A tough new era for electric vehicles

Guests: Axios' Joann Muller, Hope King and Felix Salmon.

Credits: Axios Today is produced by Niala Boodhoo, Alexandra Botti, Fonda Mwangi, Lydia McMullen-Laird and Alex Sugiura. Music is composed by Evan Viola. You can reach us at [email protected]. You can text questions, comments and story ideas to Niala as a text or voice memo to 202-918-4893.

Transcript

NIALA: Good morning! Welcome to Axios Today!

It's Wednesday, August 9th.

I'm Niala Boodhoo.

Today: U.S. credit card debt reaches a record high. Plus, a new national monument in Arizona.

But first, a tough new era for electric vehicles. That's today's One Big Thing.

NIALA: The push for electric vehicles to become more mainstream has gained serious momentum in recent years, given climate change, fluctuations in gas prices and tax incentives. Just yesterday, General Motors announced plans to equip all of its electrical cars and trucks with two-way charging technology, so the vehicles can supply backup power during blackouts.

But as companies, including GM, look to adapt their EV plans for the future, Axios's Joann Muller writes, the broader transition to electric vehicles will likely be longer and bumpier than many experts predicted. She's here with a reality check on EVs today and tomorrow. Hey, Joann.

JOANN MULLER: Hi, Niala.

NIALA: Joann, so I think we're past the early adopters phase with EVs. We're seeing a lot more of these vehicles on the road. How much of the market are EVs right now?

JOANN: They're about 6 or 7% percent of new vehicle sales right now, which is more than double what they were a year ago. So we've seen quite a spike. But it's very spotty. So San Francisco now is half of all new vehicle sales are electric. California's, as a whole, is around, I believe, 25%. But, you're not going to find too many EVs in, Des Moines. And so it's really a spotty trend.

NIALA: So you write the next phase of EV expansion in the U. S. will be tough. Why's that?

JOANN: There's two big problems. One is the price of EVs are still much higher, at the point of sale, over a gasoline vehicle. And also, people are still very, very confused and apprehensive about charging. And so, this second wave of buyers, they call them the early majority. They're very price sensitive. They're interested in buying an EV, but they're just not ready to pull that trigger. And so what it means is that the auto companies are having to adjust.

NIALA: How is that affecting EV targets that major automakers had set?

JOANN: Well, what we see here is people sort of extending their timeline or, maybe hedging a little bit. Ford had said that they were going to sell, or at least scale their production plants so that they could make 600, 000 EVs a year. And they were going to hit that target by the end of this year. Now they're saying, mm, we're going to go a little slower and we probably won't hit that rate until 2024. These are very expensive, and they have to balance the profitability that they get from EVs.

NIALA: So GM just announced that soon all of its vehicles will be able to two-way charge. Is this in reaction to climate change and the blackouts that we've been seeing?

JOANN: Yeah. The question I get asked all the time is how on earth, will. America will be able to support all these EVs on the grid. And the answer that the EV makers say, in return is, hey, what if we use the cars to actually supply electricity back to the grid? Here's the but. This is expensive. Like, Ford, which already does this with their F-150 Lightning, they estimate that it costs $9, 400 to put in this two-way capability in your home.

Motor Trend did a story recently where they looked at what it would cost to upgrade one of their writer's homes, and it was over $18,000. So you gotta be prepared. This is not free.

NIALA: Joann, the Washington Post just reported on abuse and poor conditions for cobalt miners, cobalt being an essential ingredient in EV batteries. How will companies reconcile the demand for these materials with safety in labor and in some cases child-labor issues?

JOANN: Well, we're already seeing car makers begin to change the chemistry of their vehicles to use little or no cobalt, at all. They are also trying to find sources that are not abusing workers. That's difficult because most of the cobalt comes from Congo, and that is where we're seeing the worst abuses of workers. But remember that all of these raw materials, raw minerals that go into batteries like lithium and nickel and cobalt, many of them are sourced through China or processed into parts in China. And that's what is behind the U. S. government's attempt to build a domestic supply chain. And that brings home some really tough questions about whether or not we want mining in North America, in the United States in particular. We do have a lot of lithium in the United States, by the way. But it takes time and effort and money to get it out of the ground. And so none of these questions are easy.

NIALA: Joann Muller covers the future of transportation for Axios from Detroit. Thanks, Joann.

JOANN: Thank you!

NIALA: In a moment, headlines we're watching this Wednesday.

Welcome back to Axios Today! Here are some headlines we're following today.

President Biden yesterday designated a new national monument near the Grand Canyon. The monument – in the form of nearly a million acres of land – and it's intended to boost tourism for the region and will protect sacred Native American land from uranium mining.

PRESIDENT BIDEN: It's good for the economy, it's good for the soul of the nation, and I believe with my core, in my core, it's the right thing to do.

And a followup to a story we covered yesterday - Ohio voters last night rejected Issue 1 – an effort by Republicans to raise the threshold to 60 percent for constitutional amendments. It's a victory for abortion rights supporters, ahead of a November vote on an amendment that would ensure abortion access in the state. Despite it being a summer election, turnout surpassed what was recorded in the state's last primary, in May 2022. Ballotpedia estimated that almost $33 million was spent on Issue 1 - with 8 in 10 dollars coming from outside of Ohio.

And, in case you missed it, Zoom is facing backlash over privacy concerns. A tech site over the weekend claimed the company's latest terms of service allow Zoom to train its artificial intelligence using customer data.

Zoom responded on Monday saying it won't use customer data to train AI without people's permission. And on tomorrow's show, we'll be digging into all this and more on the latest in the world of AI.

NIALA: Americans are spending big. For the first time ever U.S. credit card debt has surpassed 1 trillion dollars. Axios' Hope King has the latest on this new record.

HOPE KING: That headline number, 1 trillion dollars, it's huge and it's being driven by consumer confidence, the overall strength and resiliency of the economy. Rising interest rates, the return of summer travel. So many of these factors that I know you've been talking about on the podcast.

But I want to put this trillion-dollar milestone in context of also savings. Because if you look at the total deposits that households have in the banks right now, this number is just 6% of that total, and that 6% is around the lowest percentage in 20 years. What does that mean? That means that we still have excess savings from the pandemic still fueling our ability to repay our credit cards, which is very, very important.

Now, going forward, we do have a very big deadline coming up. That's October. That's when student loan payments pick up again. And some analysts are already expecting that consumers will reduce their spending by $300 a month when they have to restart their payments. Lastly, is that we're going into the holiday season as well. So depending on where you are with your student loan payments, you might actually end up continuing to spend because you've gotta buy gifts for yourself or others. That's one big thing to watch.

NIALA: That's Axios' Senior Business Reporter Hope King.

NIALA: And one last thing before we go. We have another summer reading recommendation for you... This time from our very own Felix Salmon.

FELIX SALMON: So Niala, when I go on vacation in the summer, I like to go to magical faraway lands, and there is no greater magical faraway land than the one that we are introduced to in a movie I'm sure you've seen, "The Princess Bride."

What I'm not sure you know is that "The Princess Bride" is actually an incredible book. The book is even better than the movie, and the movie is almost perfect.

The book is called "The Princess Bride: S. Morgenstern's Classic Tale of True Love and High Adventure." It is by William Goldman, a legendary screenwriter, and it is the most wonderfully enjoyable escapist fantasy you will ever read. It is incredibly funny and incredibly fun.

So, if you want to escape, then read "The Princess Bride" by William Goldman. If you want to know where we are, read "The Phoenix Economy" by Felix Salmon. But either way, just read something this summer because summer is for reading.

NIALA: "The Princess Bride" is one of my very favorite books. That's Axios' Chief Financial Correspondent – and Axios Today guest host – Felix Salmon.

That's it for us today!

I'm Niala Boodhoo - thanks for listening - stay safe and we'll see you back here tomorrow morning.