Listen to the full episode, here.
Key Points
- The initial fervor around the EV industry was described as artificial, driven more by government subsidies, political pressure, and hype rather than genuine, organic consumer demand.
- The removal of incentives, like the $7,500 federal tax credit, quickly revealed the weakness in underlying demand for EVs.
- A significant barrier to widespread adoption in the U.S. was the lack of infrastructure, which took over a century to build for gasoline vehicles and could not be replicated for EVs in a short, mandated timeframe.
- The unique preferences of American consumers, who favor large trucks and SUVs for long-distance driving and towing, were not yet adequately met by the capabilities of most available EVs.
- Hidden costs associated with EVs, such as more expensive and faster-wearing tires, the rising cost of electricity, and the environmental impact of producing batteries and components, were identified as further deterrents for consumers.
- The argument was made that consumers, particularly those not in the top income brackets, were unlikely to prioritize the environmental benefits of EVs over their immediate financial concerns and budgetary constraints.
John Norris (00:30):
Well, hello again, everybody. This is John Norris, Trading Perspectives. As always, we have our good friend Sam Clement. Sam, how are you doing?
Sam Clement (00:36):
Great. Thanks for asking.
John Norris (00:37):
Good, good. Sam, here we are close to the end of 2025. We’ve been talking about electric vehicles for seemingly forever, and this week we had an announcement out of Ford Motor Company that they were going to take a pretty major write-down of a lot of their electric vehicle–related investment. I mean, a significant write-down.
They also mentioned that they were going to quit production—if I’m not mistaken—of their Ford F-150 Lightning, which kind of came as maybe not a shock, but a little bit of a surprise, particularly from a major automobile manufacturer just saying, “Hey, we can’t make this work.” Or at least that’s the perception.
Sam, how did we get to this point where companies like Ford put all this money into EVs? Taking a $19.5 billion charge is one thing, but how much money did they invest, and why?
Sam Clement (01:34):
Yeah. I think the takeaway—and where we’ll probably take this topic—is not really about Ford specifically, and more about the fervor around this industry for several years that seemed artificial to me, at least.
Whether that’s subsidies, hype, or whatever you want to point to as the reason, it’s probably a lot of all of them. But it seems like the write-down is more the financial backing of what we’ve already felt—that this was maybe a little bit overdone.
We’ve talked about this with the internet, and we’ve talked about it with AI. Yes, these are likely going to be the future, but the timing is where things start to get tricky. That was the case with the internet, and it’s the same conversation people are having with AI. With every revolution, the topic seems to be not if these things are going to change the way we act and behave, but when.
John Norris (02:32):
I think you’re right about that. And going back to my question, why did they invest so much so quickly when it was unclear whether or not the U.S. market was really ready?
From what I understand and what I’ve read, there was just so much pressure put on the North American auto industry from Washington and from state governments—particularly from Sacramento and, if I’m not mistaken, Albany—to have zero-emission vehicles, ZEVs, by 2030 or 2035.
I think the Biden administration said something like 50% of all new cars sold in the United States by 2030 had to be electric vehicles. California has come up with its own strict mandates and what have you. That’s a very short period of time.
Now, when we’re talking about you and me and the life of your baby girl or the life of my kids, five years doesn’t seem like a lot of time. But when you’re talking about putting up manufacturing facilities, designing new cars, finding all the inputs—let alone the engineers and people to actually build these things—five years is a very short period of time.
It’s lightning-fast. You mentioned the Ford vehicle, but it’s lightning just in general to get that done. And I think that’s a huge chunk of the problem.
I don’t think U.S. investors are fundamentally resistant to electric vehicles, but when you’re forcing EVs down my throat—or at least that’s the perception—and the infrastructure isn’t ready, that’s an issue.
Sam Clement (04:03):
Yeah. I think if you focus on economics—and that’s the lens we look through a lot of these things—most of it comes down to supply, demand, and incentives.
What you incentivize is typically what gets done. We saw that politically with EV credits. The supply was robust—or at least the plan to create supply was robust, whether it actually came online or not is a different story—but supply was much more robust than demand.
Then you had incentives artificially boosting demand. Now you look back, the credit’s no longer there, and things change really quickly when all you have to do is unplug an incentive.
John Norris (04:55):
I’ve read in a lot of places—and Sam, you seem to agree—that the $7,500 tax credit that EV owners were getting from the federal government was undoubtedly a huge spark for demand.
So basically what you’re saying is, without that $7,500, a lot of the reason to buy an EV kind of goes out the window.
Sam Clement (05:18):
Yeah. And you’re seeing it. You’re seeing the write-downs, you’re seeing prices come down.
I’ve even seen that a lot of recent EV demand has come from people who were underwater on their previous car loans and rolled that into discounted EVs just to get out from being underwater. Whether that’s fully flowing through the data or not, it’s indicative of what’s happening on the supply-and-demand side.
John Norris (05:48):
That doesn’t sound like a good long-term business model.
Sam Clement (05:51):
It doesn’t. No, it doesn’t.
John Norris (05:52):
Do you think the American consumer is always going to be reticent to buy EVs—at least to the degree Washington would want? The goal was 50% by 2030, and right now we’re at maybe 5% to 10%.
That’s a huge leap. Even though a lot of those policies have been rolled back, getting from 5% to 50% that quickly was a pipe dream. But do you think we’ll ever get there in general?
Sam Clement (06:32):
I do. I just have no clue on the timeline.
If you’ve ever driven an electric vehicle, it’s unbelievable. I’ve been in a Tesla Plaid that had it floored, and it’s amazing. But when you look at trucks and heavy-duty SUVs—the vehicles Americans love—we’re not Europeans. We love big cars that go long distances because we drive long distances.
John Norris (06:59):
Unfortunately, our parking lot doesn’t love the large cars that everyone loves to—
Sam Clement (07:03):
Drive. I can attest to that.
And that’s where a lot of the issues with the U.S. market are. There are good-quality products, but not across the board for what Americans actually need. Until the products get there and demand becomes more natural and less incentivized, that timeline is hard to pin down.
I’d have to be an electrical engineer at one of these manufacturers to know exactly when that happens. But for a lot of consumers, the product just isn’t there yet.
John Norris (07:34):
I generally drive smaller cars than you do—which isn’t that hard, because you drive a pretty huge vehicle.
I’ve driven small SUVs and sedans, and even I haven’t been lured into EVs yet. For one, until recently they were very expensive, and I’m not a car guy.
And two—this is just me as a consumer, not indicative of anyone else at Oakworth Capital Bank—it seemed like a hassle. I used to drive up and down the interstate to Fort Payne and Mentone quite a bit. There weren’t many charging stations up there, and not a ton in Birmingham.
That meant installing a charging station at my house, probably a Level 2, which could cost a couple thousand dollars. With a gas vehicle, there’s no shortage of gas stations. I don’t worry about running out of power on the interstate or planning my vacations around charging stops.
For EV proponents, I know these arguments sound familiar—and maybe even frustrating—but for me, I was ambivalent. Push-me, pull-you between gas and EV. The EV just seemed like enough of a headache to turn me off.
And a huge chunk of that isn’t the vehicle itself. Teslas are awesome. Absolutely awesome. There just isn’t enough public infrastructure.
Sam Clement (09:33):
Yeah. And I think once again—just to put it a little differently—once the quality of the cars across the board reaches what Americans are expecting, comparable to gas vehicles, I do think demand will naturally continue to increase.
But for Americans—for people who tow—I mean, a lot of people in this country have big trucks because they tow things.
John Norris (10:01):
Tow things, and—
We also go to Home Depot and buy a lot of—
Sam Clement (10:03):
Crap. And electric vehicles are not on par with gas and diesel trucks and large SUVs. They’re just not.
John Norris (10:10):
Right. And you’re talking about infrastructure, and you’re right—it’s just not in place.
The thing about it is, it took a long time to build the infrastructure we have for gas vehicles. All these gas stations and truck stops didn’t just pop up overnight. Businesses made decisions to invest in gas stations in particular locations. Entrepreneurs did too.
I mean, my Lord, how long have we been driving internal combustion engines? I’ll throw out 1900, but obviously it was before that. It was 1875, 1880 when these things first became practical.
So it’s been a very long time to build out the infrastructure we have for gas vehicles. And now the powers that be in Washington, Sacramento, and elsewhere want that same infrastructure built out in a very compressed period of time.
And where’s the money going to come from?
I like to pick on this one particular gas station outside DeSoto State Park up in Fort Payne, Alabama. That might be meaningless to a lot of people listening, but the guy who owns it owns four or five gas stations. I happen to know that.
Turning all of those into places with charging stations would cost significant real money—particularly if you’re talking about installing Level 3 chargers, which get expensive very quickly.
To do that, there has to be some kind of guarantee of a return on investment. And there’s absolutely no guarantee that return will be there if EV demand—absent incentives—doesn’t materialize.
So I’d say a huge chunk of the problem isn’t necessarily the car manufacturers trying to step up supply. It’s that mom-and-pop gas stations are saying, “Hey, I can’t make this work,” and big vertically integrated oil companies are saying, “This isn’t in my best interest.”
Sam Clement (12:20):
Yeah. And again, this isn’t unique to electric vehicles.
Once the product exists and consumers genuinely demand EVs—which U.S. consumers just aren’t at that point yet—things change. If tomorrow everyone only wanted EVs and the situation flipped, then it would make sense for gas station owners to invest in charging infrastructure.
That’s really the crux of the issue. There just isn’t true, natural demand yet. The incentives are gone, and I’d argue the $7,500 credit wasn’t even enough to truly change U.S. consumer habits.
It obviously helped the EV industry, but until the product becomes the desirable product, none of these other changes are going to happen. And it’s going to be very difficult to strong-arm U.S. consumers—especially U.S. consumers—into changing vehicle habits, which are almost uniquely American.
John Norris (13:25):
We generally have bigger houses. We live farther apart, with massive geographic expanse.
We might not ever reach the same level of EV demand that more densely populated places like much of continental Europe—or even coastal China—will reach. It just makes more sense for them.
Given all that, I think we’re pretty much in agreement. A huge part of the problem with consumer demand is simply how Americans live, combined with the lack of infrastructure and the question of who builds it.
Car companies can build cars, but that doesn’t mean people will buy them if the infrastructure isn’t there.
Outside of that, what are some of the hidden costs that might be making consumers say, “I don’t know about EVs”? I’ve heard resale can be difficult, and then there are things like tires costing a lot more.
Sam Clement (14:33):
Yeah—tires cost more, and you go through them faster. That’s not true for every EV, but the weight of some of these vehicles matters.
There are other costs that add up. Electric is generally cheaper than gas, but those costs still exist. And I think sometimes sales pitches oversell the cost savings of going from gas to electric.
You’re still paying for electricity.
John Norris (15:03):
Right. You’re still paying for electricity—you still have to plug in the car.
I read an estimate—this wasn’t my math—that the average American drives about 1,100 miles per month. If you’re charging at 15 cents per kilowatt hour, it’s cheaper than fueling a gas-powered vehicle.
But what happens when electricity costs go to 18, 19, 20, even 25 cents per kilowatt hour? And that’s not just because of EVs, but because of data centers and general computing, which use enormous amounts of electricity.
Sam Clement (15:58):
Yeah. Whether it’s data centers or not, we’re using more and more electricity.
John Norris (16:02):
Exactly. We’re using a lot more.
So ladies and gentlemen, boys and girls of all ages, I hate to tell you this, but the price per kilowatt hour probably isn’t going down. And if it does, it’s because a public service commission has capped utility prices—which usually means less reliability and potential blackouts.
I don’t expect the cost advantage EVs currently have at the “pump,” so to speak, to last indefinitely. Gas engines are becoming more efficient, and electricity costs are likely rising.
Sam Clement (16:44):
Yeah, I agree.
John Norris (16:46):
Do you think I’m wrong on that?
Sam Clement (16:47):
No, I think you’re spot on.
John Norris (16:48):
Another thing people don’t always consider—and this is where I’ll play devil’s advocate—is the environmental impact of producing EVs.
I’m not anti-environment at all. But while the vehicle itself may have zero emissions, producing the parts involves a lot of emissions.
Sam Clement (17:14):
Environmental impact.
John Norris (17:16):
Exactly. Take rubber, for example. EVs are heavier than gas vehicles, so they go through tires faster. EV-specific tires often use more rubber because of the added wear.
That doesn’t sound like much per vehicle, but multiply it by roughly 16 million vehicles sold in the U.S. each year, and it adds up. That rubber has to come from somewhere.
Sam Clement (17:46):
And rare earth metals.
John Norris (17:47):
And rare earth metals. New mines have to be dug.
That means more rubber plantations, more deforestation, more mining—things people generally don’t want in their backyard. These are real environmental costs associated with greater EV adoption.
I’m not making a huge argument for internal combustion engines. I’m just saying there are hidden costs. EVs aren’t zero-emission from cradle to grave.
Sam Clement (18:35):
Right. There’s this belief that EVs are already so much better for the environment. Maybe they are while you’re driving them, but the components that go into them need to be compared apples to apples.
John Norris (18:58):
Exactly. I’m not arguing EVs aren’t more environmentally friendly overall. They probably are at the vehicle level.
But getting there is the issue. And when EVs cost significantly more than ICE vehicles, you’re asking consumers—many of whom aren’t in the top 1% or even the top quartile—to prioritize environmental ideals over their monthly budgets.
That’s a big leap. A really big leap.
Can the people pushing these policies convince the remaining 90% of Americans to care more about long-term environmental outcomes than about putting food on the table?
Sam Clement (20:32):
That’s the question. How do you care more about something that might happen 30, 50, or 100 years from now when you’re worried about tomorrow?
John Norris (20:42):
That’s the biggest point of contention with widespread adoption. Infrastructure isn’t fully there, and EVs are still generally more expensive than gas vehicles.
A few years ago—things might be a bit better now—you probably remember when Tesla built superchargers in what’s now the Publix parking lot in Mountain Brook Village here in Birmingham.
Sam Clement (21:36):
Yeah.
John Norris (21:36):
There are five or six charging units there. I was coming out of Publix one day and saw a family tailgating at the charging station—literally tailgating.
Not a fun tailgate—no bourbon, no sausages. Just sandwiches and kids stretching their legs. The license plate was from New Mexico, or something like that.
They had planned their entire trip around stopping there. That level of planning is a huge part of the problem for me.
Sam Clement (22:42):
Yeah, I agree.
John Norris (22:43):
Do you think that improves? And what do you think is the future of EV production in the U.S.?
Sam Clement (22:52):
Longer ranges and faster charging—especially for towing and heavy loads—are the biggest things that need to change.
We’re already seeing something interesting, particularly in Chinese EVs: almost a reverse hybrid. Instead of gas-first with electric assist, you have electric vehicles with gas generators to reduce range anxiety.
John Norris (23:41):
More of a hybrid approach.
Sam Clement (23:44):
Exactly—just flipped.
John Norris (23:48):
Which manufacturers hate, and mechanics hate even more.
One last thing—pure speculation. Would policymakers feel better if we imported EVs from China? Companies like BYD, Geely, NIO?
We could hit 50% EV adoption tomorrow if we bought them all from China—but do we really want that?
Sam Clement (25:00):
Some of those vehicles are unbelievable.
John Norris (25:05):
They’re awesome.
Sam Clement (25:06):
They really are. The range is impressive, and many have generators built in. It’s hard to argue they aren’t ahead.
John Norris (25:19):
Europeans would agree—and German automakers are already feeling the pressure.
But I don’t think anyone really wants to see the collapse of the North American auto industry just because China is better at EVs right now.
Sam Clement (25:55):
I agree.
John Norris (25:56):
All right, everyone—thanks for listening. If you have comments or questions, drop us a line at or leave a review on your favorite podcast platform.
You can also visit oakworth.com—O-A-K-W-O-R-T-H—under the Thought Leadership tab for more content, including Trading Perspectives, Common Cents, Macro & Market, and pieces from our advisory services led by Mac Frasier.
Sam, any last words?
Sam Clement (26:45):
That’s all I’ve got.
John Norris (26:46):
That’s all I’ve got too. Y’all take care.
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