The latest electric vehicles are off to a halting start, their progress slowed by high prices and supply bottlenecks.
In their first full year of sales, both Nissan Motor Co. Ltd.’s Leaf and General Motors Co.’s Chevrolet Volt – the first of a new generation of cars powered by rechargeable batteries – have sold in smaller numbers than the two car makers expected: about 30,000 units combined.
The Volt, which GM fast-tracked through development in a process it likened to a “moon shot,” suffered a blow after batteries caught fire hours or days after severe crash tests.
The U.S. car maker says it has the hazard under control, in part thanks to a procedure whereby batteries in crashed cars are “depowered.” But even before the problem came to light, GM acknowledged it would miss its target of selling 10,000 Volts last year.
Nissan’s Leaf, meanwhile, saw its sales knocked first by distribution bottlenecks, then by Japan’s earthquake. The model racked up 20,000 in sales in the year to November – “marginally below expectations,” says Andy Palmer, head of strategy planning.
However, the Japanese group says interest is strong enough for it to produce 40,000 Leafs next year. GM says it will sharply increase its production of the Volt in 2012.
Car makers and industry analysts say it is far too early to pass judgment on a technology whose potential is expected to be realized over decades, not years.
The modest initial sales of electric vehicles (EVs) are largely a result of the small number of models on the market, which will grow from 2012 as Toyota, Renault, BMW, Daimler and other manufacturers launch electric or plug-in hybrid cars.
Nevertheless, many analysts, even those who are confident that EVs will be viable long-term alternatives to conventional cars, are cutting their sales forecasts because of the slow initial uptake of the first models to come to market.
Adam Jonas, a Morgan Stanley analyst, concluded that EVs were “not ready for prime time,” and reduced his expectation of their market penetration in 2025 to 4.5 per cent from 8.6 per cent before.
Some smaller EV producers, which raised capital on a wave of optimism around battery-powered cars, failed in 2011. Think Global, a Norwegian producer of electric city cars, shut its doors, as did Aptera Motors, which was developing an electric three-wheeler in California.
The industry’s latest crop of EVs came to life thanks to a convergence of factors, notably the development of advanced lithium-ion batteries capable of powering plug-in cars over distances long enough to make them feasible for typical commuters. The Leaf can travel about 100 miles (160 kilometres) without recharging.
The rise in gas prices since 2006 and the financial crisis from 2008 onwards have also prompted the U.S., French and other governments to offer car makers soft loans tied to carbon-cutting technologies. Many agreed to bankroll subsidies for early adopters of the cars, including Britain’s plug-in car grant of up to £5,000 ($7,900), and France’s clean-car bonus of €5,000 ($6,600).
Yet the U.K. saw barely 1,000 EVs registered in the year through October, and France fewer than 2,000. Early reviewers of EVs have raved about their performance, but complained about their price, especially given their limited driving range.
Citroen’s C-Zero electric city car, for example, costs €30,000 even after France’s €5,000 subsidy. Nissan’s Leaf sells for more than £25,000 after Britain’s £5,000 grant – a high price to ask for a car “that cannot travel more than 100 miles before it needs to be stationary for hours,” according to Britain’s Autocar magazine.
“Manufacturers are asking consumers to pay premium prices, even with a rebate, for cars that are flawed in terms of convenience,” says Calum MacRae, leader of PwC Autofacts, which estimates that pure EVs will make up 1 per cent of the global car market in 2017.
One unexpected hurdle to a widespread uptake of EVs has been an impressive advance in traditional internal combustion engine technology. Ford Motor is phasing out the hybrid version of its Escape crossover vehicle on the grounds that a new model equipped with its efficient EcoBoost engine will outperform the hybrid.
According to the U.S. car maker’s research, high prices remain the biggest obstacle to consumer acceptance. The electric version of Ford’s small Focus, which has just started production in Michigan, will sell for $32,500 (U.S.), including a $7,500 U.S. government tax credit. A home battery-charging unit costs a further $1,499. By contrast, the sticker price of a gas-powered Focus is as low as $16,500.
Sharif Marakby, Ford’s global head of electrified vehicles, says firm conclusions on the EV era will have to wait until 2012 or 2013, when car makers produce them in far greater numbers. “We would not be drawing conclusions from the sales this year,” he says.