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Electric vehicle prices, range the top concerns for prospective buyers

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Autolist Editor-in-Chief David Undercoffler sits down with Yahoo Finance Live to examine concerns consumers have about buying into an EV, pricing on new and speculative EV models, and the influence of gas prices when considering an EV purchase.

Video Transcript

[MUSIC PLAYING]

RACHELLE AKUFFO: Well, it's hard to find a good deal on new or used cars. Meanwhile, monthly car payments hit a record of $712 a month in May. And that's before you add in the record-high gas prices at a national average of over $5 a gallon.

So is now the time for electric vehicles to shine? Well, I'm joined by David Undercoffler, Editor-in-Chief of Autolist, and our very own reporter Pras Subramanian to find out. So we're going to start with this survey that your company came out with, EVs apparently still not cutting it for consumers but it's due to price, range, and poor charging infrastructure. Break that down for us.

DAVID UNDERCOFFLER: Yeah, that's right. So we asked consumers over the past few months what are the top three reasons, pick top three reasons you wouldn't buy an EV. And those were the three reasons people chose. And we've run this survey for a number of years, since 2019, 2020, we took 2021 off but ran it this year as well. And yeah, those have always been the top three. Consumers are very consistent. Price is the number one reason they're not buying an EV, range is the second reason, and then charging infrastructure, anxiety over where they're going to charge the vehicle is always number three.

PRAS SUBRAMANIAN: Hey, so this is Pras here. So are people not willing to pay a premium then for those EVs? Or they want to just basically make-- they want to have EVs kind of cost the same as those gas-powered equivalents?

DAVID UNDERCOFFLER: Yeah, that's exactly it. They're looking for price parity. When we ask people, OK, how much more would you be willing to spend for an equivalent EV versus its gas price counterpart? The most common answer was no more, right? So there's interest in EVs. We certainly see that on our search traffic and inventory. As gas prices go up you see more people looking at EVs but once you get them to that point where they need to spend more for that vehicle, they're not willing to do that.

RACHELLE AKUFFO: So then is it just that the EV market hasn't done a good enough job of really sort of helping consumers understand the upfront cost versus some of the longer-term benefits?

DAVID UNDERCOFFLER: I think that's some of it, certainly, yeah. There is certainly something to be said for the long-term service life of electric vehicles. There's far fewer moving parts in these things so they need a lot less service over the lifetime of the vehicle. But in our experience looking at how consumers are imagining this purchase, they aren't necessarily taking sort of the long view. They're looking at sort of the upfront, the monthly payment, and they're not factoring in insurance costs or service costs. So that's sort of where we're seeing that difference.

PRAS SUBRAMANIAN: Hey, David, so what's getting a lot of play this-- recent times is high gas prices. You guys asked your survey respondents about that. How does that weigh into-- factor into choosing an EV versus a gas-powered car?

DAVID UNDERCOFFLER: Yeah, this was a little bit of a surprise for us. The number one reason-- so we asked people OK, what dollar per gallon would the price of gas need to hit in order for you then to consider an EV for your next vehicle? And the most common answer was actually it's not about the price of gas. I wouldn't choose an EV for other reasons. And those go back to the reasons we mentioned at the top of the segment, price, range of the vehicle, and where to charge it.

So it's-- one might think, OK, I'm sitting here, I'm in California, gas is $7 around the corner, $7 a gallon. But there's a disconnect as I'm pumping that gas into my vehicle it doesn't mean that I'm going to then run around the corner to my dealership and buy an electric vehicle. That's not how consumers are seeing it.

RACHELLE AKUFFO: And obviously, people trying to sort of figure out how to spend their money right now and what they should be holding onto. Then you also have things like tax incentives for things like EVs that were very popular. You see some countries cutting these subsidies like China. What sort of incentives would really make more people want to get EVs?

DAVID UNDERCOFFLER: Yeah. So we asked people this question sort of two different ways. One we asked are you in support of more state, federal, and local incentives to buy EVs? And there was pretty widespread support for that, it was about 2/3 of people, 65% said that they supported that.

But then we also asked, do you support lifting the current cap of every automaker gets 200,000 vehicles that are eligible, that's either electric vehicles or plug-in hybrids that are eligible for a federal tax credit. And that support was actually more mixed. So a little bit of disconnect there. You saw just this week that there are some automakers, the CEOs were asking for that cap to be lifted. That's certainly something that would keep up with the markets in Europe and China. You do see more incentives offered there. And I think that the popularity of EVs in those markets reflects that.

PRAS SUBRAMANIAN: Hey, David, looking at the types of EVs that people are buying and that they're interested in. What are you guys seeing in terms of the types of cars they want to get, in particular, pickups?

DAVID UNDERCOFFLER: Yeah. So we're seeing some movement in this segment, right? When we first started running the survey a few years ago, even in that short amount of time there weren't the same number of vehicles or types of EVs that have come to the market since then, right? So you're seeing crossovers are really what we drive no matter the propulsion, right? Whether it's internal combustion or EVs, we like crossovers in America. We also like trucks.

And so those are the two segments that you're seeing a lot of movement. A lot of people are starting to identify them as OK, I currently drive a gas truck but I would be interested in an electric truck. What's also notable is in that time, we've seen a lot of big automakers, Ford has the Lightning you're showing right there, that's going to be a really interesting inflection point because I think that's going to show a lot of people who maybe haven't previously considered an EV that, look, this is offering many of the daily use case benefits of my current truck but now it's only electric. It's not a big change to their daily lifestyle of using a vehicle.

RACHELLE AKUFFO: I will say I'm more likely to dip my toe in with a hybrid than go full electric but it's mainly because of that charging station issue. If that changes, maybe I'll change my mind. A big thank you there to our guest David Undercoffler, Autolist Editor-in-Chief. Thank you for joining us, and our very own Pras Subramanian.