The Electric Car in 2011: Like a Baby Taking its First Steps
Posted: 12/24/2011 03:02:00 PM PST
But while 2011 was widely heralded as the year the electric car finally entered the mainstream, the young industry has hit a lot of bumps in the road.
Customers who ordered Nissan Leafs had aggravatingly long waits for deliveries because of the earthquake and tsunami in Japan, where the car is built. General Motors has fallen short of its goal to sell 10,000 Chevy Volts this year, and federal safety officials are investigating the fire risk of the car's battery. Electric vehicle sales have been slowed by the lingering weakness of the economy. And many Americans still have lots of questions about electric vehicles, including concerns about range.
"While we're still in the very early innings of vehicle electrification, the commercial progress of EVs in the marketplace has been mixed at best, and largely been unimpressive to date," wrote Morgan Stanley automotive analyst Adam Jonas in a research note downgrading Tesla's stock earlier this month.
Jonas also reduced his forecast for global electric-vehicle market share by 2025 from 8.6 percent to 4.5 percent. He cited advances in internal combustion engine technology, lower fuel prices and the sluggish European economy as reasons why electric vehicles have been slow to take off.
But other analysts and electric vehicle advocates say the bumpy rollout was not unexpected, stressing that any new industry -- particularly one as disruptive as electric vehicles -- experiences growing pains.
"The market is in its infancy, and was bound to stumble along the way," said Michael Omotoso, senior analyst at LMC Automotive. "Kind of like a baby taking its first steps: He or she will stumble and fall several times before finally learning how to walk."
Nissan's struggle to meet global demand for the Leaf caused delivery delays that frustrated many early adopters who placed reservations and had to wait several months to get their cars. Some reservations were canceled, though Nissan will not say how many.
"The tsunami slowed everything by at least a month, but Nissan has worked through the backlog," said Ron Coury of Northbay Nissan in Petaluma. "I've sold over 300 Leafs, and we haven't had any issues or complaints. The most difficult thing is educating customers beyond the early adopters. It's new technology, and average people who don't know anything about electric cars have a lot of questions."
Nissan, which never made public its sales forecasts, says it has sold 20,000 Leafs worldwide, including about 9,300 in the United States. California is by far the largest U.S. market, accounting for 60 percent of U.S. sales.
GM sold only 6,152 Volts through November. It says December sales look "solid," and that it now expects to hit its 10,000 target sometime early next year. California remains the Volt's biggest market, although the car is now available at Chevrolet dealers in all 50 states.
Most auto industry analysts say the electric vehicle market will grow slowly over time. While Silicon Valley consumers are intensely curious about electric vehicles -- Tesla's showroom in San Jose's Santana Row gets heavy foot traffic -- the nation as a whole has shown less interest.
Many experts say that the adoption rate of electric vehicles will largely depend on more robust education efforts among consumers.
"There's a learning curve with new technologies," said Robert Peterson of GM. "Consumer education, product visibility and familiarity with the incumbent technology all play a role in how quickly adoption of new technologies like the electric vehicles move from early adopters to mainstream."
Slow sales aren't the Volt's only challenge. Last month, the National Highway Traffic Safety Administration opened a formal safety defect investigation to assess the risk of fire in Volts after two cars caught fire days after being involved in side-impact crash tests. The safety agency says Volt owners whose vehicles have not been in a serious crash do not have reason for concern, but the publicity has put GM on the defensive.
Patrick Wong, the first Bay Area resident to get a Volt, says safety concerns over the car's battery have been overblown.
The 26-year-old Berkeley resident has had his Volt for a full year and regularly blogs about his experiences at www.mychevroletvolt.com. He says the battery concerns can be addressed by training drivers, dealers and first responders to discharge or de-energize the battery pack after major accidents. The NHTSA typically drains fuel from gasoline-powered cars after crash tests.
"I love my Volt and I'm very happy with it. It's been a great ownership experience. I'm not at all concerned about the battery," he said. "You have to compare risks. There's not a greater risk than a collision in a gas-powered car."
In the coming year, consumers will face a much wider array of electric vehicle choices. Several established automakers -- including Ford, Honda and Toyota -- plan to launch electric models, including plug-in hybrids. Consumers can also drive electric vehicles without having to buy them -- guests at the Four Seasons Hotel in San Francisco, for example, can rent a Nissan Leaf via Enterprise Rent-A-Car for $90 per day.
"In 2012, it will be important for the EV makers (and sellers) to avoid further problems in the areas of safety and late delivery to customers," Omotoso said. "And rapidly building the charging infrastructure across the country will also be key. The more charging stations people see, the more likely they are to feel comfortable about buying an electric vehicle."
A reduced forecast of 4.5% - Morgan Stanley reduced its projected market share for electric vehicles in 2025 from 8.6 percent, citing improved engine technology, lower fuel prices and the sluggish European economy.