Electric Cars Are Doomed to Be Fancy

America’s federal tax credit for buying an electric car was supposed to be the great equalizer, an incentive meant to solve for the fact that EVs have long been more expensive than the polluting fossil fuel vehicles they must replace.

That tax credit is now dead. Thanks to the Republican budget reconciliation bill pushed through Congress this summer, the incentive will die after September 30 of this year.

Its demise comes at a particularly inopportune time. For a long time, even a $7,500 benefit wasn’t enough to make many of the best electric cars cost-competitive with their gasoline-powered rivals. Slowly, that had begun to change: More EVs with a starting MSRP in the $30,000 range, such as the base-level Chevy Equinox EV, could compete directly on price with internal combustion once the tax credit (along with any state and local incentives) was taken into consideration.

Without the tax credit, most EVs can’t compete on price alone. Battery production costs are falling, but not fast enough for a new EV in America to cost the same as a comparable gas car. With electricity prices seemingly set to rise, the appeal of never again buying gasoline isn’t as strong. At the same time, the federal government has been trying to add new, nonsensical taxes on EV ownership. Cars.com says the tax credit was a major reason half of EV owners cited for choosing their vehicle, and that it’s driving the decision for about half of curious buyers.

Add it all up and a big group of American shoppers who might have considered buying an EV if the dollars and cents added up probably won’t, at least for now. The mess leaves electric vehicle makers in a precarious position. They must convince American drivers that EVs are simply superior — more capable, more dependable, and more fun. As longtime Rivian executive Jiten Behl told InsideEVs’ Patrick George last week: “Forget they’re electric for a moment. They’re just better cars. And a better product will always win.”

That argument is an existential one for Rivian, which Behl departed last year. Deliveries of its long-awaited R1S SUV started in 2022, and since then the vehicle has become a Range Rover-replacing status symbol in my part of Los Angeles. But after three years, most people with the means and desire to buy a $70,000 to $80,000 EV have done so, yet the company’s more affordable R2 and R3 vehicles remain at least a year away.

Rivian’s solution for the meantime is to push the limit of electric vehicle performance, dollars be damned. This summer, I’ve driven triple-motor Tri Max versions of both the R1S and the R1T pickup trucks. Zooming from a stop, its 800-plus horsepower and instantaneous torque is whiplash-inducing. Put in Conserve mode and the vehicles approach 400 miles of range, enough to obliterate range anxiety. There’s plenty of power for towing and off-roading, plus all the other functionalities that make EVs better than combustion cars: using the vehicle battery to power one’s home or other uses, Dog Mode, or tapping into battery power to pre-condition the cabin on a scorching or frigid day.

Gas vehicles have modes, of course. Over the past decade or two, drivers have gotten used to the way that “sport” or “eco” modes subtly change the character of a car. In a super-EV like the Rivian, having so much capability at your fingertip feels like the EV could become a totally different car at the push of a button. For the Tri Max models, this level of muscular competence costs north of $100,000. But such prowess speaks to someone out there. Rivian has been developing the more-ultimate-than-ultimate electric vehicle, a quad-motor version with horsepower in the four digits, for those in the “money is no object” tax bracket who’ve been convinced that electric is better (or at least that electric is the future, and they want to own it).

A more telling case will be next year’s arrival of the R2, a two-row electric SUV meant to cost in the neighborhood of $45,000. Without the tax credit, prospective buyers can’t tell themselves that it’s really in the $30,000s. On price, then, it’s competing with BMW SUVs, not Chevys.

This is nothing new for the EV market. Selling electrics as luxury cars with a high price tag helps to mask the cost of the battery, and it brings in more revenue for a startup company like Rivian that desperately needs it. Tesla sold a lot of cars this way even though its refinements, build quality, and creature comforts weren’t quite up to par compared to a Mercedes-Benz or a BMW. Part of the luxury people paid for was the feeling of owning the cool new thing, at least back before Tesla’s brand was tainted.

It’s a bit trickier for legacy car companies, who are struggling to navigate shifting attitudes and incentives in America and to compete against cheap, Chinese-made EVs abroad. Take the Hyundai Ioniq 9 that arrived this summer. Hyundai and Kia are the farthest along of the traditional brands in selling great EVs to Americans, and the Ioniq 9 may be the best electric offering for families that need a three-row vehicle to accommodate their tribe. Thanks in part to the hulking 110-kilowatt hour battery needed for this boat to have 300 miles of EPA-rated range, however, the Ioniq 9 starts at $59,000 — more than $20,000 higher than Hyundai’s similarly sized, gas-powered Palisade.

Even a $7,500 benefit wouldn’t bridge such a divide between electric and gas. So, Hyundai bet all along that, incentives or not, buyers would find the Ioniq 9 to be the premium product that it proved to be during my road trip test drive in one this past weekend. Where the Palisade comes with 291 horsepower from its gas engine, Ioniq 9’s 422 electric horsepower allowed the big vehicle to accelerate effortlessly onto the highway and zoom up the Grapevine mountain pass that leads into Los Angeles, dusting plenty of combustion-powered cars huffing and puffing to get uphill. It is remarkably spacious and startlingly quiet, even when putting out lots of power.

My top-of-the-line Ioniq 9 had numerous tech features meant to make it feel special, like the enormous curved touchscreen that spanned from dashboard to center console and the heads-up display — specs that feel futuristic and attempt to justify the extra cost. But let’s be real. For anyone who’d choose a $60,000 EV over the same company’s $40,000 gas-guzzling SUV, it comes down to the simple, everyday advantages of an electric car: Your home is your gas station and you begin every day with a full tank. You’re sitting on a big battery full of electricity that can be used for more than driving, whether that’s backing up your home appliances during a blackout or just air-conditioning your dog while you run into the drugstore. No oil changes. No belts, sparks plugs, or antifreeze to worry about. No tailpipe emissions poisoning your city’s air or filling your garage with carbon monoxide. Immediate power at your feet. And, of course, the possibility of one day running the family car entirely on clean energy.

None of those reasons will change the financial calculation and make the EV less expensive in the long run. For now, the argument for EVs is that you get what you pay for. When more Americans experience a premium EV, that might be enough to convince them that electric is worth the extra cash, tax credit or not.