Electric Cars on a Roll, With Lots of Room for Growth
“We’re seeing tremendous demand for our product,” said Diarmuid O’Connell, vice president of business development at Tesla Motors. He was offering his expansive vision during a feel-good Electrification Coalition conference call Thursday that also included weigh-in from Nissan.
A Legislative Agenda
The Washington-based Electrification Coalition (EC), launched in 2009 with top corporate buy-in from 13 CEOs (including Nissan, NRG Energy and FedEx), made headlines when it offered a 2009 “Roadmap” that threw down a big goal—75 percent of U.S. road miles could be electric miles by 2040, provided its legislative goals were met. The group wants to see government spending concentrated in special deployment corridors, and improvements in incentives—including turning the federal income tax credit into a direct rebate at the point of purchase.
That hasn’t happened (although President Obama adapted many of the group’s recommendations for his budget proposals). Today’s Congress has lost the bipartisan consensus on EVs, but the coalition is still very optimistic about the emerging market. That's spelled out in a new report.
Consumer Choice Growing
EC points out that there are currently 14 plug-in electrics on the U.S. market, nine of them battery only. Some 110,000 cars with plugs have been sold in the last 2.5 years, which EC’s Jonna Hamilton claims is way ahead of where regular hybrids were at this point in their launch. “It’s more than double the early performance of hybrids,” she said. AOL Autos clarifies that particular point:
In the first 30 months after the Toyota Prius debuted in 1999, cumulative hybrid sales were approximately 50,000 units, according to an analysis done by Argonne National Lab. In the first 30 months since plug-in electrics were released in December 2010, cumulative sales have been approximately 112,724.
Tesla's Star Power
Hamilton acknowledges Tesla as a star performer. “The Tesla Model S has been able to achieve 8.4 percent of the luxury market, more than cars like the Audi A8,” she said.
In fact, in the first quarter of 2013, Model S sales beat out the A8, the Mercedes S-Class and the BMW 7-Series, says LMC Automotive. And that makes O’Connell happy. “The Model S is a great car, not a great EV,” he said. “At the end of the day, people will buy great cars. We had a very successful launch. What continues to work for us in terms of exciting the public is getting butts in seats—having them try the car. Most of our leads are coming from referrals, and we’re seeing excellent take-up that continues to grow.”
O'Connell, by the way, objects to calling the Model S a "luxury car." Instead, he said, "We are defined as a performance car, and we made a conscious effort to achieve that."
In response to my question, O'Connell also denied that Tesla would ever produce a hybrid or PHEV, although it talked about them at one time. "You have to be a real veteran to remember conversations we had about hybrids," he said. "It was many, many years ago, early in the Roadster program. For a long time now, we've been very focused on pure electric technology. We will not ever be considering a hybrid or PHEV under our brand."
In Search of Profits
O’Connell also said that making the Model S per-unit profitable is a major company goal, and that economies of scale will help make that happen as production ramps up. “We continue to benefit from huge improvements in consumer electronics,” he said. “And, beyond things like that, it’s a matter of, day to day, looking at every part that goes into the vehicle and figuring out how to shave cost out of it.” He added that the company is “trying to get to our $30,000 third-generation car as quickly as possible.” Did you hear that, folks? Thirty-grand is the bogey for Tesla's affordable model due in 2016 or 2017.
Sam Ori, a vice president at EC, said that scale and technological improvements will drive down battery costs. The EC report predicts a 50 percent cost reduction in lithium-ion batteries by 2020.
Nissan’s Tracy Woodard, director of government affairs, added more happy talk. “The good news is that we’re over 30,000 LEAF sales in the United States, and 100,000 globally,” she said. “We’re still very bullish on the technology, and we’ve started car and battery production in Smyrna, Tennessee. We’re still working on the infrastructure, getting more plugs in the ground.”
June was, in fact, a record month for EV sales. An incredible 36 percent of all the EVs on the road now were sold in the last six months. Does that have to do with the current $199 leases? You bet it does. On the other hand, all the gains only get EVs to 1.23 percent of the overall market, so there’s a lot of room for growth.
New to EVs? Start here
What Is An Electric Car?
Before we get going, let's establish basic definitions.
A Quick Guide to Plug-in Hybrids
Some plug-in cars have back-up engines to extend driving range.
Electric Cars Pros and Cons
EVs are a great solution for most people. But not everybody.
Eight Rules of Electric Vehicle Charging Etiquette
Thou shalt charge only when necessary. And other rules to live by.
Seven Things To Know About Buying a Plug-In Car
A few simple tips before you visit the dealership.
Eight Factors Determining Total Cost of Ownership of an Electric Car
EVs get bad rap as expensive. Until you look at TCO.
Federal and Local Incentives for Plug-in Hybrids and Electric Cars
Take advantage of credits and rebates to reduce EV costs.
Guide to Buying First Home EV Charger
You'll want a home charger. Here's how to buy the right one.
Electric Car Utility Rate Plans: Top Five Rules
With the right utility plan, electric fuel can be dirt cheap.
The Ultimate Guide to Electric Car Charging Networks
If you plan to charge in public, you'll want to sign up for charging network membership (or two).