. Those things have to come down for widespread adoption of electric cars to come. It will come, it’s just not going to be tomorrow.
– Which is an important point to make because if you think about maintenance that’s required for EVs. I mean, over the course of the car, some would argue it’s already cheaper, but that sticker price still isn’t there. I mean, does it come down to that more than the gas price itself? Gas prices have people thinking about it, but the price has got to be within $30,000 to $40,000 range instead of the 60, 70 we’re talking about today.
BRIAN MOODY: That’s exactly right. And when you look at only one thing, one parameter, it’s shortsighted. It’s just like investing. You want to look at the whole picture, not just one tiny box. So yes, you can save money on gas by buying an electric car. If someone gives you an electric car for free, great. You’re going to make all kinds of savings by not buying gasoline. But the purchase price and the financing of that, because the price was higher, is going to cost you. But as you said, over the long haul, those electric cars tend to require less maintenance, and as the price comes down, it’s going to be attractive.
I think– one more thing. The average American, if they were to drive an electric car, I think they’d really like it. We’re not there yet. The average American probably hasn’t spent much time in an electric car. I think they’d like it once they try it, and maybe that will be worth spending a little bit of extra money for.
– Well, either way you cut it or slice it, more and more Americans getting into EVs. Maybe it’s just a supply issue. Kelley Blue Book executive editor Brian Moody as well as Yahoo Finance’s Pras Subramanian. Thanks to both of you.