US: Electric cars too costly for many, even with aid in Climate Bill

US: Electric cars too costly for many, even with aid in Climate Bill

Policymakers in Washington are promoting electric vehicles as a solution to climate change. But an uncomfortable truth remains: Battery-powered cars are much too expensive for a vast majority of Americans.
Congress has begun trying to address that problem. The climate and energy package passed Sunday by the Senate, the Inflation Reduction Act, would give buyers of used electric cars a tax credit.
But automakers have complained that the credit would apply to only a narrow slice of vehicles, at least initially, largely because of domestic sourcing requirements. And experts say broader steps are needed to make electric cars more affordable and to get enough of them on the road to put a serious dent in greenhouse gas emissions.
High prices are caused by shortages of batteries, of raw materials like lithium and of components like semiconductors. Strong demand for electric vehicles from affluent buyers means that carmakers have little incentive to sell cheaper models. For low- and middle-income people who don’t have their own garages or driveways, another obstacle is the lack of enough public facilities to recharge.

The bottlenecks will take years to unclog. Carmakers and suppliers of batteries and chips must build and equip new factories. Commodity suppliers have to open new mines and build refineries. Charging companies are struggling to install stations fast enough. In the meantime, electric vehicles remain largely the province of the rich.
To some extent, the carmakers are following their usual game plan. They have always introduced new technology at a luxury price. With time, the features and gadgets make their way into cheaper cars.
But emission-free technology has an urgency that voice navigation or massaging seats did not. Transportation accounts for 27% of greenhouse gas emissions in the United States, according to the Environmental Protection Agency. Battery-powered cars produce far less carbon dioxide than vehicles that run on gasoline or diesel. That is true even accounting for the emissions from generating electricity and from manufacturing batteries, according to numerous studies.
Only a few years ago analysts were predicting that electric vehicles would soon be as cheap to buy as gasoline cars. Given the savings on fuel and maintenance, going electric would be a no-brainer.
Instead, soaring prices of commodities like lithium, an essential ingredient in batteries, helped raise the average sticker price of an electric vehicle by 14% last year to $66,000, $20,000 more than the average for all new cars, according to Kelley Blue Book.
Demand for electric vehicles is so strong that models like the Ford Mach-E are effectively sold out, and there are long waits for others. Tesla’s website informs buyers that they can’t expect delivery of a Model Y, with a purchase price of $66,000, until sometime between January and April 2023.
With so much demand, carmakers have little reason to target budget-minded buyers. Economy car stalwarts like Toyota and Honda are not yet selling significant numbers of all-electric models in the United States. Scarcity has been good for Ford, Mercedes-Benz and other carmakers that are selling fewer cars than before the pandemic but recording fat profits.
Automakers are “not giving any more discounts because demand is higher than the supply,” said Axel Schmidt, a senior managing director at Accenture who oversees the consulting firm’s automotive division. “The general trend currently is no one is interested in low prices.”
Advertised prices for electric vehicles tend to start around $40,000, not including a federal tax credit of $7,500. Good luck finding an electric car at that semi-affordable price.
Ford has stopped taking orders for Lightning electric pickups, with an advertised starting price of about $40,000, because it can’t make them fast enough. Hyundai advertises that its electric Ioniq 5 starts about $40,000. But the cheapest models available from dealers in the New York area, based on a search of the company’s website, were around $49,000 before taxes.
Tesla’s Model 3, which the company began producing in 2017, was supposed to be an electric car for average folks, with a base price of $35,000. But Tesla has since raised the price for the cheapest version to $47,000.
Even used electric cars are scarce. Popular models like the Tesla Y and Ford Mach-E are sometimes selling for thousands of dollars more used than they did new. Buyers are willing to pay a premium to get an electric car, even a used one, right away.
Joshua Berliner, a Los Angeles entrepreneur, was in the market for a used Tesla Model 3 sedan but discovered that prices were higher than for a new Tesla. “The same held true for nearly every make we looked at,” Berliner said in an email.
Berliner, who owns a Tesla and wanted a second one for his wife, said he had become so desperate that he almost bought a gasoline car. “I normally wouldn’t consider combustion vehicles, but if gas prices were lower I might have pulled the trigger,” he said.
The Inflation Reduction Act, which appears likely to pass the House, would give buyers of used cars a tax credit of up to $4,000. The used-car market is twice the size of the new-car market and is where most people get their rides.
But the tax credit for used cars would apply only to those sold for $25,000 or less. Less than 20% of used electric vehicles fit that category, said Scott Case, CEO of Recurrent, a research firm focused on the used-vehicle market.
The supply of secondhand vehicles will grow over time, Case said. He noted that the Model 3, which has sold more than any other electric car, became widely available only in 2018. New-car buyers typically keep their vehicles three or four years before trading them in.
A $7,500 credit for new electric vehicles, another provision of the Inflation Reduction Act, would help push down prices across the board and filter down to the used-car market, Case said. Carmakers sold nearly 200,000 new electric vehicles in the United States from April through June. As those new cars age, used electric vehicles will become “accessible to a lot more people,” Case said.
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The problem is that many new electric cars may not qualify for the $7,500 credits. The Inflation Reduction Act sets standards for how much of a car’s battery must be made in North America with raw materials from trade allies. Several car manufacturers and suppliers have announced plans to build battery factories in the United States, but few have begun producing.
“Right now with our lack of capacity for materials, I don’t think there is any product that will meet that today,” Carla Bailo, president of the Center for Automotive Research in Ann Arbor, Michigan, said of the standards. “Tesla is probably close but the rest of the manufacturers, no way.”
The legislation also excludes imported electric vehicles from the tax credit. The provision is designed to protect American jobs but would undercut the price advantage of Chinese brands that are expected to enter the United States. SAIC’s MG unit sells an electric SUV in Europe for about $31,000 before incentives.
Eventually, Bailo said, carmakers will run out of well-heeled buyers and aim at the other 95%.
“They listen to their customers,” she said. “Eventually that demand from high-income earners is going to abate.”

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Building a greener future: 5 Indian startups that are working to battle climate change

Building a greener future: 5 Indian startups that are working to battle climate change

While over 150 countries are slated to host environmentally-themed events, environment experts hope for this year’s World Environment Day is to encourage a global effort to tackle what they describe as the decline of the natural world. Inger Andersen, the Executive Director of the United Nations Environment Programme (UNEP) said, “we are running against the clock. Today, as we look to a…future of heatwaves, droughts, floods, wildfires, pandemics, dirty air, wars, and plastic-ridden oceans, action is more important than ever.”
On World Environment Day, here’s a look into five Indian startups that are working across different sectors with the aim to make environmentally conscious decisions and contribute the transition to a greener future.

1. Phool
This is India’s very first biomaterial startup and a fragrance-focussed wellness brand. Phool.co is a flower recycling technology startup and so far it has raised $8 million (Rs60.5 crore) in a Series A round from Sixth Sense Ventures, a consumer-centric venture fund. 
Phool.co was founded in 2017 by engineering graduates Ankit Agarwal and Prateek Kumar. The startup company uses floral waste, collected from dumping temple waste in rivers, to make patented organic fertiliser and charcoal-free luxury incense products. 
As of now, this Kanpur-based startup accumulates floral waste from three Indian cities, including one of the biggest temples (Kashi Vishwanath), averting 13 tonnes of waste flowers and toxic chemicals from reaching into the river every day. 
It is worth noting that self-help women groups handcraft the waste into patented charcoal free incense sticks and essential oils through the ‘flower cycling’ technology. Additionally, it is India’s first direct-to-consumer wellness brand to obtain the coveted Fair for Life-Fairtrade, and Ecocert Organic and Natural certifications. And, there’s more, this IIT-backed startup has invented Fleather—‘leather made from flowers’. With this commercially viable, vegan alternative to animal leather, the startup hopes to make the use of animal leather obsolete.

2. Banyan Nation
One of India’s first vertically integrated plastic recycling companies, Banyan Nation is a waste management company that collects plastic wastes from industries and recycles them for further use. The startup utilizes its unique technology platform to integrate thousands of informal workers and produces premium-quality recycled polyolefin plastics (PE and PP) for mainstream and high-quality applications.
Founded by Mani Vajipeyajula and Rajkiran Madangopal, this Hyderabad-based company leverages tech-based solutions to collect plastic from informal recyclers and businesses. Interestingly, the company won the World Economic Forum Global Technology Pioneers (2021), Circulars Award at the World Economic Forum (2018 Intel-DST Award Innovations for Digital India (2017), Millennium Alliance Grant (2016), and mBillionth Award (2015).
3. BluSmart 
Beginning its operations in 2019, BlueSmart is an app-based all-electric ride-hailing business to consumer platform with about 600 electric vehicles (EV) operating in the Delhi-NCR region. 
This Indian company is currently competing with the industry behemoths Ola and Uber, with dedicated electric vehicle fleet for customers looking for sustainable mobility. Founded by Anmol Jaggi and Punit Goyal, the electric vehicle ride-hailing and charging startup recently raised USD 25 million (around 194 crore) in a fresh funding round.
The funding is a follow-up to the Series A round that closed in September 2021, bringing the total Series A investment to USD 50.7 million. The company said it has raised USD 25 million in the Series A1 round, comprising USD 15 million in equity capital and venture debt of USD 10 million.
The equity round was led by BP Ventures and Green Frontier Capital, with participation from existing investors. The venture debt funding comes from Stride Ventures, Alteria Capital, BlackSoil and UCIC. Additionally, BluSmart said it plans to use the funds to scale up its all-electric ride-hailing fleet to over 5,000 EVs and expand its network of EV superhubs across Delhi-NCR.
4. ZunRoof
As is a leading solar energy startup in India, ZunRoof is creating waves by focusing on the residential solar segment by providing best on-grid solar solutions. Currently with major operations in the Delhi NCR region, the four-year-old startup is expanding in other geographies rapidly. 
As per the company release, “out of the 1805 solar net meters installed in Delhi, ZunRoof has installed more than 300 solar net meters, claiming the top spot as an individual contributor to the residential adoption in Delhi-NCR region.”
So far, ZunRoof has worked with 1000 households in Gujarat to go solar by installing 1000 solar rooftops in Ahmedabad, Surat and Vadodara. Solar segment is widely divided in commercial, residential and industrial scales where the sizes and complexities of projects vary a lot, the company release notified. Notably, the residential solar segment is especially tough to penetrate given the individual customer’s need to be educated about the solar setup and feasibility of having a solar energy harnessing unit on the rooftops.
5. Ather Energy
This is an Indian electric vehicle company founded by Tarun Mehta and Swapnil Jain in 2013. Headquartered in Bangalore, Ather Energy manufactures two electric scooters, the Ather 450X and the Ather 450 Plus. Additionally, it has also established electric vehicle charging infrastructure across the country called Ather Grid.
Electric two-wheeler maker just last month announced raising USD 128 million (around 991 crore) from National Investment and Infrastructure Fund Limited’s (NIIFL) Strategic Opportunities Fund (SOF) and Hero MotoCorp along with additional investors, Ather Energy said in a release. The company said it plans to use the funding to expand manufacturing facilities, invest in research and development, charging infrastructure and to grow its retail network.
Additionally, the electric vehicle company partnered with HDFC Bank and IDFC First Bank to offer retail finance for its e-scooters, earlier this year. The collaboration has allowed Ather Energy customers to avail instant loans from the two private lenders at low-interest rates and with a maximum LTV (Loan-to-value), as per the company release.

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