In a renewed push for clean energy, President Obama called for one million electric cars to be on American roads by 2015 last month. But is that goal realistic?
The government released a report this week saying that by its “conservative” estimates for 2015, the electric car supply in the U.S. will total 1.2 million cars. One eyebrow-raising note in its estimates, though: The report projects supply of the Nissan Leaf (pictured) in the U.S. this year to be 25,000 cars. Nissan has reportedly delivered just 106 cars as of last week, although it says it’s ramping up production in March. The company has about 20,000 reservations, and reportedly 40 percent of those reservations have become purchases.
And, tough-to-predict Leaf deliveries or not, at least one group is predicting the country won’t reach that goal: Pike Research estimates that U.S. electric vehicle supply in 2015 will be closer to 841,000 cars.
“The vendor’s planned production of vehicles don’t often match demand, and while there is greater demand than the small supply today, we don’t expect that to continue very far into the future,” said John Gartner, Pike Research analyst. “For the one million figure to be reached, it would require either a faster reduction in the price of the batteries than has been forecast, or sustained federal incentives that offset their higher cost.”
The government’s report could be conservative since it doesn’t include key automakers like Toyota, which has the plug-in Prius planned for 2012, and startup Coda, which says it wants to sell an ambitious 14,000 of its electric sedans in its first year of production (the car is slated to become available late this year). According to the report, the all-electric Nissan Leaf and partially electric Chevrolet Volt (pictured, below) will make up a large part of the projected supply, with 120,000 Volts to be produced every year from 2012 to 2015, and 15,000 Volts to be made available this year. By the government’s estimation, the Leaf is expected to have 25,000 cars available this year in the U.S., then increase in supply each year until it totals 300,000 cars made for the U.S. by 2015.
Some agree with this optimistic outlook. Management consultancy PRTM’s North American automotive practice director Oliver Hamizeh said one million electric vehicles by 2015 is a “realistic goal” and argues that the “cool” in-car connectivity and monitoring features offered by electric cars will increase demand for the cars.
Still, electric car skeptics abound. Venture capitalist and billionaire Vinod Khosla has come out against electric cars many times, even arguing recently that by 2025, the world’s supply of lithium will not be enough to power the batteries needed for electric vehicles.
But Gartner dismissed that, saying, “The consensus is that lithium is in plentiful supply that even a few million EVs will take only a small fraction of the annual lithium (supply).”
ExxonMobil executive William M. Colton said today he wasn’t a fan of electric cars, which may not be surprising considering he works for an oil company, but his concern that batteries are too expensive and, as Gartner suggested, are unlikely to come down in price anytime soon is common among consumers and analysts. Electric car batteries can account for up to half of a car’s price, and even with federal and state incentives, electric car sticker prices are still higher than many gas-guzzling alternatives.
But while consumers look at sticker prices, businesses look at return on investment. Major companies like Frito Lay, FedEx, Staples and GE have committed to buying electric cars and electric trucks. GE announced last year it would buy 25,000 electric cars for its corporate fleet, starting with 12,000 from GM, many of them likely Chevrolet Volts. Brian Hansel, chief executive of Smith Electric, which is delivering 176 electric trucks to Frito Lay this year, says customers can expect return on investment from fuel savings and saved maintenance costs within three to four years of purchase.
For its part, the government is trying to spur sales and innovation. It is pledging to invest in electric vehicle research on subjects like advanced batteries and drivetrains and is proposing that the $7,500 federal tax credit for electric car buyers be turned into a rebate so the savings are visible when a customer buys the car, rather than when they file their taxes.