The near-term challenges of mass electric vehicle (EV) adoption inevitably begin with price, but a recent cold snap has re-emphasized battery and charging snags. In addition, as prices for new EVs trend down, new buyers also have to consider potentially lower resale values.
Tom Narayan, lead equity analyst covering global autos at RBC Capital Markets, told BNN Bloomberg on Jan. 31 that the EV market is going through a bit of a slowdown.
“Price of the car—that’s one of the main reasons why people aren’t buying EVs right now. Another reason is range anxiety, because public charging isn’t as good. Or at least psychologically people don’t think it’s as good,” he said.
Mark Fields, former president and CEO of Ford Motor Co., told CNBC on Jan. 26 that some of the more widely discussed consumer concerns about EVs have typically revolved around the charging network, repairs, and insurance costs.
However, “One of the bigger things that’s emerged for consumers are the residual values, because they performed very poorly—EVs overall and residual values,” he said.
The residual value is an estimate of a car’s worth a number of years in the future based on its original manufacturer’s suggested retail price (MSRP). It can provide a rough ballpark for resale value.
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Mr. Fields explained that poor residual values are related to Tesla’s aggressive price cuts and thus consumers think their EVs will eventually be worth a lot less.
Used EV Market
A car’s projected residual value is the largest component of its lifetime ownership cost.“Most consumers don’t even think about it,” said Daniel Ross, senior manager, Industry Insights & Residual Value Strategy at Canadian Black Book (CBB), a Markham, Ontario-based company that tracks and forecasts used vehicle prices.
CBB also tracks a car’s retained value, which represents the current actual value of a vehicle in the wholesale used marketplace and is expressed as a percentage of its MSRP.
For 2023, the average retained value for the entire market of 4-year-old cars was 57 percent, but for battery EVs, the retained value drops to 44 percent, Mr. Ross told The Epoch Times. However, for hybrids, the retained value is above average at 61 percent.
“The hybrids have retained a really good value because they’re a happy medium for everybody. And they have affordability, for the most part, built into them—the battery electrics being so expensive,” he said.
But Mr. Ross added the caveat that battery EVs on average tend to be more upscale cars, which usually lose value faster than a less expensive mainstream car as they have more value to lose.
But battery EVs are catching up.
“It’s been a growing trend that that gap between internal combustion and battery electric vehicle retained value and residual value has been shrinking,” he said.
Cold Weather Lesson
During January’s cold snap, Teslas queued in long lines at charging stations in Canada and the United States. CTV reported that on Jan. 19, drivers waited up to two hours at a Tesla charging station in Ottawa’s west end, where five of the eight Tesla superchargers were out of service.“LIBs [lithium ion batteries] usually suffer from obvious capacity reduction, security problems, and a sharp decline in cycle life under low temperatures, especially below 0 °C,” according to a 2022 study published by the U.S. National Center for Biotechnology Information.
While consumers show less concern about residual values, they’re more cognizant of battery risk, Mr. Ross said.
“If that battery were to sour or go bad or have any catastrophic failure, they’re left holding the bag on a very expensive part of that vehicle,” Mr. Ross said.
There are guidelines on how to optimally charge a battery—at what battery temperature to do so, whether to do so when it is nearly fully charged or nearly empty—unlike how it is when filling a car with gas.
“There is a view that some Canadians are not currently prepared to take the full plunge to BEVs [battery EVs] due to range anxiety, longer times to recharge batteries in locations away from home, and a lack of charging stations in some areas,” said Brian Livingston, executive fellow at the University of Calgary School of Public Policy, in a Jan. 25 working paper for the C.D. Howe Institute regarding Ottawa’s EV mandate.
The federal government announced its EV Availability Standard on Dec. 19, which it says will ensure Canada achieves its goal of having all new cars sold in the country be zero-emission by 2035.
But cold weather charging efficiency is a key reason why a Natural Resources Canada (NRCan) report concluded that it’s too early to evaluate the reliability of EVs in Canadian winters, according to Blacklock’s Reporter on Jan. 22.
Blacklock’s Reporter also cites Consumer Reports auto testers’ analysis that temperatures as mild as -8 C quickly drains EV batteries and cuts performance by up to 50 percent.
And with the more frequent charging required in the cold, the NRCan report said, “Uncontrolled charging may negatively impact distribution networks of electrical grids.”
As Ottawa seeks to become a major player in the battery supply chain, NRCan warns of the pollution affecting nearby Indigenous communities from mining for battery components and carbon emissions from EV production.
Survey Says
Pollution Probe, a Canadian charitable organization focused on environmental issues, published its 2023 consumer EV charging experience survey on Jan. 29 with responses from over 1,500 EV owners covering every province.The respondents tended to be wealthy and middle-aged—71 percent were above 45 and 56 percent had pre-tax household income of over $125,000, the survey found.
Quebec led all provinces in satisfaction with 40 percent finding the number of public charging stations adequate.
The survey reported that the reliability of charging infrastructure is a concern, with fewer EV owners in Quebec experiencing stations being out of service than in other provinces. But 56 percent of EV owners said they felt that the power supply at charging stations is “not consistent.”
“The charging experience of Canadian EV owners can vary significantly based on multiple factors, including access to home charging, driving behaviour, vehicle range, residential location, and access to public charging networks, and socioeconomic status,” according to the survey.
But the experience with charging EVs in the cold was not a survey question.
“We are conducting annual surveys and are currently in the process of considering additional or revised questions to ask in the next round. We will certainly consider exploring EV charging in the cold to a greater extent,” Cedric Smith, director of transportation at Pollution Probe told The Epoch Times on Feb. 2.
