Are Electric Vehicles on the Way Out?

 

The Chevy Volt has, if you’ll pardon the pun, not been particularly electrifying. GM has been forced to idle 1300 workers after they only sold 75% of what they were expecting the Volt to move. Not helping the Volt was a wave of bad press making it out to be the new Pinto, catching fire during crashes. The government has proven this isn’t true, but that may not be enough for the Volt. The auto insurance companies aren’t too thrilled with it, either.

Is This the End of Electric Vehicles?
We don’t think so. We just think that, right now, they’re a limited market falling victim to a little too much hype a little too soon.

Let’s start with the cars themselves. Electric vehicles have two very big problems with a lot of consumers right up front.

The first, and likely biggest, is cost: anybody interested in an electric vehicle is in for some serious sticker shock. The Volt costs $39,000 MSRP. Its more successful competitor, the Nissan Leaf, costs about $32,000. Even the new Mitsubishi i-MiEV costs $30,000. This is before dealer discounts, trade-ins, and an extremely generous federal credit of up to $7500, of course, but $40,000 up front is enough to give anybody pause, even with the generous gas savings, especially when the average cost of a new car is $28,400, according to the government.

The second problem? Range. Electric cars just don’t go all that far … or at least don’t seem like they do. In truth, many of us drive a lot less than 100 miles a day, the average distance an electric car can go before the battery dies. But if you drive a lot, you’re already out of the target market, and if you’re concerned about breakdowns or distance problems, right now there’s not much auto makers can say to you on that score.

Realistically, these are not cars designed as Americans know and like them: these are designed to run errands and ferry the kids to school.

What About Hybrids?
The entire auto industry has been taken a bit by surprise by a huge surge in auto sales. Why? We’ve been hanging onto our old clunkers for so long and gas prices have risen to such heights that people are starting to look at cars getting 35 miles to the gallon and thinking “Man, that’s worth getting a new car,” especially as gas prices shoot towards $4 a gallon and may even approach $5 in some areas.

Unsurprisingly, the big winner for auto makers have been fuel efficient cars, especially hybrids. Toyota has seen a huge demand for their venerable Prius, for example. And if you’re looking to save money, you can get a four-door hybrid for less than $20,000, like the Honda Insight, which gets 10 miles less to the gallon than the Prius…and still is at 41 mpg city and 44 mpg highway.

Similarly, there’s more model diversity. If you want a hybrid SUV or minivan, your bases are covered: they won’t be as fuel efficient as the sedans, necessarily, but they’ll still burn a lot less gas for your money. And, if the battery dies, at least you still have a gasoline engine to get you home.

So we don’t think the electric vehicle is dead: we just think, right now, the market isn’t quite as robust as people thought.

Add Comment