If you follow the electric car market, you may have noticed a curious business phenomenon taking place in China. Leaders there are said to be scaling back plans for selling 500,000 electric vehicles (EVs) per year by 2015. The problem, it seems, is that the new breed of EVs are selling sluggishly.
"Developers have yet to achieve breakthroughs and will be lucky to sell 2,000 cars this year, mostly taxis. The government has hedged its bets by broadening the industry's official goals to include cleaner gasoline engines," according to a recent Associated Press article on the subject. "Officials including Premier Wen Jiabao started acknowledging last year that progress was slow and developers need to improve quality instead of rushing models to market."
Electric vehicle sales are sluggish in China. (Source: BYD)
For many EV proponents, China's struggle with EV technology must come as a surprise. For years, the electric car cognoscenti have been warning us about falling behind in the EV race. In a 2010 article called "Their Moon Shot and Ours," Thomas Friedman of the New York Times notably urged US leaders to keep up with China. "Moore's Law of electric cars" would enable the electric car battery's cost per mile to be "cut in half every 18 months."
But there is no Moore's Law of electric cars. That may be why EVs and EV batteries aren't doing very well in the US, either. Sales of the Chevy Volt have been slow. Nissan sold 370 Leafs in April, 579 in March, and 478 in February. A123 Systems, an EV battery maker that was granted up to $249 million in funding from the Department of Energy, posted a first-quarter net loss of $125 million and is said to be struggling.
Moreover, as we've reported before, industry analysts expect huge lithium-ion battery gluts over the next few years. Bloomberg News reported recently that venture capitalists are hesitant to lend support for EV-based efforts. "The only thing that would cause America to be all electric cars is to lose the economic trade war with China and have it imposed on us," a venture capitalist told Bloomberg.
If there's a lesson in all this, it's that EV development is difficult everywhere. China doesn't have a magic bullet, any more than we do.
"There's a general view that, if you throw money at it, you can do whatever you want," David Cole, chairman emeritus of the Center for Automotive Research, told us. "But this technology isn't at that point yet." Cole and many other engineers in the auto industry have repeatedly told us that hybrids and plug-in hybrids are still needed to serve as a bridge to the electric car, which may not be ready for prime time for many years. Even then, Cole has said that plug-in hybrids, such as the Volt, will need to bring their MSRPs down by about 40 percent before they can be really competitive.
I suspect that if you canvassed engineers around the auto industry, you'd find that many agree with the Chinese belief that it's best not to rush models to market. At this point, investments in basic and applied battery research might be wiser than funding commercial products. The reason for that is the same as it has been for 100 years: If you can't build a battery that's remotely competitive with gasoline, it's going to be hard to wean consumers from their internal combustion engines.
Even in China.
Related posts:
For a close-up look at GM's Chevy Volt, go to the Drive for Innovation site and follow the cross-country journey of EE Life editorial director Brian Fuller.
Yes overpriced EV's are not selling great in China as here because they build then overweight, size and use expensive drives and batteries.
Had they, we built 1,000lb composite bodied, aero with lead batteries the mass production price would be $8-10k and save that in gasoline saving in 3-5 yrs or so making them very economical.
Why don't they? Because they would canibalize their big ICE car market thus why we get EV's designed to fail by being overweight, overpriced, overteched.
One has to notice no mention of the other EV's in China/Asia like 2-3wh ones that are selling fast in large quantities proving that done right, EV's are very good at lowering transport costs.
My own EV's show that with 250 and 600mpg equivalents for my 2 seat sportwagon and Harley size EV trike respectively and cost to build are very low as few parts needed. Why is they are lightweight and use lead batteries.
So the Chinese electric car technology is not advancing faster than American technology. Maybe because it is actually American technology transplanted to China ?
Another block to the development of a real market for EVs is the cost of oil. The prevailing thought was that rising oil prices would spur consumer interest in EVs and also make them more affordable. But technological advances in obtaining oil may keep oil at a low enough price that the EV won't be able to earn back its high cost. Add to that the improvements in internal combustion engines and the EV may not look so great.
Rob Spiegel; Yes. The (rising) cost of oil and gasoline does make hybrids and EV's more feasible. Also, as oil prices increase, reserves that are more difficult / expensive to produce become profitable. The oil companies are few in number, and vertically integrated, which makes it easier to manipulate expenses and prices. The game is to maximize profits, but not so much as to lose the market to EV's. Is it a coincidence that gasoline prices seem to increase until the economy stalls, and hybrid and EV sales increase, and then the price of gasoline drops ? The oil companies will 'charge what the market will bear'. And those who will disagree should review their Econ 101 notes about Markets and Monopoly's.
Good points, GlennA. One pattern I've seen over the decades is that high oil costs spur exploration and technology development (such as horizontal drilling) to get to more oil. Once the new sources of oil come on line, the price goes down again. These technology developments may help make North America energy independent in the next 10 to 15 years. That's a development I never expected to see. Of course, a lot of that move to energy independence will come from natural gas.
I only see two markets for pure EV's (PEV's): people who are in love with the concept and have money to burn, and city drivers where range isn't an issue.
But, here is a scenario where PEV's become viable (assuming tiny two seater EV's, with any viable battery chemistry):
Cities can prohibit ICE vehicles in the city proper (think London that already prohibits all but cabs in the daytime). Busses and taxi's are perfect electric candidates since they can use infrastructure to change out battery packs instead of charging them on the vehicle (as a fleet activity). Underground roads and parking garages become easier to construct and more paletable if the vehicles have no "concurrent emissions", and space is better utilized if vehicles are smaller. Standardizing on a charging station and max vehicle size will also help when installed in these parking garages. All parking spaces would have a charging station so vehicles would always be "topped off" minimizing range issues. This would both help with congestion and air quality (the real reason to go this route, not some green anti-carbon fantasy).
Couple that with mass transit where some of the suburb station parking spaces are reserved for the small electric vehicles (with standardized charging stations). As time goes on, more and more of the parking spaces will be reserved for electric's encouraging suburban use of PEV's.
HOV lanes and toll roads can be free for the SMALLER pure EV's.
If NYC or Chicago went electric this way (say by 2020), that would immediately create a mass market for electrics. Then (and only then, with a mass market) would pricing become an issue and cheaper (but heavier, shorter range) chemistries would then be viable. These cars could actually be cheaper than ICE vehicles!
This can be done (in fact, I think it's probably inevitable as population densities increase and oil prices rise). This is probably more likely to start in the east (China) where densities and polution are already beyond bad (and a rising middle class less inclinded to tolerate it).
Chuck, thanks for this sentence: "But there is no Moore's Law of electric cars." As we've discussed several times in comment threads, Moore's "Law" gets misapplied all the time in non-semiconductor environments where it doesn't belong. What's boggling is that people like Friedman, who are supposed to know better, do much of the misapplying.
Charles, due to the increase in crude oil and gasoline prices, peoples are looking for vehicles with alternate energy sources. Most of the automobile companies had started R&D in similar line. I mean vehicles running with alternate energy sources like solar, electricity, air, water etc. Around 2 year back I had brought an Electric car and am using it for my local use. From my experience what I understood is it requires a minimum 4-6 hours of charging for a 70 miles journey. So in between the journey, I have to spend minimum 2 hours for charging, which is a time consuming process.
Jerry, most of the EV’s are overpriced when compare with the same type gasoline (Petrol/Diesel/CNG) vehicle. For EV the main advantage is, its running cost is very less when compare with gasoline based vehicles, but maintenance is more. Once in 3-4 years we have to change the entire charging unit with Cells and this cost up to 15-20% of the vehicle cost.
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