But what will it take for Washington to actually hit this target? As I explained in a previous article, Washingtonians purchased around 250,000 new vehicles last year, of which only about 20,000 were EVs. The most popular model types of all vehicles sold last year (at least in the most densely populated Seattle metro area) were primarily SUVs and pick-ups according to seattlepi.com. As such, Washington would need an approximately 40% sustained, annual increase in EV purchases for the remainder of the decade to achieve this goal. Just how likely is it that this goal will be met?
For reference: In 2021, 535,000 electric vehicles were sold in the U.S. according to CNBC. Of that figure, InsideEVs and Cox Automotive estimates that 352,471 were Tesla vehicles. This means that Tesla controlled more than 65% of the electric vehicle market in the U.S. in 2021. Other automakers are starting to catch up to Tesla and I have written about which are most likely to catch up the fastest. But in short, Washington consumers are going to need more than Tesla (whose lowest priced vehicle currently starts at about $47,000) and a smattering of other options to reach this goal, even Tesla would admit this. Consumers want a diversity of electric vehicles, pick-up trucks and SUVs in particular, and the versions that sell in the highest volumes are not those that cost $60k and up. EV pickups are currently only offered in small numbers and all at prices far above any Washington State incentives which include partial sales tax exemption for new electrified vehicles capable of at least 30 miles of all-electric travel that are priced at or under $45,000 (or $30,000 if used). SUVs have more options in the compact size range, some of which in their base model or lower trim versions, are eligible for Washington State incentives. But automakers are going to begin offering more of these vehicles soon, so we should be all set right?
No, we really are not in a good position on this at all and there’s a few simple reasons why. The average price of new electric vehicles is already higher (with a few exceptions) than the Washington State tax incentives on offer (which seem set to phase out in 2025). The average price of a new EV in the U.S. was over $56k in November 2021, according to PRNewswire.com and Kelly Blue Book. Of course if we include plug-in hybrids capable of traveling 30 miles or more on electricity only, there are a few more options under $45k, but that doesn’t get Washington any closer to its goal as it is currently laid out in the new law. It is increasingly less likely that average EV prices will improve any time soon because of the ongoing production and supply chain issues. The price of cobalt and nickel in particular, which are used in most EV propulsion batteries, are skyrocketing and there aren’t really short or medium term means of increasing supply enough to meet demand. Add to this the lingering effects of the pandemic on parts shortages, the war in Ukraine, spasms in the global economy wrought by other geo-political and natural causes, and there are few scenarios where we might see the price of EVs trending downwards to the point of “everyday” affordability or under the $45k WA incentive limit. Eight years is not a lot of time to encourage a change in consumer habits without drastic action.
If Washington State has a similar preference for pick-ups and SUVs as much of the country, and that doesn’t change much over the next 8 years, that means that about 180-190k of the 250k annual figure above will need to be EV pick-ups and SUVs. This also assumes Washington’s demand for vehicles stays steady over the next 8 years. If we assume that pick-ups and compact - full size SUVs will collectively have an average battery size of around 100 kWh (which is on the conservative side considering the sizes of batteries planned for EV pick ups and mid-full size SUVs today), that would mean in 2030 Washington State alone might consume 18-19 million kWh of batteries for those vehicles types and another 5-6 million kWh of batteries for sub compact - mid size cars/SUVs if they have an average battery pack size of 75 kWh, giving Washington a total annual appetite for EV batteries of around 23-25 million kWh. To give you a sense for how much that is, Tesla sold somewhere in the neighborhood of 28 million kWh of batteries in its EVs in the U.S. last year (estimating based on average size of their vehicle batteries and the prevalence of the Model Y and Model 3 in sales). Thus, Washington would consume almost all of Tesla’s current annual production, in 2030, nevermind the rest of the country with much larger new vehicle markets. Of course other brands intend to be selling large volumes of EVs by then and Tesla intends to make much larger volumes as well. But by comparing things to current production levels, we get a sense for the scale that will be required, especially if larger states might move up their electric vehicle goals or otherwise compete with Washington for what is almost certainly going to be continued limited supply.
Where might Washington turn for a good model to achieve its goal? Norway is a good example. New gasoline (and diesel) powered vehicles are a small percentage of the vehicles sold there now (most recently less than 14% of total February sales). Norway achieved this dramatic shift by heavily incentivizing EVs and leveraging higher taxes and fees on fossil fuel powered vehicles. Washington will also need to pursue a far more aggressive plan of subsidizing EVs while simultaneously making it much more expensive to drive fossil fueled light duty vehicles to achieve its goals. But so far the state government is not inclined to do this, ostensibly because increasing the taxes and fees associated with gasoline and diesel powered vehicles is regressive, and unfairly burdens the least wealthy. A resolution to that issue may be simple: eliminate the sales tax on all EVs new and used that cost less than $60k, while simultaneously adopting a gradual increase in taxes and fees on fossil fuel and the vehicles that run on it over a period of 10 years and at the same time use that new revenue to provide significant financial and zoning support for broad implementation of 240v charging for multifamily dwellings and fast charging options along all highways statewide. The biggest obstacles to mass adoption of EVs are charging infrastructure and the initial price of EVs (they cost less to fuel and maintain, but consumers are not inclined to think about that). The other main issues of range and charging time will be resolved by the industry and or the gradual change of people’s habits over time. At least that’s my opinion. What do you think?
Image by Freeimages.com
Justin Hart has owned and driven electric vehicles for over 14 years, including a first generation Nissan LEAF, second generation Chevy Volt, Tesla Model 3, an electric bicycle and most recently a Kia Sorento PHEV. He is also an avid SUP rider, poet, photographer and wine lover. He enjoys taking long EV and PHEV road trips to beautiful and serene places with the people he loves. Follow Justin on Twitter for daily KIA EV news coverage.