The Dysfunctional Electric Car Market

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The dysfunctional electric car market is over a century old. My father tells stories about my great-grandmother’s electric car. He was embarrassed to have her drop him off at school in it. He remembers my great-grandfather having to rescue her because her electric car lost its charge miles from home.

Surely, one hundred years later electric car technology has progressed to the point where electric cars are practical, hasn’t it? Maybe not.

Many people may not realize it, but electric cars have been around since the 1890s. They had their heyday around 1900. Not surprisingly, Thomas Edison was a proponent of electric cars and was on a decade-long mission to create a long-lasting, powerful battery for commercial automobiles before giving up.

In the last 100 years, there have never been any resoundingly commercially successful electric vehicles. Why not? There are seven main reasons working against electric cars succeeding. (These reasons also apply to hybrid vehicles to some extent)

Limited Range

Range anxiety is one big issue limiting widespread acceptance of electric cars. That’s why most car manufacturers produce hybrid vehicles with a gasoline engine backing up the electric motor. Even Tesla Motors’ two-seat roadster with a 300-mile range can only achieve this through “careful driving.” And isn’t careful driving anathema to owning a roadster in the first place? Most electric vehicles are limited in range to 80-100 miles.

Long Charge Times

Long charging times are a part of the myth told by the dysfunctional electric car market

All electric cars take a long time to charge

So, an electric car’s range is limited. Just fill it up, right? Not so fast. It takes up to 20 hours to fully charge an electric vehicle on 120-volts. Faster chargers at 240-volts can reduce the time to several hours, but these chargers cost extra money. Compare that to the 5-7 minutes it takes to fill a gas tank. Not much of a competition, is it?

 

 

Infrastructure

It seems there’s a gas station on every corner. According to U.S. Census data, there are approximately 125,000 filling stations across the United States. At the end of 2012, there were only 13,000 electric car charge points. If you’re running low on electricity, you’d better hope you’re near one of these electric charging stations or home. Otherwise, you may end up like my great-grandmother—out of electricity far from home.

Cost

The high cost of ownership of electric vehicles is well documented, including elsewhere on this site. I want to amplify the point, however. Consider this cost comparison between the Chevy Volt and Cruze.

Misleading costs of ownership are part of the dysfunctional electric car market

Electric Car Cost Comparison Chart

 

 

Even after tax credits and estimated energy savings, the Volt costs a premium of $8,136 if purchased over 6 years, or $5,400 over 10 years, at 5% interest.

Pollution

Exhaust Pipes Emitting Carbon Dioxide

Carbon emissions are a red herring used by the dysfunctional electric car market

According to a study published by the Proceedings of the National Academy of Science (PNAS), electric vehicles may be bigger polluters than gasoline powered vehicles. The key is where the source of the electricity all-electric cars use comes from. If it comes from coal, the electric cars produce 3.6 times more soot and smog deaths than those powered by gas, because of the pollution made in generating the electricity. But if the power supply comes from natural gas, the all-electric car produces half as many air pollution health problems as gas-powered cars do.

Government

The government attempts to boost sales by offering electric vehicle tax credits (some as high as $7,500). While the tax credit will make some of the price tags a little more reasonable for consumers, look closer at the deal. The incentive is a tax credit. That means the buyer must wait until filing taxes the following year to see the benefit. And that’s not even the real problem. The real problem lies in artificially manipulating the worth and price of the vehicles. With the government reducing the costs, manufacturers are not encouraged to research and innovate in order to bring the true initial price of the vehicle down.

Perhaps the government is pushing electric vehicles to help create jobs. If so, we’d expect to see manufacturers adding capacity and jobs. Unfortunately, that’s not the case. Last week, Ford announced it would be moving production of its CMax Energi out of its plant in Wayne, MI in 2018, presumably overseas. So, as we get closer to peak electric vehicle purchases in 2020, production of Ford’s models will take jobs overseas.

Ease of Gasoline

It will take time for the dysfunctional electric car market to build out the infrastructure of gasoline

Gasoline is readily available because the infrastructure has developed over the last 100 years.

Gasoline works well and we know it. Gas is readily available, gas stations fuel us up in under minutes and gas prices are fairly reasonable. Fracking of old oil wells has catapulted the United States into being an oil producing country again, thereby insuring inexpensive gas for years to come.

So, the future of electric vehicles may not be as bright as some believe. Too many inertia factors stand in the way of widespread adoption of electric vehicles. J. D. Power and Associates projects sales of Hybrid Electric and Plug-in Hybrid Electric vehicles will reach 1.67 million units by 2020 and account for nearly 10 percent of the market share. Battery Electric Vehicle sales, however, will make up less than 1 percent of all vehicles sold in 2020 at just over 100,000 units. It’s hard to buck the trend, even for do-gooders.

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About Author

Bill is an Associate Producer at Horsepower Broadcasting as well as our Operations Analyst. He personally oversees most all of the myriad interviews with our automotive celebrity guests. He handles scheduling, contacts, press releases, press passes and everything in between. His keen intellect is awe inspiring and he is a true academician in every sense of the term.

Many of our business related blogs and posts are created and written by him as the business category is what Bill is most familiar with. He has a wide range of interests in business related subjects including marketing, sales, finance, motivation, leadership, banking, technology and leading edge thinking.

His input and contributions to the show are invaluable and we are grateful he is a part of our team.

1 Comment

  1. The debate over this blog post really caught fire on Facebook. One regular reader, Jimmy Young, blasted me as being hydrocarbon-centric. His arguments are cogent, and it’s important to get them into the discussion. With Jimmy’s permission, I’m inserting them here for others to read and join in the conversation.

    “Sorry, perhaps not poorly researched, just seemingly old-centric (respectfully). Our species needs so much more responsible stewardship if we are going to survive ourselves and the consequences of our spectacular creations. I don’t believe the author is looking far enough in time, neither backwards nor forwards. Propelling humans around by harnessing the horsepower of electrons and electromagnetism is our future… but perhaps I missed a main point that TODAY the Ecar industry isn’t fully “there” yet, agreed. Unlike the fuel of ICE engines ALL Ecars run on the flow of electrons and every month now there are so many new ways to capture and use clean electrons, wouldnt you agree? People can capture their own on their own rooftops even. The term “range anxiety” is almost a non-issue these days, for town-driving that is. The cumulative daily trips by an average town driver is a non-anxious fraction of a fully or partially charged Ecar. Longer distance driving is a different reality and I would merely comment “things will improve”. California has exceptionally “clean” grid electricity, let’s use this fact to encourage clean electricity globally. Regarding the “government subsidies” paragraph, I am almost in total disagreement… “The real problem lies in artificially manipulating the worth and price of the vehicles. With the government reducing the costs, manufacturers are not encouraged to research and innovate in order to bring the true initial price of the vehicle down.” Temporary taxpayer subsidies of promising, nascent industries give them a fighting chance to reach stability IMO. Subsidies lower the price, not costs. It is also incorrect that temporary subsidies create a long term manufacturer innovation complacency. They ALL live with the realization that the handouts are temporary and only fiscal performance counts. Yes, gas is easy. Some day so will harnessing electrons. lets give Ecars a brake. First of all because the drivers may be choosing to drive a little slower but mostly because they need help growing even from the established ICE world. These things still break and need to be fixed (well, not nearly as much), lubricated and cared for. Thank you. JY (no, I do not own an Ecar yet. Waiting for the subsidies to end first. I am TRYING to build one in my garage though. Yea, about that…).”

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