Expensive to buy, cheaper to operate and of course friendlier to the environment, the electric car is traveling a bumpy road globally, with the added barrier of a bit of high-voltage politics Stateside – the toll it must pay for its bailout bounty.
EVs (electric vehicles) and PHEVs (plug-in hybrid vehicles) are intended to help reduce fuel usage and CO2 emissions. The International Atomic Energy Agency (IAEA), the UN’s energy watchdog, hopes to see widespread adoption of electric vehicles by 2050. The IAEA envisions sales of electric vehicles reaching 7 million per year globally by 2020 and 100 million by 2050 – or, in other words, half of all cars sold in the world. So how are we doing towards “widespread adoption”? Fair - no thanks at all to politics.
Gas prices and environmental concerns have boosted electric car sales, but the issue of bailouts for the auto industry is now coming back to haunt them. One car in particular, the Chevy Volt, has been the subject of partisan politics and election campaigning - publicity that could help make or break its success.
First things first, let’s take a look at the car itself. The Chevy Volt is a compact hatchback, extended-range electric car that can run for about 40 miles, give or take, on a battery charge. It can go a few hundred more on a tank of gas after the battery dies. It costs nearly $40,000, though a federal tax credit knocks around $7,500 off that price. This product of Detroit and General Motors was named Trend Car of the Year in 2011 and European Car of the Year in 2012.
According to Forbes, the Chevy Volt sold 2,289 units in March 2012 alone. While that’s good news for the Volt, it is tempered by forecasts from auto-industry executives who believe that the electric car will not gain more than 10 percent of the market even by 2025 or beyond.
Traditional market factors, however, are not all that could reduce Chevy’s Voltage. In the midst of the financial meltdown, the government bailed out General Motors. The Chevy Volt (and electric cars in general) emerged stronger from that bailout, and President Barack Obama took on the Volt as a sort of energy security/climate change poster child. Because Obama chose to put the spotlight on Chevy Volt with a bit too much forced enthusiasm, the Republicans felt compelled to keep it in the spotlight, referring to it as the “Fred Flintstone car”, among other critically constructive slogans.
While General Motors may have at first reasonably expected dividends from unwittingly entering the political fray as Obama’s pet campaign car, perhaps it wasn’t the kind of visibility the Volt needed. Of course, the Vice-Chairman of GM, Bob Lutz, is a Republican himself and is having a hard time coming to terms with the criticism of the Volt coming from his party – criticism that would not likely have surfaced had Obama not gone overboard with his Volt campaign. “The problem with conservatives is getting them to accept that an electric vehicle is not necessarily a left-wing environmental plot,” Politico quoted Lutz as saying. So, in essence, Obama has turned Volt into a green machine for big government – a branding General Motors could do without.
The Nissan Leaf is the other top runner and has so far not entered the political fray. But the Leaf is powered only by battery and while this makes it more attractive environmentally, it is also less convenient in comparison to the Volt’s back-up gas tank and internal combustion engine to generate electricity when the battery runs out. The Leaf runs out of battery power after 100 miles or so and it takes eight hours to charge it up again. The Volt can be fueled in a pinch. The Leaf, then, is perhaps for the fully committed green car enthusiast, while the Volt is a bit less risky and less likely to leave you stranded on the side of the road.
Politics aside (and, indeed, politicians should not be telling the public what car to buy or pretending to be experts on automobile safety), the electric car market is not faring as well as planned. So far, it’s nothing spectacular, but these are early days.
China is also hitting a few snags in the electric car market, mostly due to technological hiccups and less-than-expected consumer demand. Combining forces, though, California-based Coda electric car manufacturers have cut a deal with China’s Great Wall Motors to launch their first joint venture in two years. They promise it will be the cheapest electric car yet, in the US, and should compare with regular car prices. China, which houses the largest number of electric car manufacturers in the world, can make them cheaper, while Coda can make them sellable in the US.
For now, car manufacturers are hedging their bets on what consumers want and what will sell. Research and development for electric cars is costly and sales are low (Volt sold only 8,000 units in its first year and Leaf racked up a paltry 10,000 sales in 2011). And the Volt is not a full-blown electric car – it still has a gas tank. Just to be safe, and while the electric car market remains an experimental one, manufacturers are simultaneously working to improve on the conventional car and make it more eco-friendly. This, so the logic goes, is perhaps a smoother way to ease into the electric car market.
By Jen Alic of Oilprice.com
Jen Alic is a geopolitical analyst, co-founder of ISA Intel in Sarajevo and Tel Aviv, and the former editor-in-chief of ISN Security Watch in Zurich.