Published February 5, 2013, Los Angeles Daily Journal – In truth, it never really had the potential many had hoped for. Supporters were hoping that the electric car would be the regeneration of an industry, but boundless enthusiasm could not replace the state of technology and sound economic principles.
Until recently, profit seekers were throwing money at anything electric; much the same way that profiteers had forked over millions to early dot com companies at dizzying speed. Lack of a proven track record – and in some cases, lack of a business altogether – were of little deterrent as investors sought to latch onto the next big thing.
The electric car will most definitely be a part of our future, just not in the way many had envisioned. The industry needs time to explore, develop and fail in all natural ways, and the technology that survives this natural selection process will be the one that reigns.
The problem that we have is that we are attempting to force an industry down a path it is not ready to forge. Advances in technology introduced us to the electric car, and had it been able to chase consumer demand, all would have been right in the automotive world.
But, our desire to rid ourselves of foreign oil dependency caused us to leap to a platform that was unable to sustain the weight of the jump. The U.S. Executive Office, both under President George W. Bush and Barack Obama, made commitments to back an industry that was too young for the job. Both Presidents committed hundreds of millions to companies that had never manufactured anything, and were woefully under equipped to make the kind of technological advances that were being expected of them.
And if President Bush’s second term was aimed at U.S. energy independence, President Obama bet the farm on the electric car industry. In his January 2011 State of the Union address, President Obama promised that the U.S. would be “the first country to have a million electric vehicles on the road by 2015.” This was followed by an overhaul of the Corporate Average Fuel Economy (CAFE) standards, where manufacturers will be required to reach a fleet average of 54.5 mpg by 2025. That number had been hovering around 27.5 mpg for the last 25 years.
The problem with all of this is that we are now forced to endorse a technology that is not ready for the challenge. Industry experts generally agree that a fleet average of 54.5 mpg is not achievable without the electrification of some of their fleet. But, because the cost of production is so high, and consumer demand has been razor thin, automakers will likely slash electric car prices to move units, and spread the losses among the remaining fleet. This, of course, will result in higher car prices for the majority of car buyers who still opt for internal combustion vehicles.
If there is any doubt on this, consider that the Secretary of Energy Stephen Chu recently published the results of a two year study that found that “internal combustion engine technologies are likely to be the dominant propulsion systems for decades to come, with liquid fuel blends continuing to play a significant, but reduced role.” Even more interestingly, the study found that “vehicles fueled with compressed natural gas – not electric batteries – will emerge as the biggest competitor to the combustion engine.”
The truth about electric cars is that consumers find them interesting, but not nearly compelling enough to buy. At least not yet. When the Chevy Volt and Nissan Leaf were introduced, the automakers trumpeted predictions of immediate success. However, the products have been anything but, with sales that were a fraction of what was expected.
And now even the dealers are showing signs of product fatigue. Automotive News reported last month that some Chevrolet dealers are refusing the carry the Volt because of the special tools they have to buy to service the vehicles. For instance, Volt dealers are required to purchase a $4,735 battery depowering tool to drain the car’s 435-pound battery pack for repair. This has some dealers saying that the math just doesn’t pencil.
Consumers are showing that they tend to agree. While President Obama promised to have the U.S. be the first country with one million electric vehicles on the road by 2015, we will not come close to reaching this mark. CBS News recently released a report that shows that the achievable number is closer to 300,000.
The result of all of this is that we have a mixed-up industry that is in the middle of an unsolvable riddle. Consider the case of Fisker, the Orange County electric car startup. After taking in $1.2 billion in cash, and incurring years of production delays, the company produced a mere 2,000 cars worldwide. It is now out of cash, out of production, and hoping that it will receive a stay of the inevitable bankruptcy execution.
And Fisker is still one of the bright spots. Many others, such as A123 Systems and Ener1, have already fallen to dominant market forces, dragging millions in taxpayer dollars down with them. To add insult to the discussion, last week the U.S. Bankruptcy Court approved a sell of the remains of A123 Systems to China’s largest auto parts maker; meaning that we unintentionally used $249 million in government funding to enrich China’s electrical car development. Not exactly the result that everyone was hoping for.
In the sober aftermath of the frenzy, none of this should be all that surprising. Industries need time to develop and technologies need time to mature. Forcing a fixed solution to a variable problem will only serve to stunt growth. As Bob Lutz, the one-time Vice Chairman of GM, famously said, forcing car manufacturers to adhere to CAFE regulations is “like forcing a clothing maker to sell smaller shirts to get people to lose weight.”