Are electric vehicles failing to connect with the public?


Klaus Doerrzapf, who has solar panels on his home, has no plans for an emission-free car in his garage. He’s one of the reasons why automakers like Nissan Motor Co. won’t recoup investments in electric vehicles anytime soon.

“It’s too early,” the 50-year-old manager at an electrics company said at the International Motor Show in Frankfurt. “Range and price are a problem. Battery life and charging times are also concerns,” Doerrzapf said, while looking at an electric-powered Focus from Ford Motor Co. (F)

Bayerische Motoren Werke AG, Volkswagen AG and Nissan partner Renault SA talked up their electric vehicles at the Frankfurt motor show as they rolled out a record number of models and began the search for a return on their development spending. Nissan, the maker of the all-electric Leaf, is investing $5.5 billion together with Renault to build electric cars.

Following the introduction last year of the Leaf, Mitsubishi Motors Corp.’s i MiEV, and General Motors Co.’s Chevrolet Volt, the new models will test consumer appetite for electric vehicles, which cost more than double the price of conventional models. Consumers are balking at paying up, concerned that their own investment will be wiped out in a few years because the batteries may not last.

“We’re about to find out what happens when several big manufacturers try to sell electric vehicles to real people,” said Ian Fletcher, a London-based analyst with IHS Automotive. “The signs aren’t all good.”

Sales Targets

Nissan has delivered 12,000 of the Leaf model since its introduction in December, Chief Executive Officer Carlos Ghosn said in Frankfurt. PSA Peugeot Citroen, which beat Renault to the market with two electric city cars last December, targeted 7,000 combined deliveries of the iOn and C-Zero models for 2011. It has sold 3,000 since Jan. 1.

Yokohama, Japan-based Nissan said last November it planned to sell as many as 25,000 units of the $32,780 Leaf in the U.S. during the model’s first year. Through August, U.S. sales of the model totaled just 6,168.

The Leaf, which has a range of about 100 miles per charge, costs $40,776 in the U.K., even after the deduction of a 5,000-pound government incentive, while the brand’s similarly sized Note starts at 11,200 pounds. In France, the 5,000-euro government contribution lowers the starting price of Peugeot’s iOn to 35,350 euros, compared with 9,700 euros for the gasoline-burning Peugeot 107.

Battery Barrier

“I wouldn’t buy one just yet,” said Jean-Pierre Ahtuam, 38, who runs a juice bar in central Paris. “I’d be worried about where I’d plug it in and whether it will be worth anything in a couple of years — that’s got to be a concern with any new technology the first time around.”

Costly batteries and limited driving range remain the key sticking points for the technology. Public charging stations are also conspicuously absent in most markets. Even the technology’s strongest advocates recognize that success hinges on years of generous subsidies from increasingly cash-strapped governments.

“As things stand, it’s only with this support that we can make the cars affordable for consumers,” said Thomas Orsini, electric-vehicle business development director at Renault, which is predicting a 10 percent global market share for battery cars by 2020. “If the subsidies disappear too soon, the market won’t get off the ground.”

Subsidies help to absorb the 7,000-euro cost of a battery that will propel a compact car about 100 miles on flat terrain between charges — providing that heating and other energy- draining functions are used sparingly or not at all.

‘Sudden Death’

The batteries’ price and limited lifespan will combine to make electric vehicles depreciate faster than combustion-engine models in the used-car market, according to research by the University of Greenwich in London.

“Electric cars suffer from the certainty, not just risk, of a large fixed cost a few years down the line,” said Michael Wynn-Williams, a business professor and author of the study. “This is sudden death, the point where an otherwise attractive vehicle is worth nothing.”

To get around this problem, Daimler AG (DAI) plans to follow Renault’s lead by initially leasing the batteries with its cars. The electric-powered Smart city car will start at less than 16,000 euros, with the battery costing an additional 60 euros a month.

Ghosn, chief executive officer of both Renault and Nissan, remains bullish. Demand for Nissan’s Leaf has outstripped expectations, he said Sept. 12.

“When we first predicted a 10 percent market share, people said we were being extremely optimistic,” the CEO said. “Since then, it’s the experts who have increased their forecasts.”

‘Nice to Drive’

Not all industry analysts got Ghosn’s memo. Fletcher at IHS expects battery-powered cars to claim about 1 percent of global production in 2020, while rival research firm J.D. Power and Associates puts their market share below 2 percent. The forecasts exclude cars with range extenders, like GM’s Volt, which use a small on-board gasoline generator to recharge the battery on the move.

Even some of the auto executives showing pure electric models in Frankfurt sounded skeptical about their future. Peugeot Citroen sees three times more global demand for hybrids, which combine electric propulsion with a combustion engine.

“Everything we’re seeing today confirms that vision,” said CEO Philippe Varin.

Consumers like Doerrzapf, who owns a VW Passat and works for a company supplying the type of electronics equipment needed to recharge the vehicles, may yet change their minds.

“They are nice to drive,” he said.

Categories: General

22 Responses

  1. BrainDeadLiberals says:

    I predict electric cars will be just as successful as the Edsel. Hence the government will have to use taxpayer money to subsidize them. And even then, they won’t sell.

  2. sharky says:

    RB- heat is an issue with electric, AC is not. The opposite is true for combustion engines.

    And for those who feel somehow compelled to parrot their favorite propaganda sources regarding subsidies, please take a month or two off from the idiot box and spend as much time researching just how much EVERYTHING THAT YOU PURCHASE is subsidized one way or another by some level of government. After all, the government is the enforcement arm of industry and “the” market is always “their” market. And there is nothing free about it. Once you begin to understand this, THEN consider the debate about electrics once again while keeping this in mind. They aren’t forcing you to pay for electrics. In fact, a much stronger case could easily be made that they are forcing you to stay forever under the thumb of petroleum products- a system that propels us at ever-increasing velocity towards an environmentally devastating end. Oil was fine up until about 50 or 60 years ago. Now it is not.

  3. wantingbalance says:

    The payback for typical median income family is 10 years. They’ll run out of money long before they run out of electricity. Thank about it. There is a price pain threshold and even with $4 gas, there’s no way that buying electric makes financial sense.

  4. John says:

    Tesla is the only maker I would purchase. there battery tech. is a little old, but can be updated later. but they have the only design that looks desirable to drive.

  5. RB says:

    The problem with the EV is that there are outside influences to consider. Air conditioning in the south and heaters in the north suck a lot of the range from these vehicles. I saw on Motorweek where the Japanese are experimenting with replaceable batteries that are installed in the EV at stations that resemble carwashes. The automated process installs a freshly recharged modular battery in the car in about 45 – 60 seconds. You do not even get out of the car. This will be the future in these vehicles.

  6. heisjuicy says:

    I’m not buying one. My aunt and uncle have a prius. Two issues: one, it’s small. They are retired and have no need for extra space. We still have two kids at home. Two, it feels like it’s going to fall apart @ 60 mph.

  7. Mike G says:

    “If the subsidies disappear too soon, the market won’t get off the ground.”

    This is why the government creates inefficiency in the market when it seeks to insert itself into the direction IT wants technology to move. End the subsidies. Believe me, if the idea is viable, and when the market supports the costs associated with these vehicles, the market will be able to get off the ground without the artificial propping up required by taxpayer dollars.

  8. West U Coog says:

    This article is flawed. With the new generation of EVs, that being the Leaf, you don’t need a charging station at every corner. It has a 100 mile range, that covers 80% of commuters, when it gets home, you plug it in and charge it up like a cell phone. Done. Its like having a gas station at home.

    BTW, the EVs get a tax deduction, not a tax subsidy. The government isn’t writing you a check, you deduct it from your tax return, just like donations, and your mortgage, and there isn’t a guarantee you can deduct the full amount. So not a subsidy.

  9. Mark from Louisiana says:

    ModerateChuck, Electric cars are heavier than gasoline powered cars, the Chevy Volt is based on the same chassis as the Chevy Cruze, the Volt is almost 700lbs heavier.
    Chevy sold around 150 Volts in July, August was up to a little over 300…wow

  10. ntangle says:

    Chuck: EV’s are potentially twice as efficient overall as the best pistoned cars of the same weight & performance, counting gas turbines or steam turbines of 50% efficiency, transmission losses of 8%, etc. For details, see my 9/8 comment for the FF article: “Houston public car charging stations launch this week”.

  11. ModerateChuck says:

    Electric cars are less impact on the environment simply because they are smaller and lighter. A small, light gasoline car would have about the same environmental impact. Electric cars use electricity that is generated mostly by fossil fuel plants, and shipped to them. It just relocates the pollution from where we live to somewhere else. The additional cost of transportation (gas and electric both) should be considered when we talk about environmental impacts as well – gas might leak out but electricity is lost in transportation as well.

  12. ntangle says:

    It’s unfortunate that they don’t yet have larger EV offerings, but that may be a fundamental limitation with them until they make a quantum leap with battery technology. Whether vehicles are fueled by elec, by CNG, gasoline or whatever, their range is limited by the size of their energy storage. In the case of an EV, it becomes weight limited and price limited as vehicle size is scaled up, because the battery mass (and cost) must be increased in direct proportion. [The range extender idea for the Volt and the new Prius is a smart compromise]. In the case of CNG, with its low energy density relative to gasoline or diesel, it’s volume limited. But since V ~ r^2 for cylinders or V ~ r^3 for spheres, it’s less limiting for larger vehicles, compared with elec.

  13. Drew says:

    One of these automakers needs to get Apple involved. Put a few gadgets in the dash and call it the iCar. For some reason people are so excited to pay 2-3 times more when there’s an “i” in front of the name, they’ll wait in line overnight just to get one.

  14. Whoop says:

    The money that I save on gas is cancelled out by the high sticker price. I can buy a Toyota Corolla which is the same size as these cars and still spend less than what these cars would cost.

  15. CaptSternn says:

    Why do people claim that electric vehicles are new technology? Electric, steam, gasoline and biofuel cars were all on the road at the same time in the early days of the automobile, all technologies competing at once. The best came out the winner. Why do some people want to set us back over 100 years in technology? Electrics are alright for the golf course, but that’s about it. But hey, if you want a glorified golf cart for the street, it’s your money.

  16. Bill in Houston says:

    I like the idea, but they must be sold realistically. A city commuter car? Perfect. The family sedan? No. That is what is holding back sales. My wife could get to work and back twice on a charge that would cost about three bucks. That is about one-third the cost of driving her gasoline-powered car.

    That would add about $33 a month to my electric bill, versus $102 a month (at $3.30 a gallon). As I’ve said before, my wife and I have considered a Leaf.

    Of course the cost would have to come down, too… and I don’t mean by that lame tax credit. The price must come down by demand. The Leaf is the same size as a Nissan Versa. The loaded Versa costs half of a new leaf. With the $17,000 price difference it would take 21 years to recoup.

  17. txloanguy says:

    Having anything shoved down our throats is repulsive. The deceptive advertising and the fact that the public has to pay for the subsidies is detrimental to sales.

  18. Common Sense says:

    Duh!!! The technology simply isn’t there yet.

  19. MD in Texas says:

    There’s a catch-22! They’re too expensive for the average joe, too small for a family, charge stations are not accessible to everyone and if you don’t have a garage to keep it in overnight, the charging cords could be stolen. Otherwise…I’d love to have one or two.

  20. JB says:

    Prices won’t come down until people start to buy them. Auto makers will quit making EV cars if nobody is buying. It is a large purchase to be one of the pioneers to try. Not quite like a VCR or flat screen to be one of the first.

  21. JB says:

    Make all gov’t entities buy them to try them out. It might be a waste of money, but so is forcing the electric cars on the public.

  22. ntangle says:

    I like the idea of EV’s quite a bit. My biggest concern isn’t the range (that’s pretty well overcome with the range extender system of the Volt & the new Prius). My concern is simply that they’ll cost less in a couple of years, as production ramps up and battery technology & manufacturing improve. The resale value will take a big hit as new ones come down considerably. Of course this is a selfish concern, as lower cost EV’s will be great for the country, especially it’s trade balance.