Colorado Sees Continued Growth in Electric Vehicle Sales

This story appeared on BigPivots.com on September 11, 2024.

EDITOR’S NOTE: In this article, Allen Best discusses “plug-in hybrids”.   Compared with gasoline cars, conventional hybrids, or battery-electric cars, a plug-in hybrid may be the hardest to describe. It can run like a regular hybrid, e.g. a Toyota Prius — automatically switching back and forth between fuel and electric as driving conditions change — but there’s another aspect: It’s also an electric car that plugs in, to recharge a battery pack that lets it drive on electric power alone, part of the time — but usually only for 20 to 60 miles.  One automotive analyst suggested plug-in hybrids are an engineer’s answer to a question that no actual car shopper has ever asked: How do I cover the majority of my predictable daily miles on electricity, without the range anxiety of a battery-electric car?

Electric vehicles and plug-in hybrids reached 22.1% of all new vehicle sales in Colorado during the second quarter of 2024.

In the first quarter, Colorado was third in the nation in proportion of EVS and plug-in hybrids to total sales. During the second quarter an auto industry analyst reported that Colorado lagged only California, although the economist did not cite the source of the data.

Colorado’s incentives, among the nation’s most attractive, have helped swell the state’s sales. EVs constituted 16.1% of all new-vehicle sales in Colorado from April through June and plug-in hybrids another 6%. Hybrids with internal-combustion engines constituted another 10.89%.

EVs and plug-in hybrids had constituted 17.1% of all sales in the third-quarter of 2023, another milestone.

But does Colorado need more tricks in its bag to continue the upward mobility?

Colorado currently has 138,060 EVs (98,202 battery-electric vehicles and 39,858 plug-in hybrids) on its roads. It has a goal of achieving 940,000 by 2030.

In March 2023, a new state roadmap for EV adoption goal of 25% of new vehicle sales by 2025. That seems doable.

However, the Polis administration’s goal is to boost EV sales to at least 70% of new vehicle sales by 2030. Is that within reach using current strategies?  Matthew Groves, the chief executive of the Colorado Auto Dealers Association, suggests that Colorado has some serious work ahead to achieve that goal. A “sprint” is how he describes the task.

A fundamental task he identifies is to create confidence among buyers that they will not get stranded without access to a faster-charging station if they buy an EV.

Range anxiety, if tamed somewhat by charging infrastructure that has tripled in the last five years in Colorado, remains an issue. This is despite impressive figures about charging stations, including the 4,200 level-2 public chargers in Colorado as of early August.

DC fast chargers? 1,079 ports altogether, according to Atlas Public Policy. As of February they were located within 30 miles of 78% of the state’s geographic area.

More are coming. The state expects the first of 400 additional fast-chargers funded through the federal DCFC Plazas grant program to be in place by the end of 2024. Those chargers will be placed at 65-plus locations across Colorado, although supply chain constraints for transformers and other components may slow the complete rollout to two years or more,

Also material to charging infrastructure are Colorado laws and funding that require and help fund sharing in multifamily housing projects and workplaces.

Instilling consume confidence
Sounds good, but Groves describes it as an incomplete picture. “Not every car works with every charger,” he points out. Tesla was supposed to make its chargers accessible to other technologies, but that has not happened yet.

Charging stations that don’t work are a problem, and the anecdotal reports suggest a significant one, at least in public perception.

“We can say that we have charging stations every 25 miles along major highways, but if there are six plugs at a stop in the middle of, say Rifle, and only two of them work, and they’re both occupied, what do I do? I may not have enough charge to make it to the next set of stations.”

Beyond the data, says Groves, what will matter most are the anecdotes shared among buyers and others. The importance of those anecdotes will vary from person to person.

“If I know somebody who got stuck between Steamboat Springs and Denver and heard they had to wait three hours for AAA to get to them, that is a more compelling (story) than the state telling me that our chargers are up 92% of the time.”

Colorado’s surging sales can be attributed in large part to the bucket of carrots offered buyers. The American Council for an Energy Efficiency Economy ranked Colorado third in the nation on its transportation electrification score in a 2023 report. That scorecard evaluating EV policies that states have taken to reduce barriers puts Colorado behind California and New York. Incentives are part of that package.

These incentives by the state, federal government and, in some cases, utilities can be “stacked.” In other words, the state EV tax credit can be combined with the federal tax credit as well as several other Colorado incentives that are available to income-qualified residents.

Groves said that he has seen purchase orders where a buyer can get back $23,000 on the purchase of a new vehicle.

Colorado also has another incentive that makes EVs particularly attractive. Beginning in 2017, purchasers could assign the state tax credits to a financing entity. A 2023 state law made it even easier. HB23-1272 allowed purchasers to assign the tax credit to a participating auto dealer in January. Dealer assignability is also available for the federal tax credit.

If it has some relatively minor problems, this program has yielded packages that have motivated consumer demand. For example, Groves reports knowing of leases for EVs that come in at about $2,100 a month. “Which is phenomenal,” he says. The sheer economics of the heavily subsidized market has some people getting EVs because of the low cost regardless of how they feel about the technology.

How long?
How long can Colorado outpace most of the nation?

National media have carried many stories since late last year about a slowdown in EV sales. Lately comes news that Ford Motor Co. has abandoned plans to roll out a large electric SUV. Tesla has been forced to offer deeper discounts, General Motors has delayed its plans for an EV pickup.

The Washington Post, in an editorial on August 30, urged state and federal policymakers to leave room for plug-in hybrid sales in the medium term.

“The industry is now in the phase that researchers call ‘the technology-adoption lifecycle’ or cross-industry adjustment. When a new technology enters the market, there is a chasm between the enthusiastic early adopters who embrace it right away and the critical mass of consumers who need longer to be convinced,” the newspaper opined.

“Most of the early EV adopters have already purchased their vehicles. It might take time to bring along the critical mass of wait-and-see consumers. Offering electric-fuel hybrids is a way to ease that transition while providing practical solutions to some common concerns.”

The Wall Street Journal on August 25 reported that automakers were already there: they have 47 models of plug-in hybrids available, nearly double those in 2019. They can run on electricity for between 20 and 40 miles before reverting to a gas engine.

Groves is skeptical we will see many lower-priced EV models arriving. “There is a finite supply of the rare-earth metals that we need for EV batteries. And when there’s a finite supply and demand surges, costs tend to go up.”

What would benefit Colorado, says Groves, would be greater flexibility in the methods used to reduce pollution from cars under the Clean Air Act. States have two choices: the federal standards for reducing emissions from cars or taking the lead of California, which federal law permits. Colorado and 16 other states have chosen to work within the constructs of what California is doing.

He cites Colorado’s Clean the Air Foundation program as an example of the innovation. “That was a uniquely Colorado program.”

An attorney, Groves had law-enforcement training and spent 17 years in Washington D.C. working on tax policy and national security issues for three different members of the House of Representatives.

“We’ve shown that we can be a leader in this field,” he says, and should not be “handcuffed by the preemptory effect of federal law.”