Thursday, March 8, 2012

Will Electric Cars Reach the Tipping Point?

I love electric cars, solar energy and alternative power sources, and so I gravitate to those technologies and interact with groups of people who share the same interest.  But how many people in our community are ready, willing and able to embrace electric cars?

The enemy against wide adoption of electric cars right now is range.  But that’s just excuse number one.  There are other excuses/roadblocks too.  For example, the time it takes to charge an electric car, the cost of having charging equipment installed at home, the look and design of the cars and the ultimate consumer roadblock: price.  In the case of the BMW ActiveE the price of the car is heavily subsidized by BMW, with a residual value set at around 85% of the purchase price.  The ActiveE has a listed MSRP of $60,000, yet a lease payment of around $499 per month.  Check around and you’ll find that most cars with $60,000 price tags have lease payments between $850 and $1,000.  And that’s for cars with high residual values.  What does the price of an Active E equal in the real world?  Not $499 per month.

Subsidization works for BMW because the ActiveE is a field test, so there is value in the subsidy by receiving driving data from 700 real world experiences.  But once the test is over, the subsidy goes with it. 

When it comes to un-subsidized cars, lets talk Chevy Volt:  

I test drove a Volt and it is a great car.  It can travel between 35 to 40 miles on pure battery power, and then it has an on-board gas motor than generates electricity so the car can travel another 300 miles or so.  The electric motor has plenty of power and Chevy did a nice job making the interior much nicer than the Chevy Cruz model on which the Volt is based.  But the Volt carries an MSRP, when fully loaded with leather seats, of around $43,000 to $45,000…for a Chevy!  Not a Corvette mind you, but a small-size Chevy sedan. 

If I were not receiving a BMW ActiveE, then I would buy a Volt because I like the electric only option (the Chevy Volt will travel about 35 to 40 miles on pure electric and then an on-board gas generator kicks in).  But I am not similar to the average consumer in this community.  I love electric cars (that should be obvious by now).  For others, the price alone will make them either unable or unwilling to pay for such a car.

Of course, the price of electric cars is primarily in the batteries, and the batteries are improving all the time.  With cheaper batteries that provide more energy with less weight, the costs will recede.  But will that be enough to tip the balance in favor of wide adoption of electric cars?  I’m not so sure.  Don’t get me wrong, I have yet to meet anyone who says “I hate the environment and want to drive a gas-powered car forever.”  People know and like the idea of electric power, but will they actually adopt electric power?  Only time will tell.

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