Electric Cars: Not Ready for Prime Time?

Washington Post, Republican Congressman and KPMG all think cars like the Volt and Leaf shouldn't receive taxpayer support.

Published: 08-Jan-2012

Electric vehicles failed to gain traction in the mainstream market last year, which saw lackluster sales for the industry's first arrivals, the Chevy Volt and the Nissan Leaf.

Will 2012 be any better? Depends who you ask, but the general consensus in the first week of this year is probably not.

In a survey of global auto executives released Thursday by KPMG LLP, an audit, tax and advisory firm, nearly two thirds of respondents said plug-in hybrids and all-electric cars won't make a dent in car sales until at least 2025. By then E.V.'s could rise to 15 percent of total car sales, according to the most optimistic projections.

The main reason for the pessimism is low consumer demand. In the United States consumer interest is actually declining, according to Pike Research, which surveyed more than 1,000 Americans for a report published Thursday. Forty percent of respondents were "extremely" or "very" interested in buying an electric car in 2011, down from 44 percent in 2010 and 48 percent the year before.

The biggest deterrent, respondents said, is cost. The gas-electric Chevy Volt sells for roughly $40,000 and the all-electric Nissan Leaf starts around $35,000. By contrast, a fuel-efficient gas-powered compact car, like the Chevy Cruze, can cost half that.

Not everyone is pessimistic though. New models of E.V.'s are hitting showrooms, and that could be a sales catalyst, Rob Bailer of Leaf Clean Energy, a renewable energy and sustainable technology investment firm, told InsideClimate News. The all-electric Ford Focus rolled out in California, New York and New Jersey late last year, with 16 other states set to get the cars in the second quarter of 2012. Toyota's Prius Plug-in will be sold in 14 states in the first half of this year. California and Oregon residents will be able to buy the all-electric Honda Fit by summer.

"People are going to start to adopt more," Bailer predicted.

But the Chevy Volt and Nissan Leaf missed their 2011 sales goals, fueling speculation that the new releases won't fare much better.

Nissan, which set a 10,000-car target last year, almost hit its mark, selling 9,674 of its all-electric Leafs. General Motors fell short of its Chevy Volt goal, selling just 7,671 plug-in hybrids of its 10,000-unit target.

Total E.V. sales reached around 20,000 in the United States, just two percent of the Obama administration's plan to put one million electric cars on the road by 2015.

Republican lawmakers who oppose Obama's clean vehicles agenda have pointed to disappointing sales as a reason to revoke tax credits for the carbon-free cars. The government offers first-time buyers a $7,500 subsidy. Last week, Rep. Mike Kelly (R-Pa.) introduced legislation to end the incentive, citing the Volt's missed sales target.

A Washington Post editorial this week agreed. Such tax credits "represent a deepening of the taxpayers' commitment to what looks increasingly like an industry not ready for prime time," the paper wrote.

In a response, Media Matters, a progressive media watchdog, said the editorial fails to recognize that "lawmakers supported electric cars because they are not already a well-established technology, not in spite of that fact."

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