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(Brandy Baker/Brandy Baker/Associated Press)
(Brandy Baker/Brandy Baker/Associated Press)

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Electric cars: reality shock Add to ...

From the FT's Lex blog

Every brand manager wants their splashy new product to be on fire, but not literally. General Motors’ Chevrolet Volt was always a vanity project, intended to buy goodwill with politicians and consumers rather than make it any money. Now a federal investigation into battery fires is harming the products’ image and that of the emerging plug-in electric vehicle (PEV) market.

Even before the news, GM had sold only 6,142 Volts in the United States, well short of its target of 10,000 this year and less than some 8,720 Nissan Leafs, its only mass-produced competitor.

The Nissan-Renault alliance is most bullish on PEVs as a profit centre, aiming for sales of 1.5 million annually by 2016. Chief executive Carlos Ghosn has reiterated his expectation that PEVs will be 10 per cent of the global car market in a decade.

But unless oil prices jump or battery technology advances greatly, Mr. Ghosn will probably eat those words. Consider the fact that cheaper, simpler hybrids (HEVs), available for a decade now, have grabbed only 2.3 per cent of the U.S. market. Pike Research reckons that HEVs and PEVs combined will be 5.1 per cent of the U.S. market and 3.1 per cent globally by 2017. Within that U.S. figure, only 2 percentage points will be PEVs such as the Leaf and Volt.

Adding insult to injury for GM and Nissan, Ford and Toyota are expected by Pike to edge out both companies in U.S. PEV market share. So much for first-mover advantage.

Fears of battery fires are probably overblown, but of greater concern are the expense and inconvenience of purely electric vehicles and efficiency gains in traditional internal combustion engines. Small rather than large batteries may provide the most bang for the buck, especially after subsidies ($7,500 per vehicle in the U.S., for example) are phased out. Rather than a revolution in auto technology, PEVs merely may be a step in their evolution. What a shocker.

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