In early February, Neil Winton, a British automotive journalist who contributes to the Detroit News and Forbes, wrote an article headlined “Electric Car Sales Jump in Europe, but Likely to Stall Soon.”
No Consumer Demand?
The Forbes article was based mostly on data derived from Europe’s Automotive Industry Data (AID) newsletter and quotes from Peter Schmidt, its editor. Said Schmidt, as quoted by Winton, “Effectively, you have no detectable genuine underlying consumer demand from private individuals” for electric cars.
Schmidt went on to describe how the next few years will be “a scary time for electric car makers, chiefly because, as the price of oil continues to hover around levels inconceivable a year ago, and with fuel prices falling month to month, those people who had thought about buying an electric car may give up when they look at motoring expenses.”
Despite significant growth in electric vehicle (EV) sales in the United States, United Kingdom, and Europe, Schmidt believes EVs face a gloomy future. “The market appears to be going nowhere, absolutely nowhere. The numbers for 2014 look healthy, but they are not,” he reported. Schmidt went on to describe how new EV models experience only “initial fast growth.”
The real quote that caught my attention: “Effectively, you have no detectable genuine underlying consumer demand from private individuals” (emphasis mine). When Schmidt says “numbers for 2014 look healthy,” let’s examine these figures and the trend over the past few years (this is fresh on my mind, since I’m currently completing a book about alternative cars).
From Understanding Battery Electric Cars, a section in Chapter 1, What is an Alternative Car?:
“Sales of electric cars have grown rapidly during the past few years. In the United States, in 2011, only 17,500 EVs were sold. In 2012, the number leaped to 53,000 (a whopping 300 percent increase). Then, in 2013, sales nearly doubled to 96,000 units. 2014 was the first year in which EV sales in the States exceeded 100,000 (according to TransportEvolved.com). Of these, nearly a third, or 30,200, were Nissan LEAFs (an increase from 22,600 units sold in 2013).
If this increase of more than 570 percent in only three years in the U.S. is any indication of the future of EVs, they may be very successful indeed.
In the United Kingdom (a country of only 65 million residents, compared to the 315 million people in the U.S.), sales of electric vehicles reached 10,000 by May 2014. In March 2014, 1,200 electric cars were sold in the country, up from only 270 in the same month of 2013 (according to The Guardian).”
I recently contributed an article to CarNewsCafe entitled “Electric Cars: Low Gas Prices Aren’t Significant.” As you can guess, in it I argued that the current—and most likely temporary—low gas prices won’t significantly affect the upward trend in EV sales. I referenced a January 2015 article by my colleague Nikki Gordon-Bloomfield at Transport Evolved, which quoted used car portal Carlypso. “By the end of the first quarter this year, [Carlypso] predicts that electric car sales in the U.S. will total around one percent of all new car sales, up from 0.86 percent in December last year,” wrote Gordon-Bloomfield.
Not Just Cheap Fuel
I went on to write of how it is not simply cheap fuel prices that attract prospective EV buyers. Very low, and predictable, maintenance costs are another major reason car buyers are considering electric transportation. Tune ups, oil changes, engine repair, and transmission work are all things of the past in the world of electric vehicles.
In her article, Gordon-Bloomfield emphasized the high-tech convenience features offered by most EVs as being, surprisingly, one of the most popular reasons for owning one. Of course, in a society that’s perpetually connected to social media and commonly toting app-driven mobile devices like smartphones and tablets, this should come as no surprise. (I have often argued that consumer interest in EVs is based in saving money and gaining high-tech, high-status personal transport, not saving the environment or decreasing one’s carbon footprint.)
“Features like remote climate control, remote unlocking, and never having to scrape ice off the windshield are a great bonus of plug-in cars, with pretty much every plug-in owner we’ve spoken to (new and old alike) citing them as their favourite features of owning a plug-in,” wrote Gordon-Bloomfield.
In addition, “low” gas prices really aren’t that low. Current gas prices seem cheap only because they are about 60% of what they were mere months ago. Likewise, $2 per gallon gasoline in the States is expensive compared to charging a battery with electricity, even in areas where electricity is relatively pricey.
Consider what $2.16 will get you. Although in many areas of the U.S. it currently won’t even get you a gallon of gas, let’s say it will. It will also fully charge the battery of a Fiat 500e or Nissan LEAF electric car, which will transport you about 80 miles.
The average fuel economy of new cars sold, according to the University of Michigan Transportation Research Institute, is only 25 MPG. In fact, the most popular vehicles sold, trucks and SUVs, typically get only 15-20 MPG. But assuming the 25 MPG U.S. average, that $2.16 will transport you 25 miles in a gasoline-powered car, or 70-80 miles in an affordable EV like the LEAF or 500e. Or, according to Car and Driver, 17 miles of city/suburban driving in the uber-popular 2015 Ford F-150 truck—but that’s only after this year’s model shed 700 lbs. of weight by integrating aluminum into the body and bed.
Pricey Electricity < Cheapest Gas
But I want to be fair. Just like gasoline prices fluctuate and vary across the nation and between countries, so do electricity rates. That $2.16 is for the state of Washington, which features the cheapest electricity rates in the country (nine cents per kWh). In New York, home of the highest rates (19 cents per kWh), that same Fiat 500e would cost $4.56 to fully charge. Assuming that would purchase two gallons of gas and propel our hypothetical average fuel economy car 50 miles, it still pales in comparison to the 70 or 80 miles delivered by an affordable EV. If we were talking corporate spreadsheets, CPAs and MBAs would be screaming—and demanding adoption of EVs.
Within the past year, residents of major U.S. cities like San Francisco and Los Angeles were paying upward of $4.30 per gallon for gasoline. Again, the petrol vehicle would get only 25 miles from that investment, while an electric car, if charging with the most expensive electricity in the nation, could travel nearly 80 miles (three times further). The sheer unpredictability of gas prices—and resulting inability to accurately manage a family budget—is reason enough for many to dump fossil fuels for electrons.
If you live in the United Kingdom or Europe, this argument is even more powerful. On February 2, gasoline was selling for $7.50 per U.S. gallon in Norway. Now you know why 15% of all new car sales in this Scandinavian country are electric.
No Crystal Ball
Back to AID’s Peter Schmidt and Forbes’ Neil Winton. Winton is claiming, based on quotes from Schmidt, that EV sales will begin to lag and that big companies, like Nissan and Tesla, which have each invested billions in electric car and battery research, will suffer. Of course, Schmidt also said that current gas prices “could hover around current levels for [the] next five years or so.” Nobody has a crystal ball, but that’s one hell of an assumption—especially given the volatility of gas prices during the past five years.
What I really question here is Schmidt’s assertion that there’s “no detectable genuine underlying consumer demand” for EVs. According to Gordon-Bloomfield, convenience features are among the primary reasons current EV owners love their vehicles. Fuel is considerably cheaper for EVs, even with temporarily low gas prices. And maintenance expenses are a fraction of what it costs to keep a petrol-powered piston pumper on the road.
If Schmidt is right and there’s truly no “underlying consumer demand” for electric cars, I’d blame it on one thing, and one thing only: Ignorance. If iPhone-toting, Netflix-binging, budget-strapped consumers aren’t enticed by high-tech convenience, considerably lower fuel prices, and immense savings on maintenance, it means they simply aren’t aware of the benefits.
Curt Robbins is author of the following books from Amazon Kindle:
- Home Theater for the Internet Age ($9.95)
- Understanding Personal Data Security ($4.99)
- Understanding Home Theater ($4.99)
- Understanding Cutting the Cord ($4.99)
- Understanding Digital Music ($4.99)