The challenges of convincing automakers to build more electric vehicles and Colorado consumers to buy them comes down to a story of Ford’s traditional show horses, the Mustang and the Bronco.
The 2021 electric version of Ford’s classic Mustang sports car got rave reviews. Enthusiastic Western Slope consumers ordered 13 of them from Glenwood Springs auto dealer Jeff Carlson.
About the same time, Ford announced it would revive its beloved four-wheel-drive Bronco after a 25-year hiatus. An electric or hybrid version might come eventually, but the first rejuvenated Broncos would run on gas.
Glenwood Springs customers ordered 160 of them.
Carlson says he is a fan of recent EV models from multiple manufacturers, and the goal of replacing gas-powered cars. Nevertheless, he says, “I can’t control customer demand.”
That’s the reality facing Gov. Jared Polis, his ambitions to combat climate change, and a legislature pondering its role in goosing EV sales. To meet emissions reduction goals codified in state law, the transportation segment of Polis’ plan calls for nearly 1 million EVs on Colorado roads in less than nine years.
“There is no way we are going to achieve our climate change goals without addressing the transportation sector,” said State Sen. Faith Winter, D-Westminster, who is shepherding comprehensive road and vehicle legislation this year as chair of the Transportation and Energy Committee.
Colorado can’t just set a goal and hope, whether it’s EVs in question or other climate change fixes, said Kelly Nordini, executive director of Conservation Colorado. That’s why her group and allies are pushing to get more of the greenhouse-gas reduction goals written into law, with hard deadlines.
“The timeline is the timeline. We wished that timeline away for too long and now we’re right up against the edge of it, and because of the way this pollution works, you can’t backload it all on the back end. That’s not going to cut it,” Nordini said.
Coloradans bought about 220,000 vehicles in 2020. Fewer than 7,500 of those were fully electric, according to new figures from the Colorado Auto Dealers Association.
Despite the daunting gap — we’d have to buy more than 100,000 EVs a year starting now to meet the goal — executive branch and legislative leaders say the fast-changing car market does not need major new consumer incentives from the state to solve the problem.
If you add in hybrids and plug-in hybrids, which supplement a gas tank with an electric motor, Colorado’s sales of qualifying zero-emission vehicles appear to be growing 50% a year and would reach annual goals by 2030 at that growth pace, said Will Toor, director of the state energy office. Including both fully electrics and plug-in hybrids, Colorado consumers bought about 11,000 vehicles last year, according to CADA.
Skeptics, including dealers, seem to be ignoring the revolution among carmakers, many of whom are pledging to go fully electric in the next few years, Toor said.
“I don’t think that they are looking at what’s actually happening in the automobile industry,” Toor said.
The dealers who are the ones tasked with shipping a million EVs off their lots respond that the state’s sales numbers simply don’t add up, and meanwhile the all-important EV tax credit to buyers dropped by nearly 40%.
“Money on the hood of the car,” that’s what matters in convincing reluctant consumers to try an EV, said CADA president Tim Jackson. Without large new incentives, he said, the state’s EV goal is “wildly optimistically aspirational.”
Meanwhile, previous Colorado laws designed to boost EV sales and lower greenhouse gas emissions may just end up handing Tesla and Elon Musk a lot more money. Beginning in the 2023 model year, Colorado will join a California standard requiring 5% of vehicles sales to be zero emission engines. Manufacturers that don’t sell that percentage have to buy credits from those who do.
In 2020, EV market darling Tesla reported a $2 billion operating profit. Since Tesla only produces electrics, it can sell credits to all the automakers who fall short. About $1.6 billion of Tesla’s profits came from credit sales.
Progress on transportation pollution is crucial now for the state’s ambitious 2030 and 2050 goals, because it’s the next largest category of Colorado emissions after carbon dioxide from electric utilities. Colorado is reporting great success in cutting utility emissions, but transportation will be much more complex. Dealers, lawmakers and executive branch leaders say they must tackle a series of problems:
Pricing and Incentives
Chris Lenckosz, owner of Empire Nissan Lakewood, says he can get you in a low-end electric Nissan Leaf for $100 a month lease. But it’s got a short range and no extras. What Americans want, and Coloradans even more so, is an SUV or light truck. That category makes up 70 to 75% of vehicle sales in Colorado, and nearly 90% in some Western Slope counties. The few electric SUVs, pickups or crossovers available now can easily be $70,000. Goodie-stuffed gas pickups can be $70,000 these days, but buyers know exactly what they are getting.
Dealers are selling out of the EV Hummer before it even arrives, at a price of $120,000.
Many EV boosters are hoping the next Biden stimulus passes with expansions of federal tax incentives still included, which used to be generous but expired for manufacturers who reach a certain level of sales. Meanwhile, Colorado’s attractive state tax credit dropped to $2,500 on Jan. 1 from $4,000 last year.
Current shoppers are looking at $35,000 list prices for an unproven, small, unadorned subcompact EV, versus say, a $34,000 new, gas-powered, tricked-out Subaru Outback, dealers say. “I think it’s going to be interesting to see how many people stay in used cars, as they find EVs unaffordable,” said Glenwood Springs dealer Jeff Carlson.
Sen. Winter’s bill does not include a tax credit expansion, and Toor says he doesn’t think it’s necessary. Winter said lawmakers are trying to keep lower income buyers in mind with provisions that would stretch out EV registration fees over time. EV buyers currently pay extra for registration to counter state loss of gas tax revenue, and those fees may increase.
Winter said the bill may also create a pilot program lowering EV fees for those who drive less than 12,000 miles a year, since they are using fewer road services.
Inequity among buyers
The fight for more EVs prompts discussions of inequity in unusual places — like car dealerships.
The $120,000 EV Hummer is shocking enough to some, dealers say. But there are everyday inequities for everybody else. Most Coloradans want either a car reliable in the snow, or a pickup for work, or a safe, long-range SUV to get them to their favorite outdoor spot in free time. People who can only afford one car, dealers note, hesitate to make it a smaller EV with limited range that they see as a tooling-around-the-city car.
“People get upset when they hear others are getting tax credits for a $70,000 Tesla,” Lenckosz said.
Carlson, who sells both Fords and Subarus, notes that the average age of the U.S. vehicle fleet has passed 12 years, as new prices increase and reliability improves. Colorado’s air would get cleaner, faster, if market-boosting programs bought dirty older cars from consumers and helped them buy any new cleaner-burning vehicle, whether electric or gas, he said.
“If you put everybody in a new Subaru or a new Ford and took 2.5 million older cars off the road, you’d do as much for air quality,” Carlson said. “Most people that have Tesla mania, they don’t care about incentives, they’re buying because they’re wealthy.”
Some environmental groups have long advocated for higher gasoline taxes, both to raise money for emissions reduction efforts but also to make cheaper electric “fuel” more attractive.
The dealers aren’t, as a rule, fans of new taxes, but they do note that the changing price of gas can have a much bigger effect on EV sales than targeted incentives. Gas prices are rising via market forces again, and Empire Nissan is selling a lot more Leaf versions this month than last year, Lenckosz said.
Charging infrastructure and speed
Two other big hurdles for consumers are the driving range of their vehicle, and how they can reliably refuel. No one wants their pickup battery going dead 20 miles from the job site, and busy people don’t have all day to drive around in town looking for a charging site. Once they get there, they likely don’t have six hours to wait for a decent charge.
Many EVs on sale now have ranges up to 250 miles, though truck buyers often seem to ask for 350, Jackson said. Those will be coming. In the meantime, dealers still spend a lot of time talking with customers about what their actual daily routine looks like, and how many days of work and errands they could squeeze in on one charge.
Range anxiety and charge panic are two of the biggest concerns from consumers when the state takes surveys on EV adoption, Toor said. So, he adds, the state and private companies are making great strides to address that right now, since it’s a factor they can control.
Colorado has a contract with ChargePoint to build high-speed charging stations every 50 miles along major highway corridors like Interstates 70, 25 and 76, and U.S. 50, 40 and 550, Toor said. Xcel Energy has also committed $105 million in coming years to help build out more charging stations and other electrical infrastructure needed to make a consumer-calming system.
“That’s going to go a long way towards assuring people that you can get to the vast majority of destinations that people go to in Colorado, knowing that there will be fast charging available on the highway,” he said.
Soon-to-be EV maker Rivian, meanwhile, has offered to put fast chargers in every state park, starting this summer — even though the first line of rugged-image Rivians won’t actually be for sale in Colorado until summer, at best.
Winter said the legislature’s transportation debate needs to include talk of how charging will look all over the state, not just at highway stops, but in neighborhoods and tightly-packed office buildings. “For a lot of folks living in multifamily housing, condos and apartments, there’s likely not enough charging infrastructure in the place you live for everyone to have an electric vehicle,” Winter said.
Carlson has chargers available at his Western Slope dealerships, and agrees that building out the network is crucial if EVs are going to take over the market. He says, though, that he’s just not as certain as government and environmental leaders that car shoppers are ready to make big changes, fast.
“The consumer is a wily, wily critter,” Carlson said. “And the government thinks that they can tell the wily critter what to do.”