Electric Cars Won't Sell Until They're Cheaper: Duh
J.D. Power and Associates isn’t exactly breaking new ground when it says in a survey released Thursday that electric vehicle sales will remain “a very small part of the U.S. market” unless they get cheaper and “demonstrate the economic benefits to consumers.”
Learning from Henry Ford
Well, duh. Of course they’re too expensive. If you go back to the transition from the horse to the horseless carriage, you’ll also see that early cars were absurdly costly compared to the average person’s salary. Automobile sales didn’t really take off until Henry Ford put them on an assembly line and dramatically cut the cost of his Model T.
From 1908 to 1913, Ford’s innovations allowed it to cut the price of the car from $850 to $600. Sales jumped from $18,000 to 168,000. Nobody knew you could sell that many cars in a year. By 1923, a Model T touring model cost an incredible $298, and sales reached a peak of 1.8 million.
According to Henry Ford and the Triumph of the Auto Industry, “At that time, well over half the cars on the roads were Model Ts, and Ford had become a billionaire. Not only did he put America on wheels, he changed the way businessmen priced their products and paid their workers.”
The Prius Started Slow
OK, here’s a more modern example. In 1999, when I was writing my first book, Forward Drive, I became intrigued by early test versions of the Honda Insight and Toyota Prius, and asked the Big Three (and folks from the obsessed-by-horsepower car magazines, too) if they planned anything comparable. They were united in believing hybrids both impractical and too expensive, and likely to remain that way.
Early sales of the Prius justified their skepticism. The Prius sold 12,000 in its first U.S. year, 2000. (The Honda Insight also trickled out of the gate.) Time, reflecting the conventional wisdom, wrote at the time: “A major obstacle: the price trade-off for being green.” Yadda-yadda. Today, the Prius is the third-best selling car in the world, a niche vehicle no more.
Of course the prices of electric cars are going to come down, and of course when they do more people will buy them. It’s a no-brainer, no? We’re looking at likely breakthroughs in both battery cost—the big Achilles Heel—and range—a big obstacle for nervous consumers today.
“The way for manufacturers to take EVs to the masses and increase sales is to address the economic equation,” said Neal Oddes, a senior director at JD Power. “There’s still a disconnect between the reality of the cost of an EV and the cost savings that consumers want to achieve.”
Agreed, but it's no big insight—it’s just a snapshot of where we’re at now, not a prediction of the future. Obviously, the automakers know this, which is why they're working 24/7 to bring costs down and repeat the Model T story.
My view of the future for EVs? Well, that's so bright I gotta wear shades.
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