Electric Cars Are Drawing Investors But Not Buyers

Electric cars have been in the news recently, with Tesla Motors raising large amounts of money from investors and General Motors banking on the Chevy Volt to renew its prospects for becoming a viable company again. GM is planning to roll out the Chevy Volt next year (OK, the Volt is not an all-electric car, but it can be fairly described as mostly electric), but it is not clear how well it will be embraced by potential buyers.

According to JD Powers and Associates, the large automobile industry polling organization, consumers will not be flocking to the new electric cars, and the reason is fairly obvious. They simply cost too much.

The report projects that it will be difficult to convince a large number of car buyers to purchase electric cars, or even hybrid cars, due to their higher costs and projects cost of maintenance. When told that a hybrid car would cost about $5000 more to purchase, interest in purchasing a hybrid fell by about 50%.

What would create stronger demand from consumers for hybrid and all-electric cars? The study from JD Powers cites a few factors.

  • A significant increase in the cost of fuel
  • A significant reduction in cost
  • A major improvement in green technologies that would establish better confidence in reliability in the minds of consumers
  • An improvement in the range for driving electric cars
  • Better design

A further issue that affects the image in the minds of consumers for the new electric vehicles is the carbon footprint of the supply chain for power. It doesn’t help to buy an electric car if the power for recharging the battery is derived from a coal-burning power plant. That effectively replaces regular tail pipe emission form a gasoline or diesel-powered vehicle with the emissions from burning coal to produce the electricity that recharges the battery.

In the end, though, it is cost that is foremost in the minds of potential buyers. Consumers are concerned about the environment, but the altruistic urge is overwhelmed by the financial hurdle of shelling out more money to buy a car with a lower carbon footprint.

Based on its survey of consumers and research, JD Powers has projected sales of hybrid vehicles and all-electric cars. The worldwide forecast is for a total of 5.2 million hybrid electric vehicles and electric vehicles combined. Of this total, approximately 3.9 million units are expected to be hybrids, while about 1.3 million are projected to be battery-powered electric vehicles.

Is the UK Government Taking a Step Back From the Electric Vehicle Market?

The UK government is today under significant pressure after refusing to acknowledge the recommendations of a Commons Select Committee with regards to the electric car market. This comes at a time when the UK government is publicly showing support for the electric car market while behind-the-scenes it seems a little reluctant to issue standards and sales forecast. What is going on?

Encouraging electric car sales

There is no doubt that governments around the world will play a major role in encouraging consumers to move to electric vehicles. The UK government has made encouraging noises over the last couple of years and issued a number of financial incentives but for some reason it is not willing to actively look to standardise charging point systems and payment systems together with issuing target sales for electric vehicles.

We can possibly understand the government’s reluctance to issue formal target sales for electric vehicles in the UK but why it is not willing to get actively involved in standardising charging point systems and payment systems is another matter. If these systems are not of a similar standard and a similar technology then there is the potential for confusion and mayhem in the marketplace.

Leading from the front

When you take into account the amount of tax the UK government, and indeed other governments around the world, collect from the sale of petrol and other similar fuels, there is obviously a need to address this potential income gap in the future. The UK government has issued a number of incentives to ensure the electric car market in the UK receives something of an injection of optimism in the short term but the long-term position is a little unclear.

Despite comments to the contrary there is no way that electric vehicle users of the future will escape the multitude of charges connected with travelling today. The government extracts a significant amount of income from the fuel market and in some shape or form this will have to be replaced when the almost inevitable move to electric vehicles gains more momentum. It would seem sensible for the government to issue a variety of standards across the board but so far there has been reluctance to do this.

Job creation

Only a few days ago we saw Nissan introduce yet another leg to its UK business in the shape of a lithium ion battery facility in Sunderland. This facility will feed the ever growing need for power supplies in the EV market and has the potential to create a significant number of jobs in the UK. The government has been fairly helpful with regards to financial assistance in the past, in the shape of tax breaks and government subsidies, and no doubt Nissan can again expect to receive favourable assistance from the UK authorities.

If the UK government wakes up to the potential of electric vehicles then it could help to create yet another prosperous employment arena in the country. Nissan has invested a significant amount of money into the UK automotive industry and created a mass of jobs across the north-east. The potential and the ability to have the same influence over the electric vehicle power supply market could put the UK automotive industry on a different level.

Conclusion

It is uncertain why the UK government is publicly in favour of electric vehicles but behind-the-scenes it has refused to acknowledge the recommendations from an influential Commons Select Committee. It will be interesting to see how this situation works out because there is no doubt that the UK government has put itself in a very tricky situation. You could argue there are more pressing issues to consider in the short to medium term, such as the economy, but the job of any government around the world is to look forward to the future.

Can Electric Cars Deliver As Promised?

By the sound of it, electric cars are poised to reshape the automotive industry in a way not seen since, well, the internal combustion engine was introduced. 2010 is shaping up to be an important year for electric cars as several new models are slated to hit the market.

That’s good news for environmentally conscious consumers, but do electric cars deserve our attention more than highly fuel efficient gas or diesel models?

Certainly, electric cars offer a huge appeal for the simple reason that visits to the gas pump are no longer part of the equation. Instead of fueling up, electric car users will plug it in at home, at work or while on the road. It’s all about tapping the power grid in ways not seen before.

I’ve been covering electric cars on my flagship The Auto Writer blog for several years, but not too many people dig deep when investigating vehicle electrification. I’m not about to tell you to buy one product or stay away from another one, but what I will say is that there are some things to consider before deciding in favor of an electric model versus something else:

Vehicle Cost – Surprise, surprise! Electric cars are pricey as we learned when the then $98,00–now $109,000 on up–Tesla Roadster hit the market in 2008. Sure, Tesla is an exotic car, but most electric vehicles are priced north of $40,000. The good news is that some models carry a $7500 federal rebate with individual states adding their rebates or tax abatement into the mix.

Vehicle Availability – When the first big wave of electric vehicles rolls out, the Nissan Leaf, Ford Transit Connect EV, Chevy Volt and other models will be available in limited numbers. That’s because manufacturers still aren’t sure if customers will embrace the technology. Some models will be scarce until production is ramped up which means you may have to wait six months, perhaps a year before buying one.

Weather Extremes – Just how durable are electric cars when facing weather extremes? Manufacturers are trying to find that out by putting their vehicles through various tests, but a Minnesota winter or Arizona heat may be hard to replicate. Look for these cars to carry generous warranties just in case the unthinkable happens…whatever that might be!

Unseen Pollution – Electric vehicles emit no carbon pollution, right? Well, while on the road they don’t. However, when powering up electric vehicles use electricity derived from coal burning plants. And, in the manufacturing process they consume precious resources just like any other car. Overall, their impact on the environment may be lower than a clean burning diesel or highly efficient gas engine, but if you’re trying to “save the earth” with an electric vehicle you may be disappointed.

There are other factors such as registration costs, insurance, maintenance and repairs and depreciation which also must be factored in. Likely, electric vehicles will improve over time and prices will drop, making power grid enabled vehicles hot sellers down the road.