January 22, 2013
Six months ago, Bradley Kerstetter of Cleveland, Ohio, traded in his 2011 Chrysler 200 for a lease on a 2012 all-electric Nissan LEAF. Kerstetter thought the LEAF would be ideal for his 12-mile round-trip commute to work. “It was almost like owning a piece of history,” he said. The car prompted stares and questions from strangers.
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But last month, he paid $5,000 to terminate his $356-a-month lease well before the expiration date. The car was “nearly useless in the winter,” lasting as little as 43 miles on a charge instead of the promised 73 miles. A 220 volt home charger in Kerstetter’s detached garage was prohibitively expensive ($1,500, plus the cost to have his electric service rewired in the garage), so he was forced to use a 120 volt charger provided with the car, which could take 20 hours.
He says he’s an example of why sales of electric vehicles (EVs) are so low. “They’re just not practical for most of the market,” he says.
The Obama administration has set a goal of a million plug-in electric vehicles on the road by 2015. The administration was also behind aggressive fuel efficiency standards that require carmakers to achieve an average of 35 miles per gallon in their fleet by 2025, a situation that encourages development of the zero emissions vehicles. And California requires that a portion of the fleet be zero-emitting. But even if carmakers build EVs, a key question remains: Will the public buy them in sufficient numbers to make a difference?
To date, the answer has been no, with purchases limited to a small segment of the population: typically affluent, environmentally-minded consumers and early adopters of technology. According to LMC Automotive, U.S. Inc., a market research company, only 9,819 LEAFs were sold in 2012. Chevrolet’s plug-in electric Volt, which has a gas engine that kicks in after a 30-to-40 mile electric range, fared better; 23,461 were sold in 2012, compared to 7,671 the previous year. All told, electric and plug-in electric vehicles accounted for a mere 0.1 percent in 2012 of the 15-million-vehicle-per-year car market, barely up from the 0.09 percent the previous year.
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In an effort to jump-start the market, Nissan announced this month that it’s reducing the price of its Nissan LEAF S Trim levels to $28,800, a $6,000 price reduction. It hopes to further trim costs by localizing production, moving manufacturing to its Smyrna, Tennessee, plant.
Late last year, Chevrolet cut the Volt’s original $349-a-month lease rate to the current rate, $329 a month, a likely factor in the sales surge this year, said Mike Omotoso, senior manager for global powertrain at LMC Automotive. “Even though we talk about environment, at the end of the day, it’s still a financial decision for most people,” he said. His firm predicts that in 10 years, only 1.5 percent to 2 percent of the market will be all electric vehicles, while plug-in hybrids like the Volt will represent 2.6 percent of the market.
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Steve Plotkin, a transportation and energy analyst for Argonne National Labs, says LEAF sales, in particular, have been disappointing. But he’s not entirely surprised. “You’re asking people to take a big leap of faith in the beginning,” he said. He believes the government’s $7,500 tax credit for electric vehicles is a good way to spur a transition, but he says the electric car’s future is dependent on so many factors: the price of oil; whether there’s a breakthrough in now-costly battery technology; how quickly a charging infrastructure develops; and how much the public will accept this new technology. If more people begin to buy these vehicles and they start to be produced on a mass scale, that will drive down costs, luring more buyers, he said.
A report out this month by the Indiana University School of Public and Environmental Affairs indicates the public has significant reservations about purchasing EVs. A survey of more than 2,300 adult drivers in 21 large U.S. cities found that the perceived drawbacks of electric vehicles outweigh the advantages for most consumers. The main perceived drawbacks were the price of the vehicles and a limited driving range that requires frequent battery recharging.
The report also found that some cities, like San Jose, Chicago and Boston, had more drivers willing to purchase EVs, while others, like Nashville and Detroit, had the fewest number of interested drivers. The problem with cities is, although they have more public charging stations, anyone living in an apartment complex or housing without a private garage will be unable to install a home charging station – an inconvenience for many potential EV drivers.
Though these findings don’t bode well for EVs in the near-term, Sanya Carley, one of the report’s authors, doesn’t think they’re cause for concern. She points out that consumers held the same reservations about gas electric hybrids – now far more accepted – when they first hit the market. But she says EVs represent a far greater shift, especially because of the lingering fear that consumers could find themselves stranded if their battery dies.
To help alleviate range anxiety issues, AAA has employed roadside charging assistance in certain cities. A charger built into a truck has a plug that fits into an EV and can provide 10 to 12 miles of range in 10 to 12 minutes. AAA started deploying the chargers last year in Los Angeles, the San Francisco Bay area and Portland; in the next few months it will add Seattle, Washington, Knoxville, Tennessee and Orlando, Florida, to that list. More will be added as the EV market develops. (A triptick travel planner lists all the charging stations in the country.)
Despite the concerns, car manufacturers are betting on the growth of EVs. Last year, six new EVs were unveiled, while four more are due this year. Bradley Berman, a research analyst at Pike Research and an editor at PluginCars.com, is particularly excited about Tesla’s Model S, which is due out this year and recently won Motor Trend’s “Car of the Year” award. It’s one of the largest EVs to date, , and can go over 200 miles on one charge. “It’s an amazing car,” Berman said. “I think the more familiar people get with these cars” and see their neighbors driving them, “the more traction there will be.”
Though plagued by reports of financial problems, Tesla hopes to sell 20,000 of this year’s Model S globally in 2013. Tesla spokeswoman Christina Ra is optimistic Tesla can achieve that, given that over 13,000 reservations have already been made. Though it carries a price tag of $52,400 (after the $7,500 tax credit), Ra says it’s in line with the price of other luxury sedans.
Dave Hirschkop, who lives in San Francisco and drives less than 25 miles per day, was drawn to Tesla after seeing his neighbor’s car. He put a deposit down on a Model S a year ago and will get it in two months – drawn to an EV that can fit his family of five, is “lightening fast” and has “amazing innovative features.”
While the Cleveland weather was not kind to Kerstetter’s LEAF battery, Vijay Lal, who lives in San Jose, California, is in love with his electric car. He’s has had “zero problems over the 16 months he’s owned the LEAF. “My personal belief is that EVs are the wave of the future,” he said. Car makers, deeply invested in the technology, certainly hope other consumers feel the same way.
Correction Janurary 22, 2013: This piece originally quoted the current monthly lease rate for a Chevy Volt to be $299. It is $329 a month.