The Karma that died during testing by Consumer Reports magazine was another blow following a recall of more than 200 of the cars last year and the halting of sales in January for a software issue. Fisker, which builds the Karma in Finland, also suspended work last month at its U.S. plant scheduled to make another car, the Nina sedan, while it works to renegotiate a $529 million loan from the U.S. Department of Energy.
Fisker spokesman Roger Ormisher said problems can arise with new technologies and a new company but added Fisker had gone “beyond the call of duty” in instituting a system to respond to customer issues and had plenty of satisfied owners. CEO Tom LaSorda in a letter to Karma owners last week said Fisker was committed to giving customers “complete peace of mind” and he had created a “SWAT team” of 50 engineers and consultants to identify issues with the car.
“The expectations have always been too high for electric cars,” said Bill Reinert, Toyota’s U.S. manager for advanced technology. “The realities have always been clouded by the dreams. I like to say it’s the first law of thermodynamics versus the first law of Disney. Disney is wishing it will be so. It doesn’t work.” Toyota has always been skeptical EVs would quickly boost its share of the auto market.
Meanwhile, several companies have struggled due to lack of funding or customer troubles.
A123 Systems posted a wider-than-expected fourth-quarter loss this month after Fisker, one of its largest customers, cut battery orders. Bright Automotive, an Indiana electric commercial truck start-up, closed its doors in February after failing to get a federal loan.
Ener1 Inc, which received a $118.5 million U.S. federal grant to make lithium-ion batteries for EVs, filed for bankruptcy in January, and Aptera Motors, a California-based EV start-up, went out of business last December after it couldn’t raise $80 million in private funding.
“There will be more companies that fail, but it’s no different than Internet companies,” said Kristen Helsel, vice president of EV solutions for AeroVironment, which makes EV charging stations for BMW, Mitsubishi and Nissan. “People with the right business model are going to do fine.”
A number of top American retail chains, including Kohl’s and Walgreen, have begun installing charging stations at their stores, but critics say the U.S. push for electric cars has come before such infrastructure is in place, weakening the case for consumers to be attracted to the technology.
But since the bankruptcy of Solyndra, a solar panel maker that received $535 million in U.S. loan guarantees, federal support for advanced vehicle technology programs has ground to a halt. Industry officials and analysts point to tightened U.S. Department of Energy requirements in the face of withering criticism from Republicans about the Obama administration’s generosity for anything related to green technology.
“There was certainly a different energy level one year ago, even two years ago,” said Oliver Hazimeh, sustainable transportation practice leader for PricewaterhouseCoopers. “This year, it just had a different drumbeat.” Hazimeh sees long-term demand for EVs rising to up to 9 per cent of the global market by 2022, but he predicts there will be some setbacks along the way.
Obama wants to increase the tax subsidies for buyers of electric vehicles to $10,000 per vehicle from the current $7,500. But critics say the small EV sales totals tell the real story.
Complicating matters, auto makers continue to squeeze increased fuel efficiency out of the internal combustion engine. That makes it tougher to make EV sticker prices attractive enough to put a dent in the traditional gasoline-powered vehicles’ domination of the market.
The EV’s industry’s struggles have vindicated the more deliberate approach taken by Toyota, Ford and Chrysler’s Marchionne, who killed plans for a Chrysler electric car, analysts said.
Still, proponents say electric-car sales will grow just like Toyota’s hybrid Prius rose from about 5,500 in its U.S. debut in 2000 to a peak of more than 180,000 in 2007.
Doug Parks, GM’s chief Volt engineer, said the proof is in the large amounts of money auto makers are spending on EV technology development.
“Follow the money. People are investing huge in this stuff,” he said. “This is a 10- or 20-year discussion and we’ve been selling the Volt for a year.”
GM, which recently launched a new advertising campaign centred on testimonials by adoring Volt owners, has made the car the centrepiece of efforts to seize from Toyota the mantle as the world’s greenest auto maker. Meanwhile, Nissan CEO Carlos Ghosn has estimated pure electric vehicles like the Leaf will make up 10 per cent of industry global sales by 2020.
Time will tell if that’s wishful thinking.
“It’s been the Kool-Aid that the entire political system has been drinking for a decade,” said Bob Martin, a senior consultant with auto product development firm The CarLab. “Electric cars are not ready for prime time. They’re really interesting toys for very, very rich people.”