ALEXANDRIA, Va.—While millennials and Generation Z have shown more interest in climate change than other generations, they’ve been slow to adopt the electric car. But that could be changing, according to CNBC.
Currently, only 10% of electric vehicle buyers are between the ages of 25 and 34, reports Cox Automotive, an auto research organization. The problem is price. Many young people are struggling with student debt and wage stagnation, while 70% of electric car customers have incomes of at least $100,000.
Early electric cars have been pricey. Tesla had a lead in the affluent consumer market, and then Porsche released its first electric car at an even higher price point than Tesla’s top models. But with global auto manufacturers, such as General Motors, Volkswagen, Nissan and Kia, bringing more e-cars to market, the cost gap between electric models and gas models is beginning to shrink, according to Rachelle Petusky, the manager of research and market intelligence for Cox Automotive Mobility, and that shift is going to accelerate.
Between 2010 and 2016, the cost of electric car batteries fell more than 70%, lowering the average transaction cost for e-cars. Prices for the Nissan LEAF have dropped by 2.5% since 2012, while the price of combustion engine cars, such as the Nissan Maxima, have increased by 7.5%, closing the cost gap.
Younger drivers are becoming more aware of the economic benefits of owning electric vehicles. The Cox Automotive survey showed 65% of Gen Z consumers said that charging an EV costs less than fueling a gasoline-powered car. According to the U.S. Department of Energy, fueling an electric car costs a little under half as much as a conventional car, with a gallon of gasoline at $2.64 on average in the U.S., and an electric eGallon at $1.24.
Other concerns are still inhibiting younger buyers, said Petusky. Their biggest concern is that the car will run out of power before the battery can be recharged. Cox Automotive research shows that electric vehicles are closing the gap in expected range. A Nissan LEAF has a range of approximately 225 miles, while Gen Z’s average estimated range for electric cars is 218 miles; for millennials the average estimated range is 248 miles.
The density of younger consumers in urban areas can be another reason for the limited appeal of electric cars, said Jessica Caldwell, executive director of insights at Edmunds. According to the 2017 census, 17.8% of people living in New York City were between the ages of 25 and 35. For many younger people living in urban areas, public transportation is the norm.
Additionally, buying a used car is cheaper than buying a new one, and buying second-hand electric vehicles are no exception. Pre-owned EVs cost between 43% to 72% less than new ones, depending on the model.
There are federal tax incentives for electric car buyers, though those decline once a manufacturer reaches a fixed number of 200,000 cars sold. Tesla’s models are already in the incentive phase out-period, with the original $7,500 credit now down to $1,875 tax credit available until the end of 2019.