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Are Electric Cars a Niche? Or Able to Beat Conventionals?

Are Electric Cars a Niche? Or Able to Beat Conventionals? thumbnail

Are electric cars a Niche?  Or just coming into their own?  I’ve been asked that question twice now in the last week in various forms, so thought I’d blog my answer.

Electric Drive Transportation Association has the total number of US sales at just under 400,000 this year, or 3.3% market share including hybrids.  Hybrids they have up 33% YTD compared to the whole of last year’s sales, and EVs/PHEVs up 375%.  But the EVs still make up only 10% of that total number.

In June The Street did a great article on EV sales forecasting line by line an estimate of 62,000 for the year, already at 18,000 at that point.

And while sales have been sluggish, they have been creeping up, with more and more and cheaper and better versions coming out in 2013 and 2014.

The price gap, somewhere between $8K and $25K, is closing.

Nissan just announced a cheaper and longer range Leaf version in Japan (yes it can be done, why didn’t you have the guts to do this last year Nissan?), Tesla’s 160-300 mi range Model S just started shipping and garnered the 2013 Motor Trend Car of the Year Award.

The Chevy Volt, for it’s struggles, as Forbes reported in September, is outselling the “Audi A6, BMW 7-Series, Porsche Cayenne and Mercedes-Benz S-Class, and it outsold most hybrids including the Toyota Prius plug-in, Honda Civic, Kia Optima, Toyota Highlander and Lexus RX 450h”.  Not yet high volume success, but then when you operate in small volumes and only send your dealers 1 or 2 at a time to start, it’s hard to blow sales numbers away.  Forbes comment was “If indeed the Volt is a “failure,” as some of its critics have contended, we’re sure there’s several auto executives out there that would like many of their slower-selling models to suffer the same fate.”

And how does this compare to the Prius?  The car that in many ways redefined the car industry and helped push Toyota to the top?  The first fours years of sales it struggled well south of 20,000 per year, the next 3 years globally shipping 30-40K/year, respectable, and strong, not earth shattering.   It took 6 years and price cuts and a second and 3rd generation to make it to the 100K/year mark.  Over 10 years to get a million sold.  Two years to get the second million sold.

But now every major car company and over half the top car models have a hybrid version now, barely 15 years (about two car design cycles) after initial launch.  Toyota shipped a million hybrids in ten months this year, 14% of sales for the world’s largest car company.  Honda reached the 1 mm number in hybrids shipped, Toyota is at 4 mm.  Does that sound niche to you?

Anyone really want to bet that in 6 years NO EV or PHEV has made it to the 100K level?

So why do we like EVs?

Among other things, 1) electrics cars run dead quiet, 2) electric cars have instant torque and terrific acceleration at low RPMs, performance which cannot be matched by gasoline engines, 3) electric cars have platform flexibility, turn radius/handling that can be amazing, since you can use distributed motors, all electric control etc, the same promise that fuel cell cars had, but couldn’t deliver, and 4) maintenance goes WAY down, virtually no fluids fewer moving parts.

Bottom line, once an EV or PHEV comes close on range and cost, it’s a better car than a gasoline car.

On the downside, cost is still cost, charging is still charging, range is still range.  But let’s look at those:

Best I can tell, we’re at an $8-$35K price difference to hybrids and conventionals, depending on the assumptions.  Since we’re still measuring at 10s of thousands of cars a year, I don’t think direct cost comparisons are yet fair.  Eventually one of these is going to take off in one market or another.  When it does, it’ll drive volume, and continue to collapse cost.  In addition the R&D work on EVs is paying off, manufacturers are finding ways to bring costs down in interim anyway.

I’ve had a couple of discussions about fast charging.  Charging is not a huge limitation, its a technology and cost choice.  Charge time is effectively a function of battery size, onboard charger size, and volts.  Let’s start out by saying we’re not going to be charging EVs at 110.  Too slow.  But charging at 220 is very doable.  220V home chargers today are in the 1-2K range. They will not stay that high for long.   Onboard charging The Leaf chose a 3.3Kw onboard charger.  Big mistake, done to skim $2K off the price of the car and keep it inline with the conventional Camry price point after tax credit.  They should have offered multiple options.  The Focus and Volt noticed this went with a 6.6 kw job,  the Tesla Model S comes with a 10 – 20 kw.  Faster charging is pretty much an ask and you shall receive issue.

Range.  Range matters.  Big time.  I contend the sub 100 mi car is idiocy and poor product management and fear of high costs.  Tesla, and the Volt and now Nissan is showing we can bring to market medium and long range EVs.  Betting against ranges getting longer is a bad bet.  I predict by 2015 the average EV/PHEV range will approach 200 mi, and range anxiety will be a thing of the past.

Scale.  Most of these are scale issues.  EVERY manufacturer of EVs started out viewing this as a few tens of thousands per year volume car platform.    In my first discussion on the Leaf with their Leaf product head, I kept asking whey they didn’t roll out faster charging options and longer battery range options for the consumer to start, and why spend all that marketing if only 10K were going to be available year one in the US.  The real answer, no guts no glory, they weren’t sure enough of success to roll this car out like they would have any other.  Even Tesla figured out the multi option idea!  In my first test drive of the Volt, the dealer admitted they had only 1 salesman trained to sell it.  And they could only get 1 car at a time in their allocation.  Not exactly setting their channel up for success.  Frankly guys, we’re not getting anywhere with that.  These are better cars, GO BIG OR GO HOME.

Niche? High cost? For today yes, but that’s how technology disruption happens.  Their parent cars broke through that ceiling, and they will too.  I think these cars are underperforming sales expectations that were all hype.  I think they are overperforming what we should have expected.  And I think we’ll look back on 2012 and 2013 as set up years.  It won’t be forever.  Electric is just a better platform once we get it right.

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8 Comments on "Are Electric Cars a Niche? Or Able to Beat Conventionals?"

  1. Beery on Thu, 22nd Nov 2012 12:42 am 

    Electric cars run primarily on coal. Coal is worse for the environment than gasoline. Electric cars are not a solution to the problems we have today, and they never will be.

  2. BillT on Thu, 22nd Nov 2012 1:22 am 

    Electric cars? lol

  3. DC on Thu, 22nd Nov 2012 1:48 am 

    No they can not, and its not even because electric propulsion is a itself an inherently bad idea. Its not. But our conception of what a ‘car’ is, is however. Heavy 4000pd or more, loaded with all kinds of useless crap and power-everything, 5 passengers, huge cargo space(that is mostly un-used and un-needed) , plenty of leg-room, hands -free built in cell-phones(accident makers), DVD players etc etc etc. And a ‘requirement’ to be able to drive from cross-continent and re-fuel in 10 mins doesn’t help either.

    In order for EV’s to ‘succeed’ several things would need to occur.

    – We would have to more or less bulldoze all our existing garbage boxes cities and towns, suburbia etc, and rebuild them from the ground up. Along with that effort, a completely new idea about how the urban landscape and transport are integrated.

    -We would need to completely overhaul our conception of what a ‘car’ is, and what it is expected to do.

    -They would need to exist in far lower numbers than there are gas-burners today. In fact, most ‘EV’s would not even be private(though some could be) on-demand transport at all. Most would be service, public transport or some type of shared transport arrangement.

    That is, in broad strokes, what it would it take for EV’s to ‘compete’. Since none of those are likely to every be addressed in our lifetimes, then no. The EV will face a uphill fight against entrenched, locked-in fossil-fuel infrastructure at every turn. And its probably just as well. Our fetish for gas-powered suburbia and Wall Mart has turned N.A. into one of the ugliest and most dangerous(if your a cyclist or pedestrian) places on Earth. EV’s wouldn’t do a thing to address any of that…

  4. Kenz300 on Thu, 22nd Nov 2012 7:43 am 

    Electric and hybrid vehicle sales are growing. The price is coming down and the range is going up.

    It is time to end the oil monopoly on transportation fuels. Bring on the electric, biofuel, hybrid, CNG, LNG and hydrogen fueled vehicles. We need a choice at the pump.

    The oil monopoly is only good for the monopoly and not good for the consumer.

  5. BillT on Thu, 22nd Nov 2012 9:44 am 

    Kenz, maybe the price is coming down, but so are people’s wages as other prices for necessities, like food, rise. The day of the personal auto are about over. If you have a new car, it will probably be the last car you own, ever.

    Ditto all the other ‘alternative’ fuel wasters.

  6. fiedag on Fri, 23rd Nov 2012 12:00 am 

    Just so you know, my next urban run-around car will be an EV. So the arguments pro or con are academic as far as I am concerned. People don’t just car make purchasing decisions based on utility and price. Car buying has always been partly about making a statement.

  7. BillT on Fri, 23rd Nov 2012 1:26 am 

    fiedag, is YOUR statement that you are a fool? That is what the picture says. You will have problems finding enough gas to get out of Dodge if you are thinking of driving that out of town when the SHTF. And that big EV says “TAKE ME! I’m FULL OF USEFUL STUFF!” to every gang, thief and desperate gangster in your path.

    BTW: I hope you plan to buy it with cash. Money to make payments is not going to last long enough, I think.

  8. BillT on Fri, 23rd Nov 2012 1:27 am 

    Oh, and I don’t think it will get very far when you are forced to go cross country through fields because the roads are a big parking lot full of desperate people.

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