Electric cars

Gas prices are driving demand for electric vehicles, but they’re in short supply

Gas prices are driving demand for electric vehicles, but they're in short supply

Until she got the keys to the car, Bonnie Velasquez feared she had stumbled upon some kind of electric vehicle scam.

Velasquez was tired of waiting for Tesla to build the Model 3 EV she had ordered, but was discouraged by prices for used Model 3s that were as high or higher than new ones. So how could a Santa Monica startup called Autonomy tell him that all they needed for approval was his driver’s license?

Then it got even more interesting, Velasquez said. Within a day of that approval, he was told to pick up his new Model 3 from a nondescript parking lot. In the middle of a pile of shiny new Tesla Model 3s was a gray one with a pink bow on it. That was his, Velasquez was told.

“I didn’t even know how to open the door. I had never even driven a Tesla,” she said. “So they showed me how, let me drive for a bit. Then they sent me on my way.

What Velasquez went through is a big departure from the traditional buy-or-lease route taken by nearly all car buyers. Instead, she used a subscription service to get the new electric vehicle, essentially leasing a car owned by Autonomy for a monthly fee of $490, in Velasquez’s case, slightly less than a direct lease from You’re here.

Bonnie Velasquez picks up her new Tesla Model 3 in Santa Monica.

(Alexis Lopez)

What should be a golden moment for electric vehicles could miss the industry. Six-dollar-a-gallon gas should mean a big boost in buyer interest in electric cars and trucks, right?

In fact, it is.

Too bad dealerships don’t have enough electric cars and trucks available to meet growing demand.

“There just isn’t availability for any type of vehicle, especially electric vehicles,” said Brian Maas, president of the California New Car Dealers’ Assn.

EV seekers confess to all sorts of unusual tactics to land a vehicle, like haunting multiple waiting lists or scouring remote dealerships for neglected EVs. Some drivers, like those with the Chevy Bolt, have seen their lease expire with no new Bolts available to replace them.

“There is a shortage of cars in general. It won’t shock you, but it’s more true for electric vehicles,” said Joel Levin, executive director of Plug In America, a nonprofit advocacy group.

“It’s because the price of gasoline is so high that the demand for electric vehicles has kind of increased right now,” Levin said, adding that supply chain issues aren’t going away anytime soon. . “What I heard from OEMs [original equipment manufacturers] it’s that we’re probably there until the end of the year, at least.

It’s a potential loss of revenue and a missed opportunity for electric cars to gain traction in a country that still overwhelmingly prefers motor vehicles powered by liquid-fueled internal combustion engines.

“Gas prices have hit at a tough time,” said Edmunds analyst Jessica Caldwell. Car buyers, faced with near-record gas prices at a time of extreme inflation without knowing how long those conditions will last, have started to take electrified cars more seriously, Edmunds data shows. (See chart.) Cars.com tweeted that since late February, consumer interest in electric vehicles, based on website visits, has increased by 173%.

But that interest is unlikely to translate into a significant increase in sales of electric and plug-in hybrid vehicles, Caldwell said, because too few cars are available for immediate sale.

Computer chip shortages and supply chain bottlenecks have created an inventory drought at auto dealerships across the country — and around the world. Dizzying price increases result from the imbalance of supply and demand. The average sale price for vehicles in August 2020 was around $38,000, according to Kelley Blue Book; in February 2022, $46,085.

Electric car customers are often put on waiting lists that can stretch for weeks or months, and some dealerships that have cars in stock mark up the sticker price by thousands of dollars. Some California dealers are adding $8,000 to the sticker price of around $50,000 for the new Kia EV6 crossover.

Tesla has increased the base price of its Model 3 by $8,500, to $48,440 and Rivian has increased the tag of its new pickup truck by $12,000, to nearly $80,000. Both companies blamed rising costs due to inflation.

Even before the chip and supply chain issues, electric vehicle production was limited for any automaker not named Tesla. The main reason why Tesla dominates the electric car industry is because of its huge lead in the market. The company made cars that were attractive, longer-ranged, and fun to drive when mainstream automakers tried to sell what critics called bloated golf carts, with little effect on the market outside of places like Santa Monica and Berkeley.

Tesla was the only automaker to actually ramp up production from a year ago. For now, this is the company Autonomy depends on for its EV supply.

Autonomy co-founder and CEO Scott Painter is seen with several Model 3s.

Autonomy co-founder and CEO Scott Painter is seen with several of the Model 3s the company offers by subscription.

(Steven Carter)

There is a caveat here for people who might be interested in trying out the subscription service, as the only vehicle Autonomy runs is the Tesla Model 3. Although Autonomy aims to acquire 10,000 d ‘by the end of 2022, Autonomy co-founder Scott Painter says, no other Teslas are currently available for Autonomy, and the base model is the only one customers can get, not the long-range or efficient.

Another caveat: Autonomy buys Teslas that customers no longer expect, which means the choices are limited.

“Tesla has an interesting relationship with its customers. You can put down a deposit, ask them to build you a car, and then you can forfeit your deposit until and until the day of delivery. These are the cars we buy at MSRP,” Painter said.

“We don’t jump the line in front of anybody and take their car,” he said. “The only thing we did was go to Tesla and say, ‘We don’t care what color or what set of tires and wheels or what battery pack you have, we’ve got it. We’ll just buy if it’s out of production.'”

In terms of production, the rest of the industry is only beginning to catch up with Tesla with more attractive cars, such as the Hyundai Ioniq 5, Kia EV6 and Ford Mustang Mach-E. On the luxury side, Polestar and Lucid-branded cars and Rivian-branded trucks are available, but with a waiting list.

Chip shortages have reduced dealer supply of Ford's electric Mustang Mach-E.

Chip shortages have reduced dealer supply of Ford’s electric Mustang Mach-E.

(Ted S. Warren/Associated Press)

Other vehicles are in the works in the short term, including the Ford F-150 Lightning pickup truck, the Volkswagen ID Buzz minivan and the Cadillac Lyriq luxury crossover vehicle.

“The Lyriq is coming, but it’s not on the street yet. The Mach-E is on the street, but they don’t do 10,000 [a month]they make a few thousand,” Maas said.

If supply weren’t an issue, the start of 2022 could have marked an inflection point for the auto industry – similar to 1973, when conflict in the Middle East and soaring oil prices pushed the American public towards fuel-efficient small cars, giving Japanese models of Nissan, Honda and Toyota entering the American market and forcing American automakers to reluctantly offer downsized cars.

If gas prices stay high and supply issues are resolved, “the potential is there” for another major shift, Maas said. But these are big ifs.

Spencer Purves of Hudson, Ohio, is taking a big dip in electric vehicles. He has ordered a new Ford F-150 Lightning and is buying a replacement electric vehicle for his wife’s aging Prius.

“My wife does 75 miles a day,” he said. “We’ve done the numbers and we can buy two electric cars, rent a car for a multi-state vacation” and still save money on fuel.

His Ford dealer didn’t add a markup to his Lightning order, but as he shops for the other car, he finds that supplies are scarce and many dealers are upping the prices. He’s got his eye on a Hyundai Ioniq 5 crossover. But he’s in no rush. “Hopefully the supply will resume at some point.”

While new electric vehicles and plug-in hybrids are rare, traditional hybrids, which improve gas mileage with a battery and electric motor but don’t need to be plugged in, may be easier to find, especially in the used car market.

“People don’t need to use an all-electric battery. People are increasingly looking at hybrids as a transition strategy,” Caldwell said. Older, lower-end, less powerful, but well-priced cars, such as the Nissan Leaf, populate used-car lots at (relatively) bargain prices.

Signing up for monthly use through Autonomy or similar subscription services is another bridging strategy.

One Autonomy customer who has radically changed his lifestyle is Brian Pennington of Torrance, a self-proclaimed 53-year-old country boy who has said big pickups have been his norm for many years. The latest is its 2018 Ram 1500 with a massive 5.7-liter HEMI engine.

But he refuels two or three times a week because of his work as a site safety manager. Gas prices pushed him to seek a solution he had never considered before.

“Last time I filled up it was $137, I’m not lying to you,” Pennington said. “I got so upset the last time I filled up. … I said, ‘I don’t care what it is. I’m going to buy an electric car.
Change. he said, was overwhelming.

“I’ve had a truck all my life. Getting used to something so new to me is amazing.

For Velasquez, what was incredible was getting his hands on a new Tesla at a time when forces were conspiring to make electric vehicles more desirable and harder to obtain than ever.

As she left with hers, she said, “I felt like I was stealing something.”