EV Charging Prices Are Going to Go Way Up
It’s standard economics — a product’s price usually rises to the level of its closest rival
In his confirmation hearing yesterday, Pete Buttigieg, the nominee to be transportation secretary, reiterated a promise that President Joe Biden made again and again on the campaign trail: The administration will seek funding to build a half-million electric vehicle (EV) chargers by 2030.
But if forecasts for EV demand are borne out, the U.S. will need a lot more charging points. In a report earlier this month, McKinsey puts the required number at five to nine million by 2025 and double or triple those figures by 2030. To get there, private industry is probably going to have to build most of them, and to justify the capital expense, it is going to have to see a reasonably steep upside.
If you go by economic history, here is one probable scenario: In the middle-late part of the decade, as EVs are selling at much a higher clip because they have become much cheaper, fast-charging stations will begin to price their power at the equivalent of gasoline. That is, it will cost you roughly the same whether you are “filling up” your EV or your gasoline-driven vehicle. To put hard numbers to this thesis, if you have a 20-gallon tank, you are currently paying an average of $50 for a fill-up compared with about $10 to charge an EV.
To understand why the price of EV charging may very well rise to somewhere near $50, consider the meatless burger — the Impossible Burger to be precise. At Burger King in Adelphi, Maryland, the Impossible Whopper is $8.99. That’s a dollar more than the regular Whopper. At Red Robin in Northridge, California, the Impossible Cheeseburger is $14.89, about $2 more than the regular Master Cheese Burger. Is it mere coincidence that the prices are so close?
Not at all. This is economics: The price of a new product will generally rise right around that of its nearest competition.
Here is another example, from when I was based in the former Soviet Union: One of the biggest U.S. policy ventures of the 1990s was to undermine Russia’s influence in the southern half of the former Soviet Union, the eight countries known colloquially as the “Stans.” The focus of this battle…