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Dispelling Electric-Vehicle Myths, #3: The Sales Wars

March 29th, 2015 · No Comments

In a series of guest posts, Assaf addresses — from the perspective both of an EV owner and an analyst — myths about electric vehicles. The first post addressed the life-cycle CO2 Footprint of various types of cars … and … the simple truth (in line with Debunking Handbook guidelines):

Electric Vehicles have lower
carbon dioxide implications
through their life cycle

The second post followed up with addressing a series of issues such as the importance of reducing oil demand and other greenhouse gas emissions. This post addresses a set of questions about the commercial/sales viability.

After establishing that even 1st-generation mass EVs already deliver a greenhouse-gas improvement, with the future promising rapid further improvement (that was #1), and making the case that the benefit from breaking oil’s monopoly far outweighs any of the valid environmental concerns and objections about EVs (that was #2) –

– It is time to ask:

  • How soon can oil’s monopoly really be broken by EVs?
  • Or is it all heat with no light, and EVs are going nowhere?
  • Are EVs condemned to be a niche product, constrained by price, utility and profitability limitations?

You might answer, “Who Cares?” Well, if you’re not convinced that moving motorized travel from petroleum-fueled to the only viable alternative available now (i.e., EVs), is indeed good for the planet – then please read no further. You will definitely waste your time. (if that’s your stance and you haven’t read Diaries 1-2, reading them might help)

Otherwise, you might want to know that the controversies regarding EVs’ environmental impact, pale in comparison to the outright warfare waged over the questions above. These issues have been fought over in the mainstream press, in Wall Street, in national politics and between business leaders.

And like on other issues, much of the fighting stems from ignorance – either innocent or willful.

So, when you next hear Uncle Ned rant about those dang “Obamacars” and their useless government subsidies, you can find something to hurl back at him below the fold…

First some acronyms:

EV – an umbrella term for any vehicle that can drive based on electric power charged from a plug. This includes the “pure” electric-only BEV (battery EV) like the Nissan Leaf and the Tesla S, the PHEV or plug-in hybrid like the plug-in Toyota Prius, and more exotic beasts like the EREV(extended-range EV) like the Chevy Volt, whose gas engine’s passes power to its electric drivetrain, rather than directly move the car.

ICE – internal combustion engine.

Now… for some EV market myths and their dispellation 🙂

Myth: EV sales are going nowhere and EV makers are desperate… the best proof is the EV price wars of 2013.

Why, those automakers are just dumping them b/c nobody wants ’em!

Hardly a week goes by, without some mainstream-media “in-depth article” or “analysis” declaring the Death of the EV Dream. Here’s a recent example:

Santa Monica Bets on Electric Cars, but Consumers Are Slow to SwitchNew York Times, September 21 2013

…For now, automakers’ push to sell electric cars “has sparked sales to early adopters but has failed to encourage mainstream consumers,” said Jean François Tremblay, director at Ernst & Young’s Global Automotive Center.

… In response to tepid demand, automakers have cut prices recently to spur nationwide sales of the Chevrolet Volt, the electric Ford Focus and the Nissan Leaf. Even California has felt some effect of the sluggish demand, as Toyota discounted its RAV4 EV in Los Angeles and San Francisco last month to meet its long-term sales goals.

Consumers have been slow to buy electric vehicles because they cost more while providing less range, said Philip G. Gott, an analyst at the research firm IHS Automotive …”The electric vehicle does absolutely nothing for the average consumer.”

This final “expert” judgment is how the article ends.

Like all good myths, this one is based on a grain of truth – actually 2 of them. The first grain is that indeed, sticker prices and lease conditions on most mid-market EVs have come down some ~$5k this year – a process triggered by Nissan when its 2013 Leaf came out. But that doesn’t necessarily signal desperation:

  • They may have increased volume and in the process reduced their per-unit cost.
  • Or they might want to deplete inventory quickly, now that a new model is coming soon.
  • Or, based on their success in a niche market, they want to expand to a broader market – but this necessitates lowering prices…
  • …Or some combination of all of the above.

The second grain of truth is historical.

Some 5-6 years ago, when oil prices were literally on fire and new beasts like the Tesla Roadster appeared, ridiculously bold projections were made about how EVs will sweep ICE cars off the roads in the blink of an eye. Then…

…it didn’t happen. The Great Recession and the subsequent drop-off in oil prices might have ateeny something to do with this. IMHO the biggest reason is the predictions themselves which were ludicrously far-fetched. But the progress of the fledgling modern-EV industry in 2007-2011 has been more fits-and-starts than leaps-and-bounds.

This is perfectly understandable. The technology and market challenges are formidable. But theonly thing the mainstream media has taken from this, is that EVs are a hopeless pipe dream destined to bomb, forever.

Ok… enough excuses. What’s the reality?

Here are year-to-date 2013 EV sales, courtesy of

Electric vehicle sales monthly chart, Jan-Sep 2013, by model.

And here are the 2012 sales:

Electric vehicle sales monthly chart, 2012, by model.

For those befuddled by numbers, here’s a quick summary:

  1. EV sales in 2013 will probably end up between 90k and 100k units, representing a 80%-90% increase over 2012.
  2. In case you are wondering, 2012 itself was a 200% increase – yes, a full 3x jump – over 2011! (the link has the 2011 table as well) So 2013 EV sales in the US will end up almost 6 times higher than 2011 sales.
  3. The monthly year-over-year increase vs. 2012 has been >100%, every single month from January through August.

Another way to look at EV numbers, suggested by the US DOE, is to compare their sales since nationwide launch to those of ICE hybrids in their early years. I have reproduced the DOE figure using the latest insideevs data above and Wikipedia’s ICE-hybrid entry:

ICE Hybrid vs. EV total US market share as a function of year from launch. Data from (EVs) and Wikipedia (hybrids).
Early-Hybrid vs. Early-EV market share compared, with each class’ “Year 1” as reference. EV 2013 numbers are through Q3.

We are now in EV Year 3 – and already matching ICE-hybrid Year 5! Incidentally, the early Prius suffered the exact same verbal abuse by MSM lazyheads, as EVs do now. Some people never learn…

Looking at these numbers through analytical eyes – the phrases “failed to encourage” and “slow to buy”, used by the NYT article’s auto-market analysts, are not the ones popping into my mind.

But that’s just me. Sorry…

What about the rest of the world? the US with its huge size, cheap gas, and persistent climate-change denialism is among the least likely to lead a mass EV adoption.

In Japan and most of Europe, things are not as rosy, mostly because both regions are struggling to emerge from long deep recessions.

A notable European exception is Norway. An oil-exporting country, it has weathered the Euro recession far better than the rest of the continent. Norway’s government gives EV buyers roughly the same level of incentives as here. So… what happens in a European country whose economy is doing ok?

Tesla Model S is Best Selling Car In Norway In September! Sets New Market Share Recordinsideevs, October 2 2013 (emphasis mine)

In September, the Tesla Model S led the way in Norway, but not only for electric vehicles, but for all automobiles regardless of the drive.The month of September saw 616 new Model S registrations, which translates to 5.1% market share.  This is a new record that eclipses the Nissan LEAF’s earlier achievements.

…Nissan LEAF sales stayed strong in September with 349 new registrations and 2.9% market share, which is good for #7 overall in Norway.

The total number of EV registrations in September in Norway was a record – 1044 and 8.6% market share (about 9% if we include PHEVs), but this figure only counts new passenger vehicles.

For reference, in the US EVs (of all subgroups combined) are approaching 1.5% of passenger vehicle sales (i.e., excluding trucks). And Tesla Model S does lead the American sports-luxury segment, regardless of drive.

Myth: ok, sales numbers are rising… but that’s only because so many automakers are trying to force them onto unwilling customers due to regulations.

Why, look at those piddly sales numbers from giants like Honda and Toyota!

Some cars’ teeny sales #s do seem a mystery. Until you hear about Compliance Cars.

Since 2012 California requires major automakers sell at least a minimum proportion of oil-free vehicles. Or else – pay another maker (e.g., Tesla) production credits for an equivalent output. Some major makers game the system:

  1. Put out an EV version of one of their models;
  2. Lease – not sell – it, and only in California and perhaps 1-2 other states with similar regulations;
  3. Severely limit quantities;
  4. Meanwhile, complain loudly about being forced to “lose money” on this “dead-end technology.”

All these are Compliance Cars: the Honda Fit EV, The Toyota RAV4 EV, and the Fiat 500e. Whatever quantity their makers allow Californians to taste, gets quickly sold out nowadays. And still they won’t expand.

Here’s what Fiat CEO had to say about their 500e subcompact, sold in CA since July:

…will lose money on every car we make…The economics of EVs simply don’t work.

And here’s similar BS from Toyota’s CEO:

The reason why Toyota doesn’t introduce any major [pure electric vehicle] is because we do not believe there is a market to accept it.

Yeah right. Major-car-company CEOs’ prognostic track record is somewhere between Wall Street analysts and Paul Wolfowitz. To be fair, a decade ago Nissan’s CEO mocked Toyota for its Prius, saying: “Some of our competitors say they are doing things for the benefit of humanity. Well, we are in a business…”

Well indeed! The shoe is on the other foot now, we are seeing who’s laughing at whom, and I’m venturing a guess who will kick who’s butt in a decade’s time.

Strangely enough, GM despite its huge investment in the Volt, is still treating its Korean-made subcompact Spark EV, introduced this summer with stellar reviews – as a Compliance Car, selling it only in California and Oregon, and not expanding nationwide before some unspecified date (the Volt doesn’t count as a zero-emissions vehicle, so they need a BEV to get California off their backs).

Yet another case of amazing CEO foresight? They are losing precious time. The urban-subcompact segment – per conventional wisdom, the most natural segment for EVs – right now has no major offering for US consumers.

So… the reality: the only “pure” battery-electric EVs available continuously across the nation, are the Nissan Leaf, the Tesla Model S, and the Ford Focus EV. There were no new nationwide BEV offering in 2013. The next new kid on the block, the 2-seater Smart ED, was introduced in May in 6 states on the coasts, and is slated to expand early next year. This tiny EV is already capitalizing on other automakers’ neglect or disdain of the zippy-subcompact segment.

Considering this limited offering, 2013 has been a surprisingly good year for BEVs in America; in a nutshell, the Leaf and Tesla S are the ones that pulled the entire BEV/EREV/PHEV sales wagon forward this year.

…and now for an opposite myth.

Myth: within X years, there will be Y million EVs on our roads (with X small and Y large).

Cumulative number of plug-in vehicles on US roads, 2010-2015 projection, based on Baum and Associates.
No… this rosy prediction from 2010 is not panning out…

Oy oy oy, if I had a buck for each time I’ve read such a headline on and similar websites, I’d be rich already. The rosy forecasts just refuse to die.

On some level it’s natural. Faced with all the anti-EV spin from CEOs, “analysts” and the press, pro-EV bodies perhaps feel the need to offer up counter-spin. IMHO, a very poor choice. EV are the underdogs; they need to deliver, not spin. Awesome delivery is what has pushed EVs forward in 2013, while over-hyped spin is part of what has held them back until now.

As to the reality: BEV production volumes are still constrained by teething problems. Look at the Leaf’s monthly sales numbers since the 2013 model was introduced in March. They are almost constant around the 2000-plus level. This indicates solid demand and a production constraint. The Tennessee plant slated to eventually produce 150k units/year, is still hovering around 25k/year output.

The bottlenecks are not on the automakers’ side, but rather with makers of batteries and other parts going into the battery pack. They were caught by surprise by the resurgent demand, and are now struggling to literally build capacity. The Leaf’s particular bottleneck was… electrodes. Nissan now promises a 33k/year pace starting November.

Worldwide, in 2014 the BEV production capacity across all makers will probably still be barely 200k/year, if that. Add maybe 50k-100k, max, from EREVs such as the Volt and the new BMW i3. PHEVs can ramp up capacity faster, but their makers are conflicted by the reality of“competing with yourself”, and won’t seriously increase PHEV volume absent overwhelming demand.

So millions of EVs? That will take a while…

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Tags: automobiles · batteries · electric vehicles · guest post · transportation