Cheddar News takes a closer look into the state of the electric vehicle industry, gauging EV adoption in North America even as prices soar amid rising costs for raw materials and supply chain woes.

Closing Bell

Deep Dive Into the EV Industry as Raw Material Costs Skyrocket

Welcome back to closing bell and cheddar news, Christine schuler here with the one and only ken buffa. Hey, let's take a deep dive ken. So buckle up because today we are going to break down the state of the electric vehicle industry and some of the roadblocks they're getting in the way of E. V adoption in the US internal combustion vehicles still rule the roads but rising gas prices, climate change and exciting tv innovations are starting to shift americans consciousness over to electric vehicles. Unfortunately, it looks like the change in perception among americans may be happening faster than the widespread adoption of E. V. S. And it could take many years, even decades for the dream of an electric future to come to fruition. While every registrations have doubled over the past year, battery powered cars still only make up just over 5% of the total vehicle registrations in the US and there are a number of factors at play. So the first and probably most important being at the price to buy an electric vehicle is rising rapidly. Raw materials for E. V. S are also spiking as supply chain issues made worse by the Russian invasion of Ukraine continues and a global semiconductor shortage weighing heavily here because these high tech cars need microchips simply to function not to mention the lack of charging stations across the U. S. Which can make planning long drives difficult and sometimes nearly impossible. So I think the other factor can obviously, it's just the sticker price. We know there are a lot of incentives to buy these electric vehicles, but because it has a higher sticker price, it also still means probably when you're paying for insurance, your insurance on an electric vehicle is going to be Price year even with the incentives than what you would pay on a gas-powered car. And obviously when there's a point in our lives where everything every penny matters, maybe perhaps going with an old gas-powered car is the best option for now, but you can upgrade in the next few years when inflation hopefully gets close to 2%. It'll happen one day, I promise. Alright, so let's break down some break down some of this. So starting with raw materials, several essential metals are needed to make electric vehicles and their batteries were talking elements like nickel, lithium and cobalt, all of which have more than doubled in price over the past two years with some like lithium more four times the price Compared to 2020. Now, the pandemic is still a factor as well, especially for Tesla, Which relies heavily on the Shanghai Gigafactory, which holds a production for weeks during strict lockdowns in the Chinese economic capital. Now that factory accounted for more than half of Tesla's total vehicle deliveries in 2021 but sputtered a bit in the early months of 2022. So it's it's harder to get raw materials and as supply fails to catch up to demand, it's more expensive to make E. V. S, which means it's definitely more expensive to buy them. Take a look at a comparison between electric vehicle and gas powered prices, you can see the average price of electric vehicle in May was around 54 grand according to J. D. Power, a 22% increase from May of last year. The average price of a gas powered car is hovering around 44,000 bucks, A 40% jump from the same time last year. Now, that price, that point aside, there's no doubt that driving electric vehicles is cheaper than gas powered cars, considering owners don't have to spend hundreds at the pump every week or two now and that can save drivers thousands of dollars over the course of the vehicle's lifetime. So take a look at the difference in the cost per mile Between the two types of cars. It's not even close the cause for E. V. S has remained basically flat over the past 18 months while combustion vehicles have spiked along with gas prices. So the savings Kristin, if we're digging for them, usually comes at the pump when it comes to these vehicles. I think it's a really good point and I think it's sort of this interesting position right now because the case for an E. V. Has honestly never been stronger in the history of America yet. Obviously with some of the supply chain challenges and the higher price of commodities that go into making these vehicles and it's still clearly hard to come by one that is affordable, right? It's still a major, major durable goods purchase for any consumer out there. Absolutely not. With the anxiety of like gas anxiety, what are you going to pay when you get to the pump versus range anxiety, drivers who are looking to make a purchase have no, have no haven to go to, they're gonna deal with either one. Um, well we have seen a big electric shift in the auto industry of late with major automakers like Ford GM and Honda planning all or mostly electric fleets in the next decade. But right now, the talk of the town is still Tesla which has the Lion's share of US electric vehicles, Tesla County for a whopping 61% of total E V registrations in the U. S and april The last month for which data was actually available, there's no one even close to that number rounding out the top four include Ford with 8% Honda and Kia, both with just about 6% of total EV registrations. Tesla seen more as a tech company though and its cars are seen as unique and out of the ordinary, which does help drive up its brand. Its dominance is likely to grow in the coming years and we told you E V. S only make up about 5% of total U. S. Vehicles but their share is accelerating rapidly at 28% by 2028 59% by 2035. That's according to consulting firm alixpartners but take a look at the places with the highest rates of E. V. Adoption. No surprise California leading the way, especially san Francisco, Oakland and san Jose region, all in northern California uh which is 20.2% of all vehicles being electric in that area. Pretty impressive. Los Angeles and san Diego have about 12% while places like new york city are lagging with just 4%. You don't see a ton of E. V. S on the road here but like we said, price is definitely a factor and the speed with which american consumers adopt electric vehicles does depend heavily on what happens with inflation and gas prices in the coming months and years. So this will be an interesting one to see. Even though new york city is tiny, I can, compared to what's been going on for years in California due to E. V. Adoption, I'm still seeing more and more electric vehicles on the road over time here in Manhattan. Yeah, absolutely. And I think that when it comes to infrastructure that's gonna be a big play also being able to not only find a charging station but perhaps make one addition to your house. That's gonna be a big thing. So I agree. I mean we live in new york. So we obviously see more electric vehicles. But I think in those kind of states where charging stations aren't 100 miles away from each other, you're in better shape. And I think consumers will notice that, too, we'll be watching closely.