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Consumers Fail to Plug into Electrics

A critical year for battery carmakers.

by on Jul.09, 2012

Slow to charge up buyers: the Ford Focus Electric.

There’s a growing supply but where’s the demand?  That’s the question industry officials are increasingly worried about as more and more battery cars enter a market that shows little sign of embracing them.

While sales of some models are up over year-ago levels, notably those of the Chevrolet Volt plug-in hybrid, demand for others, such as the Nissan Leaf, have slipped year-over-year.  And still others, new to the market such as the Ford Focus Electric, are moving at such a slow pace they’re little more than rounding errors on the sales charts.

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Few now believe demand for plug-ins, in particular, will come near to meeting a target set by an Obama Administration that has strongly advocated alternative power – and backed it with billions of dollars in federal loans and grants to automakers and battery car manufacturers.

The President had forecast 1 million plug-ins would be on the road by 2015.  But “There is little evidence” that can happen, according to a new report by Pike Research, a Boulder, Colorado firm focusing on clean technologies such as battery power.

“Those betting on strong early growth curves hoped that battery prices would quickly fall, positive word of mouth would quickly spread or automakers would introduce new models more quickly,” Pike researchers stated in a new study of the battery-car market.

It’s not all doom-and-gloom.  After an excruciatingly slow start, the Chevrolet Volt is steadily gaining sales momentum, sales climbing to 1,760 last month.  By comparison, the maker sold just 561 in June 2011.  For the first half of 2012 Volt sales totaled 8,817, triple last year’s pace.  But, after just missing its 10,000 target for 2011, the maker remains well short of its 60,000 goal for this year – a figure that would include both 45,000 U.S. and 15,000 foreign sales of the Chevy Volt and the similar Opel Ampera.

The real surprise, in recent months, has been the weak performance of the Nissan Leaf, which charged onto the market in late 2010 and routinely outsold the Volt despite concerns about so-called “range anxiety.”  But Leaf sales fell 69% in June, year-over-year, to just 535 units.  It has posted similar numbers all year, total sales for the first half of 2012 come in at 3,148 compared to 3,875 last year.

“Nissan’s low volume of LEAF sales over the past handful of months is perplexing, especially considering how the automaker insists that US sales will hit 20,000 units by the end of Fiscal Year 2012,” which ends on March 31, 2013, writes plugincars.com, a site that tracks the performance of the electric vehicle industry.

Nissan officials continue to downplay the slow sales of Leaf, insisting this is actually a supply, rather than demand, issue.  The maker has been shifting much of the production from its Japanese battery-car plant to other markets around the world, leaving dealers in the U.S. short of cars, a Nissan spokesman stressed.

The real test will come when the new Leaf assembly line opens in December at Nissan’s sprawling factory complex in Smyrna, Tennessee.  That facility will also feature a new plant to produce the batteries used in the little electric car.

By the time U.S. Leaf production begins the Nissan offering will face a wide range of new competitors.  Mitsubishi launched its little i-MiEV late in 2011 and other entries now in showrooms include the Smart fortwo electric, the Ford Focus Electric, the BMW Active E, and the plug-in version of the Toyota Prius hybrid.  Collectively, all five battery models generated sales of just 1,023 units in June, the limited-range Prius Plug-in accounting for two-thirds of that demand.

That model is just the latest in a series of new offerings sharing the popular Prius badge, a strategy that seems to be paying off even though the Prius plug-in has the shortest range – operating on battery power alone – of any of an assortment of plug-ins now on the market or coming soon.

Toyota, meanwhile, will soon launch its first pure battery-electric vehicle, or BEV, in two decades, a version of its RAV4 crossover that uses a driveline developed by the California start-up Tesla Motors.

Tesla – which is also developing battery-based technology for Mercedes-Benz and which supplies the Smart fortwo electric powertrain – hopes to be the big winner in the field with its new Model S, which went on sale last month.

Skeptics, like IHS Aaron Bragman, warn that buyers are put off by both the high price and the limited range of battery cars, typically just 100 miles or less per charge.  But Tesla hopes to overcome that obstacle by offering motorists a choice of three battery packs that offer ranges of 160, 230 and 300 miles.  But the new sedan still isn’t cheap, the base car starting at $57,400 and the top-line model pushing over the $100,000 mark.

Nonetheless, Tesla CEO Elon Musk has set a target of 5,000 sales this year, with a goal of 20,000 next year.  And in 2013 the maker will also roll out a crossover version dubbed Model X.

Other new entrants aren’t nearly as optimistic.  Honda will shortly launch a BEV version of its subcompact hatchback, the Fit EV.  But it will market that battery car in just two states – California and Oregon – this year, then add a handful of East Coast states in 2013.

Critics sneeringly deride the Fit and similar battery cars as “compliance vehicles,” developed solely to meet zero-emissions mandates enacted by California regulators and copied by roughly a dozen other states.  Cynics insist the makers don’t really see a market but have no choice but to comply.

Company officials counter that they recognize the battery car market is building up slowly and that they are wisely focusing efforts on regions where demand will build first.

Who is right remains to be seen, though analysts warn that the unexpected downturn in fuel prices since hitting a near-record peak in April isn’t helping.  But few observers expect gas costs to remain this low for long and once pump prices begin to rebound – and as more BEVs and plug-ins come to market – proponents insist that demand for battery vehicles will finally switch on.

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7 Responses to “Consumers Fail to Plug into Electrics”

  1. geowaldman says:

    I rode in a Volt yesterday. Hell of a car, fast and comfortable and charged from the panels on the owner’s roof. Strange that you mention it briefly as selling better and better, then spend the rest of the piece on cars that are not doing well, specifically the foreign one. What’s up with that?

    • Paul A. Eisenstein says:

      Hi, George,

      First, the roof panels will not charge the vehicle up. They couldn’t generate enough current on a long Michigan summer day to propel it a mile. Solar roofs are essentially for keeping the car cool by powering the ventilation system.

      I think the piece covers a wide range of products, domestic and foreign, including not just the Volt and Ford Focus Electric but also the new Tesla — which I note has set a very ambitious goal. But while Tesla is aiming to solve the range anxiety issue, as I also noted, it does mean a big bump in price, the second big obstacle to battery car sales.

      And while Volt IS up from last year’s poor sales, I stress that it is well behind the pace it would need to meet the target GM has set for 2012.

      Paul A. Eisenstein
      Publisher, TheDetroitBureau.com

  2. manousos1 says:

    “Who is right remains to be seen, though analysts warn that the unexpected downturn in fuel prices since hitting a near-record peak in April isn’t helping. But few observers expect gas costs to remain this low for long and once pump prices begin to rebound – and as more BEVs and plug-ins come to market – proponents insist that demand for battery vehicles will finally switch on.”

    A couple of years back

    These three USA Innovators:
    Engine Design Timeline – Achates Power
    2004, Founded by NAE Member Dr. James U. Lemke with investment from John
    Walton, son of Sam Walton, founder of Wal-Mart. Named after Achates …
    Khosla Ventures and Bill Gates Invest in EcoMotors’ Revolutionary …
    12 Jul 2010 … The two principals, Vinod Khosla and Bill Gates, indicate their stakes in
    EcoMotors reflect a shared belief in the global potential of the opoc™
    Watch “Two-Piston Single-Cylinder Engine from Pinnacle Engines …
    29 Apr 2012 … Lee Teschler of Machine Design magazine talks with Monty Cleeves of Pinnacle
    Engines about a new two-piston single-cylinder engine that ..

    Had BOLD claims about their Inventions and their Powerful Supporters.

    All three were asked for COLLABORATION
    in order to share the cost of the R&D of their engines
    and of their CLONES:

    http://www.pattakon.com/pattakonPatOP.htm
    http://www.pattakon.com/pattakonOPRE.htm
    http://www.pattakon.com/pattakonPatPortLess.htm

    The question is:
    Did they have any COLLABORATION among themselves ????

  3. 62Lincoln says:

    Paul,

    Wasn’t GM’s original goal for this year to have sales of 60,000 units? I recall the target as 45,000 in the U.S., and 15,000 in Europe.

    That was never a realistic goal, and of course GM subsequently backed down to “producing to meet demand”.

    • Paul A. Eisenstein says:

      Yes, you are correct and I will revise the story accordingly. Actually, you are correct with an asterisk. They always said the target was “production” of those numbers, not sales. But since they also insisted they would only build to demand…

      Paul E.

  4. jlowe51 says:

    It’s pretty much a no brainer on the slow sell of the Vote now. The high price and the low cost of gas. When gas reaches around $4.00 a gal. then people will overlook the cost of the car and just think more about how much they will save in gas. I do think the ads GM now have out on the Vote will help sales. When you having someone tell you that they have driven 4000 miles and haven’t had to buy gas it will make you think.

    • Paul A. Eisenstein says:

      I agree that the new ads seem to be more direct and to the point. There’s something about simply having to gas up no matter how much — or little — it costs. They may also have to address consumer perceptions about ease of use, including the plugging in to charge.

      Paul E.