海角大神

Are electric cars a Niche? 聽Or just coming聽into their own? 聽I鈥檝e been asked that question twice now in the last week in various forms, so thought I鈥檇 blog my answer.

Electric Drive Transportation Association has the total number of US sales at just under 400,000 this year, or 3.3% market share including hybrids. 聽Hybrids they have up 33% YTD compared to the whole of last year鈥檚 sales, and EVs/PHEVs up 375%. 聽But the EVs still make up only 10% of that total number.

In June聽The Street did a great article聽on EV sales forecasting line by line an estimate of 62,000 for the year, already at 18,000 at that point.

And while聽sales have been sluggish, they have been聽creeping up, with more and more and cheaper and better versions coming out in 2013 and 2014.

The price gap, somewhere between $8K and $25K, is closing.

Nissan just announced a cheaper and longer range Leaf version in Japan (yes it can be done, why didn鈥檛 you have the guts to do this last year Nissan?), Tesla鈥檚 160-300 mi range Model S just started shipping and garnered the 2013 Motor Trend Car of the Year Award.聽

The Chevy Volt, for it鈥檚 struggles, as聽Forbes reported in September, is outselling the 鈥淎udi A6, BMW 7-Series, Porsche Cayenne and Mercedes-Benz S-Class, and it outsold most hybrids including the Toyota Prius plug-in, Honda Civic, Kia Optima, Toyota Highlander and Lexus RX 450h鈥�. 聽Not yet high volume success, but then when you operate in small volumes and only send your dealers 1 or 2 at a time to start, it鈥檚 hard to blow sales numbers away. 聽Forbes comment was聽鈥淚f indeed the Volt is a 鈥渇ailure,鈥� as some of its critics have contended, we鈥檙e sure there鈥檚 several auto executives out there that would like many of their slower-selling models to suffer the same fate.鈥�

And how does this compare to the Prius? 聽The car that in many ways redefined the car industry and helped push Toyota to the top? 聽The first fours years of sales it struggled well south of 20,000 per year, the next 3 years globally shipping 30-40K/year, respectable, and strong, not earth shattering. 聽 It took 6 years and price cuts and a second and 3rd generation to make it to the 100K/year mark. 聽Over 10 years to get a million sold. 聽Two years to get the second million sold.

But now every major car company and over half the top car models have a hybrid version now, barely 15 years (about two car design cycles) after initial launch. 聽Toyota shipped a million hybrids in ten months this year, 14% of sales for the world鈥檚 largest car company. 聽Honda reached the 1 mm number in hybrids shipped, Toyota is at 4 mm. 聽Does that sound niche to you?

Anyone really want to bet that in 6 years NO EV or PHEV has made it to the 100K level?

So why do we like EVs?

Among other things, 1) electrics cars run dead quiet, 2) electric cars have instant torque and terrific acceleration at low RPMs, performance which cannot be matched by gasoline engines, 3) electric cars have platform flexibility, turn radius/handling that can be amazing, since you can use distributed motors, all electric control etc, the same promise that fuel cell cars had, but couldn鈥檛 deliver, and 4) maintenance goes WAY down, virtually no fluids fewer moving parts.

Bottom line, once an EV or PHEV comes close on range and cost, it鈥檚 a better car than a gasoline car.

On the downside, cost is still cost, charging is still charging, range is still range. 聽But let鈥檚 look at those:

Best I can tell, we鈥檙e at an $8-$35K price difference to hybrids and conventionals, depending on the assumptions. 聽Since we鈥檙e still measuring at 10s of thousands of cars a year, I don鈥檛 think direct cost comparisons are yet fair. 聽Eventually one of these is going to take off in one market or another. 聽When it does, it鈥檒l drive volume, and continue to collapse cost. 聽In addition the R&D work on EVs is paying off, manufacturers are finding ways to bring costs down in interim anyway.

I鈥檝e had a couple of discussions about fast charging. 聽Charging is not a huge limitation, its a technology and cost choice. 聽Charge time is effectively a function of battery size, onboard charger size, and volts. 聽Let鈥檚 start out by saying we鈥檙e not going to be charging EVs at 110. 聽Too slow. 聽But charging at 220 is very doable. 聽220V聽home聽chargers today are in the 1-2K range. They will not stay that high for long. 聽 Onboard charging The Leaf chose a 3.3Kw onboard charger. 聽Big mistake, done to skim $2K off the price of the car and keep it inline with the conventional Camry price point after tax credit. 聽They should have offered multiple options. 聽The Focus and Volt noticed this went with a 6.6 kw job,聽 the Tesla Model S comes with a 10 鈥� 20 kw. 聽Faster charging is pretty much an ask and you shall receive issue.

Range. 聽Range matters. 聽Big time. 聽I contend the sub 100 mi car is idiocy and poor product management and fear of high costs. 聽Tesla, and the Volt and now Nissan is showing we can bring to market medium and long range EVs. 聽Betting against ranges getting longer is a bad bet. 聽I predict by 2015 the average EV/PHEV range will approach 200 mi, and range anxiety will be a thing of the past.

Scale. 聽Most of these are scale issues. 聽EVERY manufacturer of EVs started out viewing this as a few tens of thousands per year volume car platform. 聽 聽In my first discussion on the Leaf with their Leaf product head, I kept asking whey they didn鈥檛 roll out faster charging options and longer battery range options for the consumer to start, and why spend all that marketing if only 10K were going to be available year one in the US. 聽The real answer, no guts no glory, they weren鈥檛 sure enough of success to roll this car out like they would have any other. 聽Even Tesla figured out the multi option idea! 聽In my first test drive of the Volt, the dealer admitted they had only 1 salesman trained to sell it. 聽And they could only get 1 car at a time in their allocation. 聽Not exactly setting their channel up for success. 聽Frankly guys, we鈥檙e not getting anywhere with that. 聽These are better cars, GO BIG OR GO HOME.

Niche? High cost? For today yes, but that鈥檚 how technology disruption happens. 聽Their parent cars broke through that ceiling, and they will too. 聽I think these cars are underperforming sales expectations that were all hype. 聽I think they are overperforming what we should have expected. 聽And I think we鈥檒l look back on 2012 and 2013 as set up years. 聽It won鈥檛 be forever. 聽Electric is just a better platform once we get it right.