A new Bank of America Institute report didn’t just lower projections for electric vehicle sales through 2030, it used internal auto-loan originations data to tell us why. Writing that EVs represent one area of the auto market that “still appears relatively soft,” BofA found three main reasons why shoppers are shying away from the next generation of driving. But it also identified a generational shift in consumption—and baby boomers and “traditionalists” are leading the exodus away from EVs.
The bank’s analysts, led by Bank of America Institute senior economist David Michael Tinsley, found that after a post-pandemic EV craze that saw sales triple from 2021 to 2023, demand cooled off in the second half of last year. There are three main causes, they wrote: “a lack of affordability, limited choice, and ‘range anxiety,’” or the worry that people will be stranded, as infamously happened in Chicago this January, when consumers couldn’t charge their Teslas in negative 9-degree weather.
The data plainly shows that older Americans led the EV flight: demand from Americans born before 1965, which was already lower than for younger consumers, began to decrease last fall—and the trend doesn’t show signs of reversing anytime soon.
“Younger generations are probably more committed to a kind of green agenda of decarbonizing their vehicles,” Tinsley said in an interview with Fortune. “And older generations and Gen X, probably, will do it if the vehicles are there, and they’re cheap enough.”
The EV sector is suffering as domestic manufacturers tighten their belts after two boom years of massive spending to get new EVs to market. Fully electric cars have proved far less popular than expected, and domestic automakers can’t compete on price with sub-$15,000 Chinese models, which could hit American roads soon.
The report pointed to that affordability problem as a key obstacle for would-be American buyers: Only 20 EV models sold in the U.S. start at less than $45,000, and domestic automakers have missed out on sales by focusing on producing high-end cars at the expense of more accessible mass-market EVs.
Tax incentives have been a crucial boost for the EV industry; the Inflation Reduction Act offered a tax break of up to $7,500 for new buyers. But the report pointed out that an uncertain regulatory landscape and the results of this year’s election might leave some consumers questioning if it’s worth betting on the government continuing to support EVs. (The government just rolled back the tax incentive for dozens of models.) And a slew of bad press hasn’t helped make the case for buying a new EV instead of a cheaper, gas-powered car.
“[EVs have] taken a bit of a bad rap of late—about cost, and reports of them breaking down or not charging. To my mind, those stories probably impact older generations more than younger generations,” said Tinsley.
While the EV market suffers, Bank of America pointed out that plug-in hybrids are helping to fill the gap: the market share of these semi-electric cars has been steadily rising for the past year and a half, and while they aren’t as efficient as EVs, hybrids still produce far fewer emissions that conventional gas-powered cars.
“The carbon [emissions] from a plug-in hybrid versus a gasoline car is, like, 30 percent,” said Tinsley. “So, you know, there are different ways to skin the cat. And plug-in hybrids aren’t a bad way, particularly if you can get mass adoption of those.”
