Tuesday, August 31, 2021

Why I Don't Yet Own an Electric Car

I'd really like to own an electric car. I'd like to fuel my vehicle at home. I'd like to routinely leave the house with a "full tank." I'd like to escape the tyranny of oil changes. I'd like to spare myself and the world noise from engines and emissions from tailpipes. I'd like to be part of the future of automobile travel.

So why am I still driving the gas-powered Nissan Rogue I bought two years ago?  I hate that car. Why don't I just dump it and go electric?

Given my past posts about the luxury-car pricing of electric vehicles (here and here), it'd be reasonable to assume that that's what's holding me back. I used to believe that myself. A recent test drive of a VW ID.4 taught me otherwise.

When the ID.4 was announced, it looked to be the first all-electric AWD compact SUV that wouldn't cost an arm and two legs. I put down a deposit on Day 1.

Before the ID.4, I didn't think very carefully about the features I wanted in an electric vehicle. EV price tags told me everything I needed to know: they were too expensive. Because the ID.4's price didn't constitute an automatic veto, I had to think about what I really wanted in a car--about features so important, I would reject cars lacking them. 

Most of the things I insist upon are so basic, it's hard to find cars that don't offer them. A power driver's seat, for example. However, there are two things I care about that are less than ubiquitous. The first is the ability to view the area around the car as if seen from above. This capability goes by many names, including bird's eye view and surround view. On my Rogue, it's called the Intelligent Around View Monitor. It's my first car with this capability, and though I hate the car, I've become so fond of this feature, I'd consider it an unacceptable step backwards to lose it. The ID.4 doesn't offer it, and when I performed the thought experiment of asking myself if I'd accept an ID.4 as a replacement for my Rogue for free and realized I'd turn it down, I recognized that a 360-degree camera was a non-negotiable feature for me.

That rules out not just the ID.4, but also Tesla's Model Y. For a car with as much tech as they pack into Teslas, it's surprising that they don't offer an all-around view capability. (My understanding is that Tesla has announced that this is coming as part of their self-driving option, but they haven't yet released it.)

My second must-have feature is a moonroof: an openable window in the top of the car. I've been hooked on these since a car I bought in 1995 happened to come with one. I think they're great, but modern automotive designers seem to think they can be replaced by giant glass roofs. None of Ford's Mach-E, VW's ID.4, Tesla's Model Y, Jaguar's i-pace, or Hyundai's IONIQ 5 offer a moonroof, but all offer a fixed glass roof. No moonroof equals no purchase for me, so this criterion eliminates all those cars.

That leaves only one candidate EV: the Volvo XC40 Recharge. It's a compact SUV, it's got AWD, and it offers a moonroof and a 360-degree camera. It's a hoot to drive, too, based on one of the most enjoyable test drives I've ever taken. (The sales rep made copies of my and my wife's driver licenses, threw us the keys to the demo car, and told us to drive it wherever we wanted for as long as we wanted.) Its infotainment system was particularly impressive, supporting the kind of natural language interactions I'm accustomed to having with my phone (and that are unavailable on the ID.4). 

Unfortunately, the XC40 Recharge has an EPA-rated range of only 208 miles. That's a problem, because one of the things I want to be able to do is take a day trip that's about 210 miles long. Any gas-powered car can do that, so I didn't even think about it when looking at EVs. It made me realize that I have a third non-negotiable feature: the ability to make a 210-mile trip on a single charge. Because EPA estimates are just that (estimates) and because nobody's going to drive a car to the point where it's completely out of fuel, I'm not going to seriously look at any EV with an EPA range under 235 miles. That knocks the XC40 off the board. 

The resulting board has nothing on it. There are zero compact SUV EVs offering AWD, a surround-view camera, a moonroof, and an EPA range of at least 235 miles.

Currently, it's not the cost of EVs that's keeping me from buying one, it's the failure of  EVs to offer the features I consider essential. I'll thus keep doing for a few more years what I've already done for what seems like an eternity: watching and waiting for the EV industry to produce a car that checks all my boxes. 


Friday, June 11, 2021

My Electric Car Search a Year Later: Modest Improvements

Exactly one year ago I wrote about my fruitless attempts to find non-luxury-priced fully electric (i.e., not hybrid) cars in three categories. Repeating my search a year later, this is what I found:

  • Little convertibles: nothing has changed. There was nothing then (at any price), and there is nothing now (at any price).
  • Used electric vehicles (EVs) with a range of 130+ miles for no more than $10,000: again, no change. I was unable to find a used EV with a range of at least 130 miles, no more than 50,000 miles on it, and a price of no more than $10,000. Upping the price limit to even $14,000 didn't help. Used EVs with even moderate range remain expensive.
  • Compact SUVs: Here, things have changed. Thee new models are available, and the price premium for getting into a compact SUV EV has dropped. For details, keep reading.

Changes in the Electric Compact SUV-scape

Last year, the only EVs in the compact SUV category were the Jaguar I-Pace and the Tesla Model Y. Since then, the field has expanded. How much it has expanded depends on how you define SUV. For my purposes, an SUV offers all-wheel drive (AWD), and that knocks cars like the Nissan Leaf, the Chevy Bolt and Bolt EUV, the Kia Niro EV, and the Hyundai Kona Electric out of the running. In addition, I don't count EVs that have been announced, but that you either can't currently order in the United States or for which no MSRP for the USA has been published. That rules out the Hyundai IONIQ 5, the Kia EV6, and the Nissan Ariya. 

That leaves three new contenders for the models from Tesla and Jaguar:

  • The Volkswagen ID.4.
  • The Ford Mustang Mach-E.
  • The Volvo XC40 Recharge. 

In my post last year, I focused on the cost of EVs compared to non-luxury ICE (internal combustion engine) equivalents, so that's what I'll do here. I'm not going to address differences in feature sets.

I went to the web sites for various non-EV compact SUVs and looked up the MSRPs for the cheapest AWD configurations I could find. Here are the results:

The average MSRP for these vehicles is $27,369. That's the price against which I'll compare EV prices. 

I'll apply the federal and state government incentives to EV MSRPs. That has the effect of reducing the MSRP by $10,000 for every manufacturer except Tesla. For Tesla, the reduction is only $2500, because Tesla no longer qualifies for the $7500 federal tax credit. However, Tesla buyers continues to get a $2500 EV rebate in Oregon, and since I live in Oregon, I'm knocking that amount off the MSRP for Tesla (as well as for everybody else).

That yields this:

The price premiums for Tesla and Jaguar keep them firmly in the luxury territory they were in last year. Volvo's 65% premium is somewhat less, but it's still well beyond the 55% price premium threshold for luxury cars that I derived in my last post. These EVs are luxury goods.

For the EVs from VW and Ford, the situation isn't as clear. They demand notable price premiums of 23% and 34% compared to ICE SUVs, but those premiums are well below the 55% average premium associated with luxury compact SUVs. A closer look at the data in my last post, however, shows that the average luxury car price premium at the bottom of the price ranges is 64%. That makes 23% and 34% look even better than they did when put up against the 55% category average. I think it's safe to say that for the VW ID.4 and the Ford Mustang Mach-E, the entry-level MSRPs fall below the luxury level. No compact SUV EV did that last year. This year, two do. That's a noteworthy development. 

The MSRP Problem

Unfortunately, MSRPs are a problematic basis for cost comparisons, because MSRPs are a lousy indication of pricing in the real world. They're suggested retail prices, and for most brands, dealers are free to mark them up or down as they wish. In addition, it's conventional at most dealers to haggle over prices. After MSRP adjustments and haggling, the price paid for a new car is often significantly different from the manufacturer's suggested price. When I bought a Nissan Rogue in 2019, for example, what I ended up paying was some 16% below MSRP. 

My understanding is that new car pricing is currently pretty firm, so it could be that these days you really do have to pony up MSRP (or more) at many dealerships. That's the thing about MSRPs. Sometimes they're higher than the prices people generally pay. Sometimes they're lower.

Demand for many EVs exceeds supply, and that puts dealers in a strong position during negotiations. When I talked to a local dealer about the Volvo XC40 Recharge, I was told there was at least a six month wait for delivery, and final pricing would be discussed only when the car was on the lot. I got essentially the same story at a local VW dealer regarding the ID.4. When I checked out a Kia Niro EV a few years ago, I saw that the dealer had added some $10,000 to the sticker price as a "market adjustment." It would not surprise me if MSRPs for EVs understate how much it actually costs to buy one.

My analysis of EV pricing versus ICE pricing is thus based on MSRP data that are of limited value. It's nice that those data show EV pricing in the compact SUV segment beginning to extend below the luxury level, but it's best to keep the customary grain of salt close at hand.

Beware Bottom Feeding

An additional weakness of my analysis is that I'm looking only at bottom-end MSRPs, i.e., the MSRP for the least expensive variants of the cars being considered. It's often impossible to find such cars on dealer lots. Few buyers want a bare-bones version of the car they buy, and even fewer dealers will resist the urge to add optional equipment to the cars they get from manufacturers. (This phenomenon doesn't exist for carmakers without a dealership network, e.g., Tesla.) Cars with bottom-end MSRPs are rarely sighted in the wild, so even if such MSRPs corresponded to the prices people pay (which they often don't), they would almost certainly convey information about only a small fraction of automobile purchases.

Still, my goal isn't to determine whether EV buyers do pay luxury prices for their vehicles, it's to determine whether they must. A year ago, manufacturers' pricing meant that they had to. This year, thanks to Ford and VW, that isn't the case. That's progress.

Wednesday, June 2, 2021

The Luxury Car Price Premium

Last June I blogged about how electric vehicles (EVs) were luxury goods. I'm gearing up to write a post discussing what's changed in the intervening 12 months, and it occurred to me that last year I asserted that an 80%+ price premium for EVs over their internal combustion engine counterparts puts them into luxury territory, but I didn't justify the claim. Doing so would require knowing what luxury cars cost, broadly speaking, compared to their non-luxury counterparts. I didn't know what the luxury car premium was. I decided to find out.

For the TL;DR among you, here's the executive summary:

  • For compact SUVs, it costs about 55% more to step up from a non-luxury vehicle to a luxury one.
  • For compact sedans, it's more like 75%.
  • For midsized sedans, it's around 90%.

If you care about methodology and details, read on.

Several carmakers have premium brands. Toyota has Lexus, for example, and VW has Audi. I think a reasonable way to calculate the luxury car price premium is to look at how comparable cars from carmakers with luxury-and non-luxury brands are priced. Given, say, a compact sedan or SUV, how much higher is a Lexus priced compared to a Toyota or an Audi to a VW?

I used the following brand pairs:

Non-Luxury Brand   Luxury Brand
Toyota   Lexus
VW   Audi
Hyundai   Genesis
Nissan   Infiniti
Honda   Acura

At Consumer Reports (paywall), I looked up price ranges for models of these brands in three categories: compact SUVs, compact sedans, and midsized sedans. For the bottom and the top end of the price range for comparable models (e.g., Toyota RAV4 vs. Lexus NX or Hyundai Elantra vs. Genesis G70), I calculated the price premium for the pair. I also averaged the bottom prices and the top prices for all the models in each category, and I calculated an average category price premium. Here are all the data:

Finally, I took the calculated results and rounded them a bit for the executive summary above. I rounded the computed 56% average price premium for compact SUVs down to 55%, for example, and I rounded the computed 92% average price premium for midsized cars down to 90%.

The data show that last year's 80%+ price premium for EVs (compared to non-EVs) put them squarely into the luxury car realm. There are a lot more EVs available this year, however, so things may have changed. In my next post, I plan to discuss whether they have.