Government subsidies also have played a role, according to analysts. Nissan and Tesla were awarded nearly $2 billion between them from the Department of Energy's Advanced Technology Vehicles Manufacturing loan program to build electric vehicles. Many other companies, including EV battery makers, have also received subsidies. "On the surface, it appears to be a huge risk to roll out these vehicles that people might not buy," See said. "But in many cases, a lot of the cost and risk has been subsidized by the government."
Moreover, the appearance of risk may not be as great as it first seems, at least for some automakers. Experts say pure electric cars can be much easier to manufacture than hybrids. "If you look at the Ford operation in Wayne [Mich.], they can do four different kinds of powertrains: conventional engines, plug-in hybrids, conventional hybrids, and electrics," David Cole, chairman emeritus of the Center for Automotive Research, told us. "EV technology is a walk in the park compared to hybrids. You just have to build flexibility into your manufacturing systems."
Still, the road to EV sales success is a hard one. Sales of the most prominent pure electric car available today, the Nissan Leaf, totaled just 8,720 units for the first 11 months of this year, according to plugincars.com, despite company projections that it would sell 500,000 EVs a year by the end of 2013. A Wall Street Journal report this year (subscription required) indicated that Nissan was sticking with its plan to sell 1.5 million EVs cumulatively by 2016, "in part due to demands by major cities for zero-emission taxis."
That's why Nissan CEO Carlos Ghosn has predicted pure EVs will make up 10 percent of the market by 2020. And, as we reported this summer, Tesla CEO Elon Musk took Ghosn's prediction up another notch by saying he believes half of all cars on the road will be pure electric ones in 15 years.
However, industry analysts say much of the auto industry doesn't share the rosy views of Nissan and Tesla. Cole chaired a session at the recent Battery Show Conference in Novi, Mich., and he said automakers expressed concerns at the conference about the state of EV batteries. The sesison was "an opportunity for the automakers to tell the battery guys what the reality is," Cole said. "Right now, the battery is still a killer for them."
Analysts also say the automakers building compliance cars want to be ready if battery technology makes a sudden leap forward. Until then, they're treading lightly. "The bottom line is that the technology is not a slam dunk," See said. "That's why they need to keep looking for the innovation that could make it happen."
All this wondering about EV's. It is easy to understand why they are building them, government intervention in the automotive market. With California's looming ZPV requirements all the manufacturers need to be positioned to say, we build an electric car people just won't buy it. The feds also subsidize hybrids and electrics so the R&D costs the manufacturers less. As to the need for pure electrics, with the environmental zeal shown by many, if electrics made sense they would sell like hotcakes.
Amclaussen has it right. The next to the last paragraph talks about "zero-emission"? Only the point of emission has changed, not the actual emissions. Politicians make lousy engineers. Maybe they can just rewrite the laws of physics and viola, problem solved! It is not only the seen, but the unseen.
A key sticking point in the business model of electrical vehicles is the resell value. When the owner goes to trade their vehicle after several years of use it is very likely that the battery will require replacement. How could the seller expect to get a decent sales price for the car when any future buyer would also have to splurge for a new battery? I'm not sure about the rest of you but I always look for a good trade-in on one of my older vehicles prior to buying a new one.
Not to mention that donating to the right party ensures taxpayers continue to pay if your R and D goes bankrupt! Nothing like free markets (as dictated by the state and federal government) to stimulate sales <sarc>.
No, Architect, I don't think Mark Reuss was joking when he said "electrify and educate." That said, it might not necessarily mean that GM is planning a headlong dive into pure electric cars. He could have been making a reference to powertrains like that of the Chevy Volt, which has gasoline on board, and isn't a pure electric. The reason that some of the experts believe GM is "dipping a toe in the water" with the Spark is that its U.S. sales will be in California initially, whereas companies like Tesla and Nissan are making a broader effort.
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