Despite low sales, supporters say year was a success
Source: Jason Plautz • E&E • Posted: Friday, December 23, 2011
It’s easy to see the sales as disappointing: The two major models sold less than 15,000 units, Chevrolet failed to meet its annual sales goal for the Chevy Volt, and EVs and hybrids continued to be lapped by their gas-fueled competitors.
But to automakers and EV supporters, the sale of thousands of cars is an exciting development that only portends higher sales in the new year. Plus, they say, the raw numbers are deceiving because they don’t show the supply side of the equation
“I see this as a very successful market rollout,” said Brian Wynne, president of the Electric Drive Transportation Association. “We’re selling every car that we’re making, which seems to be lost on some people. The issue isn’t demand; the issue is that we’re ramping up production.”
In the first year that mass-market electric vehicles — the Nissan Leaf and the extended-range Chevrolet Volt — were on the market, any sales would be important, Wynne said. But for all of the headlines and political attention electric vehicles captured last year, including several White House events highlighting the cars, some say the uninspiring sales numbers point to an overhyped but undersold technology.
Although December sales figures have not been finalized, through November Chevrolet had sold 6,142 Volt units, while Nissan had sold 8,720 Leaf cars. That put Chevy well below its stated goal of selling 10,000 Volts in the year and left the Leaf sales below expectations.
Meanwhile, sales of larger cars remained steady throughout the year, and consumers who might have sought out the costly EVs eyed the new wave of fuel-efficient gas cars.
Skeptics point out that the EVs and hybrids still make up less than 3 percent of the overall car market, putting them well below sales of some individual models of light trucks. The fact that the Volt fell below its sales target, they say, bodes even worse for the cars, which could see limited demand once the early adopters stop snapping up the available models.
But, analysts say, the raw numbers don’t carry as much weight for a burgeoning industry. Michael Omotoso, senior manager of powertrain forecasts at LMC Automotive, said he felt it had been an “interesting” year for EVs, but showed that the market was growing.
“The market is in its infancy and was bound to stumble along the way,” Omotoso said, adding that some of the automakers’ goals were “overambitious.”
What’s more, Omotoso added, the March earthquake in Japan disrupted production and other factors slowed down delivery. “And of course the economy still isn’t in great shape, so there were several challenges outside of the control of EV makers.”
The earthquake and subsequent power difficulties in Japan caused significant problems for Nissan, which saw production and deliveries take a hit. The country’s overall auto production dropped to 35 percent of its normal rate in the aftermath of the quake, while disruptions at parts manufacturers sent shock waves around the globe (Greenwire, March 24).
“The question is not about demand, but supply,” said Robbie Diamond, president of the Electrification Coalition. “They’re selling the cars they’re producing. Obviously, we’d love for the industry to be producing many more and thus selling many more cars.”
But the biggest problem, analysts say, is still unfamiliarity with the cars. Price concerns mean drivers won’t take the risk on new technology, and there are still questions about range anxiety and safety issues. The latter have been accelerated by a National Highway Traffic Safety Administration investigation into a pair of fires in Volt test cars (see related story).
Looking ahead
To EV backers, 2011 was important, but 2012 will be far more valuable. They say the second year is the time to capture more than just the excited early adopters and move beyond consumers’ basic concerns about range and safety
“[In 2012], these cars will become much more prominent in the marketplace,” said EDTA’s Wynne. “You’ll see greater enthusiasm based on the driver experience. We’ve talked for a long time about how valuable this will be — at the end of the day, people drive cars because they’re fun to drive.”
The market will also become much more robust, with as many as 30 new models entering the landscape. Ford will roll out its electric Focus, which is forecast to have a market-best fuel efficiency equivalent, while Toyota will debut the plug-in Prius hybrid. The Leaf and Volt will also achieve nationwide rollouts after the slow build in 2011 that targeted the markets with the most potential.
Wynne said the introduction of the new models would provide a huge boon to sales, since potential EV drivers would not have to be shoehorned into the few existing cars based on their range or price
“People don’t just have different tastes, but different driving styles,” he said. “That’s part of what’s unique about electric drive. We’re trying to come up with the right combination for every particular driver.”
General Motors Co. CEO Daniel Akerson has publicly stated a goal of producing 60,000 Volts in 2012, with 45,000 of those sold in the United States. Other automakers have not publicly released sales targets, but spokespeople for both Ford and Nissan said they expect sales to grow in the next year.
By 2020, Ford spokeswoman Brianne Kohs said, executives hope to have 10 to 25 percent of its fleet electrified.
And LMC Automotive forecasts that EV sales will more than double in the new year, rising to about 27,000 units in 2012.
Still, it won’t be an easy climb for the nascent industry. Safety questions will continue to dog the cars, and their cost is not expected to drop in the next year, pricing out many potential buyers.
Supporters say the most important step to increasing EV sales is to make them more mainstream, which requires education work on all fronts. Seeing other drivers in EVs, charging infrastructure on street corners and educational materials can go a long way, they say.
“Our concern is this becoming a niche market,” said Diamond of the Electrification Coalition. “What we want is to get to the mass consumer market. Our focus is on how to create a deployment community, whether with the government or without.”
Diamond said the deployment community — a concentrated area where government and businesses would promote EV sales and infrastructure to see how a mass adoption would work — would offer valuable information to all players, as well as provide a model for consumers. Various bills and government programs have proposed deployment communities but have not moved.
And automakers need to work on ramping up production to avoid problems of late delivery or a long waiting list, Omotoso said. More widespread production can also drop the price of batteries, which would bring down the overall cost of the car.
“There is competition from compact cars getting 40 mpg on the highway, as well as hybrids that have been around for over 10 years and are established in the market already,” he said. “We expect the EV market to continue to grow, but it will be a slow process.”