Plug-in Electric Vehicle Sales Need a Shake-up

By · August 26, 2011

Although it’s only August, the electric vehicle market has the feeling of coming into the home stretch for the year. We have seen the race for plug-in electric vehicle (PEV) glory boil down to the Nissan LEAF and Chevy Volt this year, with the Volt sputtering a bit earlier than expected. We have seen numerous delays pushing new launches back months—I am looking in your direction, Coda, Fisker, Ford, and Toyota. All of this has left the PEV market feeling a bit underwhelming for 2011. Particularly when you consider that the President has given the market a goal of 1 million PEVs on the road in four and half short years—8,000 down, 992,000 sales to go.

Light-duty PEV sales to 2017

You can probably see where I am going with this. My colleague John Gartner and I recently completed the forecasts for PEVs and expect that the U.S. market will reach 667,000 PEVs sold by 2015. In fact, we anticipate that the goal of 1 million vehicles is almost slipping out of reach at this point without substantial shake up in the market in the next couple years. What do I see as the potential market shake-ups?

1. New models

So far, the only two mainstream models available compete in similar segments and have similar packaging. Market delays for competitors means lost time towards meeting this goal. In the last couple of weeks, we have seen several new model announcements a bit earlier than typical—although “typical” has been thrown out the window recently—with BMW’s i8 and i3 releases and Cadillac’s announcement of the ELR plug-in hybrid. But these are not going to be the “substantial shake-ups” that the politicians need for the market to meet their goals. So, where are the potential shake-ups? Toyota’s Prius Plug-in Hybrid, if it’s priced right, has the potential to turn many current Prius owners into plug-in owners. Ford’s multi-vehicle platform could prove a winner too, but the C-Max bodystyle is still yet to be tested in the U.S. mass market.

2. Faster production ramp-up

GM claims that the Volt is out-selling its production, which seems likely true, but then added capacity and lower production costs have to follow soon. Nissan’s Smyrna, Tennessee plant will have the capacity for 150,000 LEAFs per year, but production is not scheduled to start until late 2012 and could even be delayed into 2013. In the meantime, expect Americans to remain hungry for the LEAF as production gets allocated across the globe. (As a side note, I would bet that you can expect a facelift for the Leaf about then too, as it seems hard to believe Nissan would start a plant with tooling for a three-year-old vehicle, but stranger things have happened.) If production capacity can be increased and production costs can be lower, that would likely have a transformative affect on the availability of PEV models in the next few years.

3. Better pricing

Whether that is via government purchase incentives, lower battery costs, or good old-fashioned vehicle incentives (financing, rebates, dealer cash, etc.), the price for PEVs has to come down. Batteries are the cost drivers and are therefore held as the Holy Grail for cost reductions in PEVs. In the meantime, fixing the flawed federal purchase incentive program or reducing the price to generate interest seems the most likely short-term tools. GM recently announced that the 2012 Volt will see a price decrease of about $1,000—every little bit helps—while Nissan announced a $500-$1,000 price increase to the LEAF. The competition, specifically Toyota, seems poised to put these two on notice with significantly better pricing for what many will consider a competitive choice. (I do realize that these three vehicles are very different animals, but at the end of the day, the only thing that matters is whose dealers customers comparison shop between). Others like the $45,000 Coda Electric Sedan or $57,000 Tesla Model S will price many buyers out of the market, regardless of how good the vehicles are.

While there are a lot of challenges to launching vehicles, setting prices, and establishing production, the bottom line is that the current market is not on track to meet the political goals. And, it looks from here that the blame belongs to the supply side of the equation.

Comments

· · 6 years ago

Dave,
This subject comes up a lot lately and everyone has an opinion about why EV sales are so slow, so let me give you my take on this.

I have been driving home brewed EV's for over 5 years now. During that time I have answered many questions about EV's and offered test drives to anyone that asked. Everyone that has driven one of my EV's wanted one of their own, however most are unwilling to build their own. It just costs too much for what you get in return.

Now that we have factory EV's with long factory warranties, many, many people are ready to make the big change and buy an EV. The 3 reasons you site above are part of the problem, but only a small part.

For Nissan Leaf sales to take off, there needs to be Leafs for sale in ALL 50 STATES. Not 5 states, but all 50 states.

Until every Nissan dealer in the country has at least one Leaf on the lot for people to look at and drive the sales figures are going to be horrible.

If Obama really wanted to spur EV sales he would quit trying to lower the price of gasoline. Releasing 60 million barrels of oil from the SPR this year lowered the price of gasoline and lowered the demand for EV's.

The 2nd thing Obama could do is require every federal building in the country to install at least one public EV charge station in the parking lot. That alone would be enough to get EV sales to 1 million PER YEAR by 2015. The cost of this would be trivial compared to the Trillion dollars we have spent in Iraq.

kjd
http://www.evalbum.com/3175

· Kevin (not verified) · 6 years ago

As far as a lower price on the 2012 Volt, while possible, the 2012's hitting dealer lots now have stickers of $45,500
More than the typicial 44,690. That most 2011's had

So it's possible to order a base model, but most Volts will be sold for more or about the same as the 2011's

· James (not verified) · 6 years ago

We finally found an orphaned Leaf last weekend, but unfortunately Phoenix has yet to receive all the charging stations that have been promised for the last couple of years and limps along with a total of three stations that aren't located at Nissan dealers (maybe there are a couple more, but doesn't matter). While her commute is easily done on the Leaf's range, it really cuts down on the Leaf's usefulness in a big, spread-out city like Phoenix. That said, I absolutely love our Leaf and would be happy to have another since this is my wife's car. We will probably trade our Honda Fit for a Volt or a plug-in Prius when we get our PV system installed later this year.

I think that the plug-in Prius, despite the fact that it's a compromise, will be the car that drags EV's into the mainstream, since it's familiar and widely accepted. Maybe the next generation get's 25 miles of range, and the next gets 50. Before long we will be knocking out a ton of ICE based pollution in the center of our cities (and god do they need that here).

· 54mpg (not verified) · 6 years ago

What will skyrocket PEV adoption? A $1000 per 5 miles of EV range on new or old passenger vehicles.

If you convert your old clunker to run on electricity for 20 miles (or buy a vehicle with the same capability), the government will pay $4,000 towards this. Such a law will skyrocket EV adoption and will help a lot in bringing down unemployment rate by employing many 1000s in the EV conversion industry.

· · 6 years ago

@54mpg,
Sure that $1000 per 5 miles will work but don't you think that's a bit much? For a 240 mile/charge Tesla Roadster, that would be $48,000 off. A 100 mile/charge Leaf would get $20,000.
You would have a feeding frenzy for cars but if 20 million Americans went for it (what idiot wouldn't), it would cost $400 billion.
Hardly feasible IMHO.

· 54mpg (not verified) · 6 years ago

@ex-EV1 driver, you are right.

Sure, the numbers needs to tweaked. Basically, I do not understand why the incentive is only for new vehicles? The current law "The credit is equal to the sum of: (1) $2,500, plus (2) $417 for each kilowatt hour of traction battery capacity in excess of 4 kilowatt hours." is pretty good.

But this needs to cover existing vehicles to have any kind of impact at all.

New to EVs? Start here

  1. Seven Things To Know About Buying a Plug-In Car
    A few simple tips before you visit the dealership.
  2. Incentives for Plug-in Hybrids and Electric Cars
    Take advantage of credits and rebates to reduce EV costs.
  3. Buying Your First Home EV Charger
    You'll want a home charger. Here's how to buy the right one.