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Dave Cohen

Dave Cohen

Dave Cohen writes the blog Decline Of The Empire. His commentaries cover a wide variety of subjects, including the American economy & macro-economics, the oil…

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Why Electric Cars Don’t have a Future

A controversy has broken out over what it costs General Motors (GM) to produce a Chevy Volt. A Reuters reporter got things going when he claimed that GM is losing as much as $49,000 on every Volt they sell.

Nearly two years after the introduction of the path-breaking plug-in hybrid, GM is still losing as much as $49,000 on each Volt it builds, according to estimates provided to Reuters by industry analysts and manufacturing experts.

Cheap Volt lease offers meant to drive more customers to Chevy showrooms this summer may have pushed that loss even higher. There are some Americans paying just $5,050 to drive around for two years in a vehicle that cost as much as $89,000 to produce...

The lack of interest in the car has prevented GM from coming close to its early, optimistic sales projections. Discounted leases as low as $199 a month helped propel Volt sales in August to 2,831, pushing year-to-date sales to 13,500, well below the 40,000 cars that GM originally had hoped to sell in 2012.

Spread out over the 21,500 Volts that GM has sold since the car's introduction in December 2010, the development and tooling costs average just under $56,000 per car. That figure will, of course, come down as more Volts are sold.

The actual cost to build the Volt is estimated to be an additional $20,000 to $32,000 per vehicle, according to Sandy Munro, president of Michigan-based Munro & Associates and the other industry consultants.

It's best not to get too lost in the cost details here. Critics of the Reuters report like Bob Lutz and Anthony Ingram say, with some justification, that the true cost of the Volt must be spread over the entire lifetime of the car's manufacture. However, this is not the 1960s, it is the 21-teens. In 2012 the economy has imploded. The middle class, which used to comprise the people who might have bought these cars 50 years ago, is toast.

The truth is that making Chevy Volts will never be profitable if the actual future costs of production (even if they are declining somewhat) are factored in, and these cars are sold at a retail price which reflects those costs without tax breaks, subsidies and giveaways. Americans can't afford this car now, and they won't be able to afford it in the future. The Volt has become politicized after the bail-out of GM, which means the bullshit flies every time the subject is mentioned. Other manufacturers (like Nissan) are making electric cars, but they won't be affordable either, at least to a mass market.

A more damning critique comes from Fred Schlacter's report All-Electric Cars Need Battery Breakthrough.

Researchers agreed that the lithium-ion chemistry used in today’s generation of batteries for electric cars–and laptops and cell phones is reaching maturity, and that only incremental improvements can be expected in energy density, which needs to be higher, and cost, which needs to be lower, for widespread use in battery-electric vehicles (BEV)–cars which are powered only by electricity from the electric grid and stored on-board.

Lithium-ion batteries are adequate for hybrid electric vehicles (HEV) like the Prius, and marginally adequate for plug-in-hybrid vehicles (PHEV) like the Chevy Volt. However, the range of a fully electric vehicle such as the Nissan LEAF–powered only by electricity stored on board and without a gasoline “range extender” is too low for many drivers, who may use a BEV as a second car for urban trips while maintaining a gasoline-powered or hybrid car for trips exceeding the electric range of a BEV.

Lithium-ion chemistry in BEVs is reaching maturity, and only "incremental improvements" in energy density and cost will be made in the future. I think that says it all. As far I know, there is no miracle super-battery waiting in the wings which will replace lithium-ion batteries in automobiles. These cars will be high-tech toys for rich people, save-the-Earth types, and high-tech enthusiasts, and that's all there is to it. If you want to "save" the Earth, you shouldn't be driving at all. And then your job is to persuade the other one billion people who use cars to stop driving too. You could start with Bill McKibben... 


My ridicule of those who tout technology as the solution to everything, including oil-based transport, does not also imply that I am denying that technological breakthroughs are possible. Obviously, some breakthroughs could occur. However, it seems to me that it's far too late now in 2012 to count on technological breakthroughs which can only marginally affect 21st century outcomes. That's like closing the barn door after the horse have left, and believe you me, the horse is gone.

Those of us who have followed these issues over the last decade have been subjected to a constant of barrage of techno-optimistic (and political) nonesense which flies in the face of Reality. We might just say same as it ever was and move on, and that's what I'm going to do today. Electric cars have no future, and even if they did, it's a case of too little, too late.

By. Dave Cohen

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  • vincent on September 16 2012 said:
    Even if the auto makers could turn a profit on elect cars customers will still have to pay the power company which uses oil to produce untill we take our heads out of the sand and put renewable on every house in America, will the electric car make it. What happened to the hydrogen car or fusion power..
  • Bill Branham on September 17 2012 said:
    21st Century Telecom, Inc. pilot R&D project begins with a net-zero energy home and Chevy Volt in the Hill Top Community. The retrofitted zero energy home will serve as a proof-of-concept including cloud-based OnStar R&D with TV white-space smart-grid field trials including Vehicle to Home (V2H) for future Vehicle to Grid (V2G) capable electric vehicles. 21st Century Telecom, Inc. is developing an Intellectual Capital Program (ICAPP STEM concept) including USDA RD Innovative Housing with the DCA Single Family and Multi-family Housing programs for Georgia and Florida. The research and demonstration project provides an interim test plan for net-zero energy micro-grids with utilities and others. The Energy Internet partnership will research and investigate how energy management operators can broadcast control signals to PEV and V2G connected vehicles (including fleets) to give or request power including sustainable net-zero energy homes, buildings, businesses with microgrid technology. The V2H and V2G-capable electric vehicles will be driver tested providing regulation over several years with Colquitt EMC, Southern Company, Progress Energy Florida and others.
  • Speculative Observer on September 17 2012 said:
    Maybe you're right that Electric Cars don't have a future. But your arguments are pretty weak. To make a strong case you should explore the host of alternatives to Lithium-ion that are coming out of labs and then present a considered argument why they wont work. The appeal to a capitalized "Reality" that only you are in touch with does not substitute adequately for a reasoned argument.
  • FEDUP on September 17 2012 said:
    Hooray everybody lets all jump on the bash GM wagon isn't it fun, what do you want car manufacturers to do, I for one would like to thank all of the early adopters out there who are buying Chevy Volts so maybe someday I can afford one. Remember when they used to say only rich people can afford electricity and electric lights. How many times throughout the years have the analist's and chicken littles of the world been wrong. GM is working on a battery with double the capacity and half the price of current batteries today and it will also increase the range up to 300 miles per charge. Cars have always been expensive to manufacture, it takes more than one year just to pay for the tooling to make a new model, if electric cars are so bad why is every major car maker coming out with one?????
  • Hans Nieder on September 17 2012 said:
    Why transition to the EV, when the current answer is the Hybrid?
  • AC Points on September 17 2012 said:
    I remember similar arguments about the Prius when it first came out. It took 4 years for it to become profitable and begin to recoup development costs. Now after 15 years they've sold 4M units and it is successful. That is definitely some long range strategy.

    The sales environment has changed over the last 15 years however. The purchase that used to be a social/political statement is becoming more and more of an economic one with a lot of models to consider and its hard to see how the Volt fits in at the current price point. I drove a camry hybrid this summer (43/39 mpg) that lists at $26000 that I would have bought if it had a better (less camry like) suspension. On top of competing with other companies, GM's going to have to compete with itself also, as they offer light hybrid e-assist Chevy and Buick models.

    Certainly electric technology is here to stay and there is some advantage in the long run to having developed your own, but IMO whether the Volt program actually pays its own way is far from decided. I think the next version will have to include a significant reduction in price for it to have a chance.
  • Richard lewis on September 17 2012 said:
    The following link will take you to the scientific explanation of why this article is correct:

  • Volt Driver on September 18 2012 said:
    Every person that repeats that horribly stupid Reuters report loses any and all credibility. As stated in the report, the car costs 20-32k to build. This means a profit potential of 8-20k for a base Volt. That means that GM is digging themselves out of the R&D hole 8-20k at a time. Could it be faster? Sure. But it is in their financial interest to continue to sell the Volt, and the notion that GM is actually going deeper into debt with each Volt it produces is absolutely idiotic. The R&D funds are already sunk. In fact, most of the R&D was already done PRIOR to the bailout, as the PRODUCTION VERSION CAR WAS UNVEILED IN SEPTEMBER 2008.

    Articles like this are extremely short sided. Every disruptive technology is ridiculed at first. Battery prices have fallen 30% in the last 3 years alone. There are battery break-throughs every few months. We are just a few short years from the electric car premium being fairly small over a traditional car.

  • Walkingman on September 18 2012 said:
    It might be more to the point in this deadly convergence of population/resource overshoot and accelerating climate change to admit that the private automobile has no future.
  • Phil on September 18 2012 said:
    "However, it seems to me that it's far too late now in 2012 to count on technological breakthroughs which can only marginally affect 21st century outcomes."

    Really? Try using ARITHMETIC! There are 88 more years left in the 21st century. I find highly improbable that future inventions will not go to producing affordable non-polluting vehicles.

    Cohen's pro oil industry bias is not lost on this reader. Perhaps he could sell his theory to Fox News so they can misinform America?
  • Sluggo Bear on September 22 2012 said:
    It's too bad there's no one left in this country rooting for the USA. Moving forward on the Volt took hefty balls AND innovation! I hope the Volt is the first of decades of US-made electric cars (but more buses and trains) that make America a manufacturing powerhouse again. I had hoped that as a country we could be at least as strategic and forward-thinking as China!!?? Too much to ask?

    So Dave Cohen - The fuzzy math notwithstanding, why are you so quick to dump on the Volt? I realize the obvious bias here so maybe I am naive, but are you looking for it to fail? It has the feel of FOX News. "This is just another failure by Obama to try to pick winners and losers. Did we mention Solyndra? Oh? Yesterday?".

    Texas now gets over 8% of its electricity from wind power. That is not insignificant. There is no one single simple solution. I work with fracking and believe me - it is not a panacea. And I wouldn't want it going on below my water table. Where do you think all of that injected hydro-mix is going to end up eventually? Right - nobody knows.

    But if we (as a country) support the adoption of renewable energy, practice conservation and improve energy efficiency - maybe we can save what's left of the planet. A little idealistic, yes. You don't have to be a genius to project the energy needs / growth rates of developing countries for another 30-50 years and see we are going to run out of ... fresh water! That will be the limiting resource in much of the world.
  • Markw on October 11 2012 said:
    The Canadian oil sector is betting heavily on triple digit oil prices to transformed Alberta’s Oil sands from a once marginal resource into one of the world’s largest oil reserve. Maybe they will be wrong and no one needs Canadas high cost oil.
    But if all the economist and oil executives are right then the Volt and its Kin are about much more than just traveling oil free. It’s about enabling the transportation efficiency our economy needs to remain competitive and continue to grow outside of the oil sector as the era of cheap oil comes to an end.

    If you want to see how the US economy will be save by the Volt and other EVs checkout:
  • Phil on November 08 2012 said:
    The current cost of lithium ion batteries for cars is about $600/kWh. By 2020 this cost will be closer to $200/kWh. Advancements in lithium ion will technology will be able to store 8-10 times more electricity than current batteries and will have a longer life. This all spells big trouble for big oil. Why do you think they are squeezing every penny out of the american people while they can. Articles like this are propaganda with an aim at getting people to dismiss EV's and vote against their subsidies and government investments in alternative energy.
  • Peter on November 13 2012 said:
    The problem with the "environmentally friendly" electric car is that its not the least good for the environment. If you take into account where the electricity comes from (mostly coal fired plants in the us) the emissions from electric cars are higher than from the regular cars. That gives the conclusion that whats best for the environment is to not use any form of car at all (and instead use a bike or public traffic). But I guess thats not what Detroit wants ;-)
  • Doug Payne on November 13 2012 said:
    To declare there is no future for electric cars is obviously a mistake. The resons are too numerous to mention here. But the hydrogen fuel cell will make the electric car cheaper, safer and 3 times more efficient then any petrol car on the road today.
  • Ryan Abbott on January 09 2013 said:
    Well in countries where most of our electricity comes from sustainable renewable energy electric cars are fine. In Sweden, Norway, and New Zealand, they all obtain over 60% of their electricity from hydrothermal, hydro, and solar energy. It costs lots as they are electric cars made from an American company used to building boat and tank shaped cars with V6 and V8. I bet you some Asian car manufacturers will crack an awesome car, and they will probably just steal the technology.
  • Benjy on July 21 2014 said:
    This `telephone' has too many shortcomings to be seriously considered as a practical form of communication. The device is inherently of no value to us.
    - Western Union internal memo, 1878

    Radio has no future.
    - Lord Kelvin (1824-1907), British mathematician and physicist, ca. 1897.

    [Television] won't be able to hold on to any market it captures after the first six months. People will soon get tired of staring at a plywood box every night.
    - Darryl F. Zanuck, head of 20th Century-Fox, 1946.

    There are countless more examples. As with anything in technology, there are always shortcomings at first, and then the technology is improved upon. There is countless research being done to improve energy efficiency across all domains (transportation, residential, commercial, industrial, etc.) No one said electric cars would be the be all end all of solutions to the energy crisis.

    One question: how much are the oil companies paying you?
  • Norbert on October 05 2015 said:
    If you knew what I know, you would all refrain your comments.
  • Mike on May 08 2016 said:
    It seems to me that every one thinks this is the end all but it is not the cost of the car but the history of bad experiences that have not been brought to light and the added cost of buying a new battery plus the terrible price of disposing of said dead bayttery . The last thing on the list is how much will the average home owner pay to update their house electric system and the cost we all will have to absorb to update the grid system, and because the charging stations that they will have to build will be unbelievable. The bottom line is can we really afford to have electric cars that pay no GAS tax where will the tax dollars come from, and endless boo to all electric cars, just my opinion

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