Biden Plan to Expand EV Manufacturing Faces Consumer Headwinds

The Biden administration plans on funding $1.7 billion to automotive manufacturers to make more electric vehicles. However, consumer interest in EVs has been declining, largely because of a still poor charging infrastructure. That could open opportunities for commercial real estate owners.

The $1.7 billion will cover 11 projects to help companies expand EV manufacturing. The White House is eyeing to prioritize facilities that either had or were at risk of closing. These are cost-sharing arrangements, so such companies as Fiat Chrysler and General Motors will also need to invest in their projects.

The emphasis might be better put on vehicle charging and not vehicle manufacturing because that is an apparent sore point with consumers. A McKinsey & Co. survey showed that consumer interest in EVs had fallen from last year, as AAA reported. The number of people who would be “likely” or “very likely” to buy a new or used EV was 18%, down from 23% in 2023. And 63% said they were “unlikely or very unlikely” to choose an EV for their next vehicle. Globally, 29% of EV owners are considering moving back to an internal combustion engine vehicle.

A major reason for the attitude shifts is a lack of charging infrastructure. Consumers are accustomed to driving as they wish, with refueling when necessary available almost anywhere with the process taking only a few minutes.

“Early adopters who wanted an EV already have one,” Greg Brannon, director of automotive research at AAA, said in prepared remarks. “The remaining group of people who have yet to adopt EVs consider the practicality, cost, convenience and ownership experience, and for some, those are big enough hurdles to keep them from making the jump to fully electric.”

A Harvard Business School study found that EV owners had “deep frustration with the state of charging infrastructure, including unreliability, erratic pricing, and lack of charging locations.” The research is based on more than one million charging station reviews by North American EV drivers.

That puts CRE owners in an odd position. There’s an ongoing search for effective EV charger business models. Property owners could help expand the country’s charging infrastructure, and it has seemed necessary for owners to satisfy the demands of consumers. But if they are turning away from EVs, the question exists whether additional investment makes sense.