Electric cars lose their spark 




Thomas Edison built an electric car exactly 100 years ago (above) but it hit the same rock that bedevils electic cars to this day:  The low power-to-weight ratio of storage batteries. An excellent example of the adage:  "Those who will not learn from the past are doomed to repeat it"

Is the Electric Car Revolution Running Out of Juice?  It depends on whom you ask:

*    Year-to-date sales of the electric Nissan (NSANY) Leaf are down over 30%.

*    Ford (F) had sold just 177 of its electric Focus through August.

*    At the same time, production of Tesla Motors' (TSLA) hot-looking -- and expensive -- Model S sedan is sold out for months to come.

*    Meanwhile, the Chevy Volt is selling a bit better lately -- but that's a mixed blessing for General Motors (GM).

How to Lose Money on a $39,995 Sale

Why are improving sales for the Volt a mixed blessing? It turns out that those sales are expensive ones: Reuters recently reported that GM is losing a bundle on each Volt it sells -- despite the little plug-in hybrid's steep $39,995 base price.

While GM took issue with Reuters' math, it's clear that the innovative car isn't a moneymaker for General Motors. With sales of just a few thousand in the best of months, it'll be many years before the car manages to repay its development costs, estimated at over $1 billion.

Now, that's not necessarily a bad thing, at least in GM's view. Like other automakers, GM is looking ahead toward the next decade, when fuel-economy rules will be much stricter. From the General's perspective, the Volt represents an early investment in the kind of technology that GM -- and other automakers around the world -- will need to perfect before those rules go into effect.

There's some validity to that argument. But that hasn't stopped GM's critics from complaining that electric-car technology is turning into an expensive boondoggle.

Will Electric Cars Ever Take Off?

A Washington Post editorial this week took the Volt to task, as part of a larger argument against the U.S. government's subsidies of electric car technology. The Department of Energy said in 2011 that there could be 1 million electric cars on U.S. roads by 2015, but as the Post points out, that's looking pretty unlikely right now.

The Department of Energy's conclusion was based on a study that made some assumptions that look kind of silly now. It expected Nissan to sell 25,000 Leafs this year. But through August, the automaker had sold fewer than 5,000 here in 2012. It also predicted that GM would sell 120,000 Volts this year. The reality: Fewer than 14,000 Volts had been sold through August in the U.S. in 2012.

Both of these cars, like much of the still-emerging U.S. electric-car business, were heavily dependent on government aid. GM's massive bailout is no secret, but some of the other Department of Energy aid programs are less well-known: Among other grants and loans, Nissan received $1.5 billion in low-cost loans to refurbish the Leaf's Tennessee factory, and Tesla got a $465 million line of credit to help get the Model S into production.

And what are taxpayers getting for all that? Not a whole lot.

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Posted by John J. Ray (M.A.; Ph.D.).