The EVs Are Coming, But Will Anyone Buy Them?

The world’s automakers are rushing ahead with plans to bring more EVs — electric and plug-in hybrid cars — to market. But there’s a problem. Consumers just don’t seem to be that interested in buying them.

evs are coming

“Consumers adore these vehicles,” Britta Gross, director of advanced vehicle commercialization policy at General Motors, told an audience at the global Electric Vehicle Symposium and Exhibition in Canada last month. “People love the quietness, the smoothness, the seamless drive.” And yet, she asked: “Why don’t consumers flock to these vehicles? What’s missing? What do we have to do? We’re at the point where we have a lot to do.”

That’s not to say there are not some bright spots in the picture. Sales of the second generation Chevrolet Volt are up 79 percent through the end of May. Ford’s Fusion Energi Plug-in Hybrid more than doubled its sales from a year earlier to 1,700 units, while Fusion Hybrid sales were up 50 percent to 2,542 vehicles. Overall, Ford’s green-car sales jumped 25 percent from June 2015 to almost 7,200 units.

But half a decade after the U.S. industry began introducing cars that consumers could attach to an electrical outlet instead of a fuel pump, the market remains meek, says AutoBlog. Sales of plug-in vehicles fell 5 percent in 2015 from 2014 levels. And for the first five months of this year, alternative power vehicles of all kinds were down 21 percent. In that time, the entire segment has averaged fewer than 4,800 vehicles a month. Compare that to a total market that is averaging 1.4 million sales a month and it’s far from good news.

Who will buy all the so-called “green” cars coming from the mainstream manufacturers? Ford says it will invest $4.5 billion in EV research. Volkswagen is mulling a decision to invest $11 billion in a large scale EV battery plant in Europe. Tesla has taken 373,000 reservations for its more affordable Model 3 electric, currently in development.

Despite all the activity, there was an undertone of anxiety at the EV symposium last week. Addressing a forum at the gathering, Robert Langford, American Honda Motor Co. manager of electric vehicle sales, said car makers are poised to bring a broader array of EVs to market. “It’s really an exciting time going from now to 2020,” Langford said. “With all the new product coming out, hopefully, a whole new group of customers [will come] to drive electric.”

Langford did admit there are still major hurdles to overcome. It’s not just battery range that customers are anxious about, he said. They’re confused about where to charge their EVs. Most EV owners charge at home, and most live in single-family dwellings where they can install chargers. But workplace charging and charging stations at apartment buildings and condo complexes are not widespread enough and not all charging stations are compatible. “It’s a matter of making customers comfortable with how to charge a car,” Langford said.

To ignite the market, some believe, the industry must redouble its efforts to communicate the benefits of EVs — whether it’s helping the planet or spending less on gasoline. GM’s Gross recommends that the industry — including all interested parties in EV technology — spend more to spread the gospel. “We have to overpower these consumers,” she said. “If you don’t accompany an infrastructure program, or a vehicle incentive program, with an outreach campaign, you’ve lost the battle. Everything you do, you have to spend an equal amount of money to talk about it.”

The EV business is simply a different beast than traditional auto sales, says Aaron Cohen, Audi of America’s general manager of electric vehicle strategy. “You need a symphony of activity among all the stakeholders,” he said. By that he meant car makers, electric utilities, charging companies ,and federal, state and local governments.

Auto dealerships are stakeholders, too. Set up to sell vehicles equipped with traditional internal combustion engines, dealerships are not always willing to commit resources to selling cars that take more explaining and yet account for a fraction of sales, says Brendan Jones, vice president of the east region of the NRG EVgo charging network. Jones, former director of EV sales for Nissan North America, says it can be tough to get a sales consultant’s attention for a low-volume vehicle.

“At less than 1 percent of aggregate market share, we don’t demand the attention of the consultant who spends his days selling Altimas or Chevy Malibus,” Jones told an audience. “Until we get up to 10 percent, we’re not going to have the attention.”

Getting that number up to 10 percent isn’t going to happen overnight, and it’s going to be a big challenge. According to Audi’s Cohen, “There are all these very smart people working on the electric vehicle topic for so many years, and yet EVs remain less than 1 percent of total light-vehicle sales. We step back and ask, why? Why is that happening? That’s a tough question to answer. I don’t want to wait until I retire for EVs to get to scale.”

OK, Mr. Cohen. Neither do I. I am nobody from nowhere, but I know that a huge part of the problem is that electric and plug-in cars cost too much. The economics simply don’t work for most shoppers. There is only one way to motivate buyers to look beyond the familiar and consider an alternative — price. By that, I don’t mean more government incentives. Rather, it will take a significant increase in the cost of fossil fuels to drive the changeover from conventional cars to green cars. A carbon fee is an essential part of the mix.

A carbon fee is not a tax. It is a market adjustment designed to force fossil fuels to bear the cost of all the harm they do. If someone comes to your party and urinates in your swimming pool, shouldn’t they be expected to pay the cost of cleaning up the damage they caused? Elon Musk delicately calls it “the turd in the punchbowl.” We are so used to burning fossil fuels, the harm they cause has become invisible. We need a market mechanism that drives home the point that fossil fuels are killing us, shortening our lifespans, and doing irreparable harm to our planet.

People vote with their wallets. Change the equation to take away the hidden advantages that fossil fuels enjoy and the “green car problem” will evaporate.

Source: Automotive News

Steve Hanley

Closely following the transition from internal combustion to electricity. Whether it's cars, trucks, ships, or airplanes, sustainability is the key. Please follow me on Google + and Twitter.