As the 2014 model year dawns, electric cars, hybrids and plug-in hybrids are better and more numerous than ever before, but there are signs customers may be balking at the technology’s cost.
Toyota just lowered the price of the Prius plug-in hybrid $2,010 and Cadillac’s announcement of a $75,995 base price for its upcoming 2015 ELR elicited howls from even the technology’s most ardent supporters.
Is this a bump in the road for plug-ins, evidence that the public isn’t ready for the vehicles, or the inevitable growth pangs of a new technology?
Perhaps all of the above.
“Plug-in vehicles aren’t going away, but how many will sell, at what price and using which technology, is yet to be determined,” said Michelle Krebs, senior analyst with Edmunds.com.
The other force restraining plug-in sales: lower gas prices.
The technology is evolving at a furious pace, making plug-ins practical for a growing number of drivers. I tested several recently, including the battery-only Chevrolet Spark EV and the Ford C-Max Energi and Fusion Energi plug-in hybrids.
The C-Max Energi plug-in hybrid’s 21-mile range got me through a weekend’s errands, plugging in occasionally to recharge. Its gasoline engine chipped in for highway driving and a longer trip Monday.
A single charge of the Spark EV’s 82-mile battery easily powered a day that included meetings in Detroit and Dearborn, dinner in Rochester Hills and a return home to Ferndale, where it recharged overnight.
But I couldn’t buy a Spark EV unless I lived in a handful of states where automakers must sell EVs to avoid fines and negative publicity.
Those EVs are known as compliance cars, vehicles automakers build to comply with laws in California and a few other states. Compliance cars include the Honda Fit, Toyota RAV4, Ford Focus and Fiat 500.
Chrysler CEO Sergio Marchionne famously said that the number of 500e’s he could sell was limited only by how much money he was willing to lose. That’s because the $199-a-month lease price for the car – available only in the EV states — doesn’t come close to covering its cost. Chrysler subsidizes it, and makes up the difference with profits on other vehicles. Automakers almost certainly lose money on every compliance car they sell.
That distorts the market for EVs, said John Voelcker, senior editor of Greencarreports.com.
“Automakers need to sell a certain number of the compliance cars, and they’ll keep cutting the price until they reach that number,” Voelcker said.
Compliance cars muddy the picture for customers, said Chelsea Sexton, an EV advocate who worked with GM on its EV1 electric car in the ’90s and contributed to the documentaries “Who Killed the Electric Car?” and “Revenge of the Electric Car.”
“Companies dump them on the market, and that creates an expectation that an electric car should cost $199,” Sexton said.
On the other hand, the price cuts make the technology available to a wider range of people than the wealthy early-adopters who line up for $70,000-plus Tesla Model S.
“Getting the technology out there to build volume and demand is common for a new generation of powertrains,” Voelcker said. “Toyota lost money on the entire first generation of the Prius,” before the public warmed to the car and it became a profitable icon of smart consumerism.
There are three kinds of plug-in vehicles:
■ Battery-electric. They get all their power from a battery that you have to hook up to an electric outlet to charge. When the battery is drained, they can’t go anywhere. The Tesla Model S, Nissan Leaf, Chevrolet Spark EV and Fiat 500e are examples of battery-electric vehicles, or BEVs.
■ Extended-range electrics, or E-REVs. These are vehicles like the Chevrolet Volt, ELR and some models of the BMW i3. You charge them from an outlet, but if you drive far enough to drain the battery, a gasoline engine acts as a generator to make more electricity for longer trips.
■ Plug-in hybrids (PHEVs). They’re like regular hybrids, but they have bigger batteries and can go farther on electricity alone. The EPA rates the C-Max and Fusion Energi’s battery range at 21 miles; the Toyota Prius plug-in at 11 miles.
Batteries are expensive, so plug-in prices generally increase as their electric-only ranges increase. Prices are falling, though. Chevrolet just reduced the base price of a Volt $5,000 from 2013 to 2014.
Automakers focus on the wrong thing when they try to sell plug-ins solely on the basis of their range and price, Sexton said.
“The No. 1 thing people who own EVs say they like about their cars is that they’re fun to drive” because of the batteries’ power and the cars’ handling, Sexton said. “Cars are emotional purchases. Automakers miss the point when they try to sell plug-ins purely with rational appeals.”
Price resistance and marketing missteps notwithstanding, sales of plug-in vehicles continue to rise. Greencarreports counted 17,500 sales in 2011, 53,000 in 2012 and expects 2013 to approach 100,000.
“We are just in the first generation of plug-ins,” Voelcker said. “There will be new batteries, more advanced vehicles and cost reductions. We’re going to see rapid change and improvements for the rest of our lives.”
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