Op-Ed: A Marketing Perspective On “Slow Sales Growth” Of Electric Vehicles

OCT 14 2015 BY CODY OSBORNE 104

Bolt Concept at 2015 Detroit Auto Show (NAIAS)

Bolt Concept at 2015 Detroit Auto Show (NAIAS)

There are a wide variety of reasons why EV sales aren’t progressing faster, but generally I think it comes down to demand for vehicles is lacking. My marketing background gives me a little perspective for understanding how a market can move and what motivates the buyers. Buyers, right now just aren’t motivated. Gas prices obviously plays into that but there is more to it than that.

A new product does best when it solves a problem

A new product does best when it solves a problem

A new product does best when it solves a problem and that buyers can clearly see what the problem is. As of right now, buyers don’t see a problem, and/or don’t see a viable solution.

It’s kind of like the DVD market with the fragmentation of Blu ray, HD DVD and streamed content. No one sees a quality difference between them, so no product owns the market. Convenience and momentary desires drive all products forward nearly equally. Digital delivery is winning out, only b/c the infrastructure is there, and the problem/solutions are apparent.

If only the infrastructure for electric cars was built out, or the perception of it was more “complete”, but right now, if you ask the common person, the thinking is, “the technology isn’t quite there yet and the charging network is severely lacking.

2016 Toyota Prius Is A "Green" Product More Familiar To The Consumer

2016 Toyota Prius Is A Long-Standing “Green” Product That Is Familiar To The Car Buying Consumer

But that’s not all, other things play into that. For one, status quo rules and that is especially true for hard goods. When folks have a long-term relationship with a single product and several decades of familiarity with a single style of product, they develop a connection and usually are unwilling to go very far outside that category upon replacement. Couple with that, the dealers similar sentiment of carrying cars they’ve sold for generations, what comes out of that is very slow progression to new technology.

Also on the supply side (car makers and dealers) you see the issue of training and investment to get into this new segment of low-profit vehicles, driven in part by very resistance and attitudes towards (moving away from) any product that cuts into their profit centers (read: SUV’s, mid-size cars on the luxury end, and pickups.)

Let’s first delve into the demand for electric cars on the consumer  side. A couple issues quickly jump out: lack of understanding of how these vehicles would work, uncertainty of how they could use them in their daily lives, limited choices and styles, consumers unwilling to do significant research, and buyers not seeing a problem that needs solving. In a nutshell, it seems that buyers are mostly happy with the current choices they have.

Doesn’t look so bad, really

Doesn’t look so bad, really

COMPLEXITY

If buyers can’t understand exactly what a product is and does, 9 times out of 10 they won’t buy it. Doritos comes out with a new flavor and consumers can make a split second decision whether they want to adopt this new product. The opposite is true for electric cars. These cars are hard to understand for most, even though, many of these cars carry far fewer parts and technically should be easier to understand than regular internal combustion vehicles, known in the EV industry as “ICE vehicles.”

The BMW i3 REx - Perhaps Not Easily Understandable?

The BMW i3 REx – Perhaps Not Easily Understandable?

One reason is it brings up a bunch of questions, some of which are hard to answer: Do I have to plug it in every night? Do I need a special plug, or do I need special wiring? How far can I drive everyday? What is it going to cost me every month? Can I go to my aunt’s house 200 miles away? Is it going to be slow or have difficulty towing a trailer? How come the trunk is half full of batteries even though my range is only 80 miles? Why do I care if it’s quiet? What kind of pollution and carbon footprint does it have? How much does my own ICE produce anyway?

It’s never going to be easy to answer all the questions all at once, so hopefully they get answered one at a time, and at some point in the future buyers will be down to one or two questions and you’ll be trying to talk them out of an electric car, instead of talk them into one. The early defectors have been the same folks that have adopted other leading edge technology and those are the types that get those questions answered before they walk into the showrooms and they can also be the ones that start answering those questions for all those “on the fence” or even the “haters” out there that spout nonsense about the EV market segment.

EV Battery Production Dirtier Than Owning An ICE? C'mon

EV Battery Production Dirtier Than Owning An ICE? C’mon

Just today I read some miscellaneous ramblings by someone who actually believed that the production of battery cells produce more pollution than regular internal combustion cars do over their whole lifetime. He completely ignored the cost of his own vehicles’ production, and the cost to produce and transport the fuel he burns in his ICE vehicle everyday. He is stuck on the fact that some unknown amount of pollution occurs in the production of battery cells and that his ICE vehicle produces very little. Perhaps this is the hardest question, because this is an every changing stat, based on where you live, what source you use to “fuel” your vehicle and how much you use it on the daily.

Our new Volt in 2013, on our first Kona “road trip,”

Our new Volt in 2013, on our first Kona “road trip,”

People ask me all the time (here in cost-focused Hawaii) how much it costs to run? Because energy is one of the most expensive products for this island population, and reducing this cost is important to most, more so than most other regions in the USA. And while cost might greatly influence and encourage more budget-oriented buyers, the investment into this technology is pretty significant.

PLAINLY STATED: poorer folks could use a cheaper running car, but can’t afford the average electric car in the first place. The hottest sellers in the segment right now are the $32,000 Nissan LEAF and Chevrolet Volt, the $85,000 Tesla Model S and the $40,000+ Ford Fusion Energi and BMW i3. Cash strapped customers usually also lack the tax liability to take advantage of the tax credits available. So the complexity of cost to buy and fuel is a major issue as well.

There are so many things to think about when looking to go electric, too many in fact. Most buyers don’t even know how electric cars can benefit them, and overloading them with information isn’t really going to work in converting them. I also hear from EV owners on the mainland who say “Hawaii is the perfect place to own an EV!” Because they know, gas is expensive here, they know our climate is mild (EV’s don’t do great in extreme heat or cold), and they know that Solar PV production would be amazing with all this continuous sun we have! The reality is this is the most expensive state to drive an EV.. because energy costs, and solar installation costs are sky high!

So even when you’d think it was simple, it’s really not.

BUYERS RESIST CHANGE (and small cars)

This is well known in the marketing world, and even more true when it comes to more expensive and more durable goods. The average car sits in the average household for seven years and when it comes to replacement, most buyers elect to go bigger (and less fuel efficient) because the FREEDOM that gives them.

Volvo XC90 T8 Twin Engine - A Rare Plug-In SUV Offering Just Entering The Market This Month

Volvo XC90 T8 Twin Engine – A Rare Plug-In SUV Offering Just Entering The Market This Month

How many families do you know that own an SUV and a pickup truck as their two vehicles? 95% of the time, they don’t NEED a truck or SUV, but they like the freedom and flexibility it provides. Electric vehicles drastically reduce that flexibility, simply because EV’s barely exist in these segments.

But that is not all, it’s also just way out of the norm, the whole experience is different, and adjusting to these differences simply won’t appeal to the vast majority of consumers out there. Many just want a simple car that goes from A to B reliably. Their perception is wrong, they don’t see an EV as either of those things, even though that’s exactly the truth. EV’s offer a simplified drive train and lower operating costs to boot. This is one area (operating costs) we as EV owners can make great strides in over the next five years, but on the reliability front, it’s going to take some time.

It’s been said in the auto industry that for an auto manufacturer to earn the trust as a “reliable car maker” it takes anywhere from 8-10 years to turn their reputation from bad to good. Many of the players in this market are not on the “reliable list” and that is why many will continue to forego these cars and stick with what they know!

Public Trust Can Take Time To Accumulate

Public Trust Can Take Time To Accumulate

Nissan has a somewhat neutral reputation and they are reaping the benefits, by having a full electric that looks and smells like an average Nissan, only 15% “cooler.” Chevrolet is another manufacturer in this country that also has a presence, but they are only 1/2 way thru their renaissance and their brand loyal customers are some of the markets most traditional. Couple that with the timing of the GM bankruptcy, and you have a huge list of people that won’t buy the brand or even it’s best cars. It’s going to be an uphill battle for GM to convince very conservative dealers in very conservative regions to stock these cars, because their own current customer base won’t be looking or buying. This should be the headline when talking about Chevy Volt sales –> “Current Chevy Customers aren’t Switching to Chevy’s latest and greatest Car!”

The story for other car makers is similar. Ford, BMW, Mercedes and Kia are all “tip-toeing” into the market with converted models (they strip the gas engine for an electric motor, and pull that gas tank to install batteries) and selling them at a $10k premium. BMW is most bullish of the aforementioned with the i3. It was developed with a chassis that was all new, but they still gave people the option of gas/electric hybrid or full electric.

The "Hockey Stick"

The “Hockey Stick”

THE “HOCKEY STICK”

Any good marketing or business developer knows that adoption of new products in the market usually take some sort of hockey puck trajectory, in that the first couple years is slow steady growth and then a HUGE surge as the product goes “mainstream.”

In case you didn’t notice, EV’s are still in the beginning section, only converting “early adopters” right now, as the market watches and thinks about future purchases. And since cars last 10-20 years… it’s going to take some time before the old cars die and hit the junk yard, and EV’s have a chance to be a part of the conversation. It’s also a chicken and the egg scenario where you can’t sell cars if you don’t have them, and buyers can’t buy cars unless you have them to sell, and in significant quantity for all market segments.

Back to the “hockey stick”. Because of education, the market will continue to move slow… as folks flush out the many questions mentioned above, and buyers give these products a real chance. But that’s only part of it. Much of growth is dependent on SUPPLY. If supply is constricted, then sales will be limited. If supply is constricted and demand is low, profitability will continue to be limited, and thus development money for new and different models will be limited.

So, the stick will stay… until enough time transpires for development and cash can contribute to a product that closely fits the “meat of the market.”  So the picture (above) is how I think the EV hockey stick will look.

Editor’s Note:  Besides writing here at InsideEVs, Cody also runs a blog (Reel Marketing) that covers topics from the Chevrolet Volt to marketing to lava flows in Hawaii. Check it out here

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104 Comments on "Op-Ed: A Marketing Perspective On “Slow Sales Growth” Of Electric Vehicles"

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I think the number one factor is price, and you can research or look into the subject in great detail and come up with all sorts of theories. But price is the thing it all boils down to.

If I had a quid for every person who said they want an EV but they want the prices to come down.

I think this is fundamental. The article is informative though I question its general drift. In marketing 101 price is shown as paramount, though not all encompassing.

As far as, fulfilling a need, not many realize yet that they really want an ev. For instance years ago no one had a mobile phone, though I did, one of those big clunky ones for work. Now everyone has an iphone.

Three Things Come to mind…#1 Price.,#2 Range ., #3 Charging Time & Charging convenience…Now., if they can Improve on these three 0bsticles., I believe They would Get many people 0ff the sidelines including myself.. & Quickly!

Price stops people from buying a Tesla. They are very expensive.

But price should NOT stop people from buying a Chevy Volt. After the tax-credit, it is cheaper than gas cars in the long term. I think the biggest problem with the Volt is fear of new technology and that the Voltec technology is only offered in a small compact car form.

Sticker shock can still hamper Volt sales. $33k is still quite steep for a compact car. Add to that the fact that many Chevy buyers won’t qualify for the tax credit, and you have a very expensive (up front) car. Most people do not perform a total-cost-of-ownership analysis before buying a new car.

$33k is pricey for a compact car, unless it’s a BMW or Lexus. I don’t think there’s much appreciation for what you get for the price of a Volt. I think the Volt properly competes with those entry level upscale cars, despite wearing a Chevrolet badge.

The only way to be sure the capture the full credit is to LEASE the first three years, then buy the 3 year old car.
You see a significant cost drop in the lease price to you.
That’s the only way to see it off the dealer lot.

Most people don’t lease.

electric-car-insider.com

Most people do lease EVs. You are right that most individuals do not lease ICE cars because leases are usually more expensive.

But EV leases are a great deal because, as you point out, Federal tax credit is usually rolled into the lease. In fact people usually get more value from the credit when they lease.

In California, 3 year leases even qualify for the $2,500 state rebate. So its like a no money down lease. Since the lease payments are less than purchasing, more buyers can break even on fuel cost savings.

For many people, an EV lease is like a free car.

It’s a standard sedan – not even a wagon. Many people need or at least want a large trunk. I would be all over a chevy volt if it was more like a prius V with regards to interior space. If someone were tor release an AWD plugin SUV at the same price point, then that would be a no-brainer. Sadly any entries into that segment have thus far been at a price point that is for a different tax bracket than my own.

It’s a hatchback. The cargo room doesn’t look good on paper, but I’ve been pleasantly surprised at what I can fit in there. And my other car is a minivan.

On the contrary, as has been said the air is pretty thin at the $30-35K for a “compact car” My 2013 Stickered for $42K That’s a lot of window sticker shock when your looking in the compact segment. If not for the incentives available I would not have bought the Volt as it would have been too expensive.

If the total cost of owning an EV is only the same (or slightly better than) an ICE car, then there is no reason to buy one. This simply because the EV has many limitations compared to the ICE car, but is both higher in price initially and no better over the life of the first owner.

That leaves you with the eco argument which is a great reason for a small proportion of the population, but not the mass market.

“I think the number one factor is price, ”

Disagree. Price is one of the most important factors but not always THE most important.

If it was, then the Honda Insight and Prius C (the two cheapest hybrids) would be runaway best sellers. Instead, the Prius C has lack luster sales and the Honda has been pulled from the US market.

Price and range. If they were $15-$25K and had a 200 mile range, they would be flying off the lots.

For example, visiting nurses drive 100-200 miles a day, and they would sure like to save thousands of dollars in fuel costs, but they have to have 200 miles of range to be able to see all their patients on a busy day.

You nailed it. EVs have to be a less expensive means of transportation.
Like the Renault Twizy(not super keen on the name, it reminds me of red licorice)but maybe it means something cool in French.
https://en.wikipedia.org/wiki/Renault_Twizy
EVs cannot compete head to head with ICE vehicles, they will always lose. ICE vehicles are also getting better, cheaper and more fuel efficient. EVs have to create and dominate their own market segment, $7,500 – $20,000 with a 125+ mile range. The only vehicle to use going to the mall, grocery store, school, work.

EVs need to be the primary vehicle for making short trips. Like the Renault Twizy(not super keen on the name, it reminds me of red licorice)but maybe it means something cool in French.
https://en.wikipedia.org/wiki/Renault_Twizy
EVs cannot compete head to head with ICE vehicles, they will always lose. Big Auto sets the agenda and ICE vehicle technology is not standing still. They are getting better, cheaper and more fuel efficient. EVs have to create and dominate their own market segment, $7,500 – $20,000 with a 125+ mile range. The only vehicle to use going to the mall, grocery store, school, work.

The offer is ridiculous, and ridiculously high priced.
Established car makers make no marketing efforts. Actually they do anti-marketing to protect their ICE enormous profits.

As for complexity, there is nothing simpler than a BEV, and recharging is the same as for a phone!
Most ignorance of the Electric’s benefit is due to car makers no doing any effort. A couple of positive ads would suffice.

Meanwhile the climate will be killing us..

A few people I know would like to own an electric vehicle, but they don’t have off-street parking at home. That makes charging at home impossible, unless they ran a cable across the sidewalk. Is there a way around that?

The options are:
– buy an FCEV
– buy a Tesla and waste an hour a week at the local Supercharger
– buy a non-Tesla and install a workplace charger, or waste even more time

Why can’t a workplace charger charge a Tesla?

(sigh)

The delusions of EV fanatics…

EV’s are and will remain a niche product for all of the reason’s you’re all aware of. Don’t get me wrong – in 10 years I wouldn’t be shocked to see BEV’s at 5-10% of new car sales. It could happen.

You could run a conduit under the sidewalk, and run the wire through that, though that is always city property,so probably not legal.

Nick asked:

“A few people I know would like to own an electric vehicle, but they don’t have off-street parking at home. That makes charging at home impossible, unless they ran a cable across the sidewalk. Is there a way around that?”

Unfortunately there is no practical short-term solution to this problem.

Long-term, there are two solutions, and I think we’ll see both of them deployed:

1. Self-driving cars will be able to drive themselves to, and return from, a parking lot catering to EV owners; every stall in the lot will be equipped with a slow charge point.

2. As the EV revolution progresses and more and more people adopt them, demand will be created for cities to install (or to license entrepreneurs to install) curbside 220v outlets for EV charging. (These can be controlled with a wireless off/on switch, using a “smart” EVSE which the driver will carry in his car. The “EV-Line” subscription service does this now in South Korea.)

For those who think these changes are too radical to actually become widespread, just consider the much bigger changes which occurred in our cities during the transition from the horse-and-buggy era to the motorcar era.

Your comment put this image of scores of EVs driving without passengers in the middle of the night to charge and return to their owner’s apartment by morning. How weird and inefficient. The only solution to this is to have residential or street charging for apartment dwellers that is as common as laundromats or a corner deli. It will take decades to build out such infrastructure, but I don’t see self driving cars being a more viable solution to that problem.

danpatgal said:

“Your comment put this image of scores of EVs driving without passengers in the middle of the night to charge and return to their owner’s apartment by morning. How weird and inefficient.”

I’m sure that back in the horse-and-buggy era, people seeing a horseless carriage driving down the road was “weird”, too.

Now, I do agree that a car driving to a parking lot to charge, and back again, is inefficient. But given the reality of how long it takes to make a major infrastructure change throughout the nation, I think it’s inevitable that we’ll see self-driving cars become commonplace, and legally allowed to drive on public streets, before every city has curbside chargers installed in all residential areas with on-street parking.

For example, how many decades did it take for rural electrification to be completed? Or rural telephone service?

Exactly how soon do you think self driving cars will be commonplace? Surely EVs will be adopted more rapidly than autonomous cars, which means the solution to the charging issue will have to involve something other than cars driving themselves to a charge location.

Ironically, EVs are best suited to driving in urban environments, but least suited to charging in those environments. The most likely candidate for an EV are suburbanites with their 2-car garage. As we all know, suburbanites like to buy SUVs.

Workplace charging is one solution, if they are lucky enough to be employed by a progressive company.

Ironically, the 3 people I was referring to who do not have off street parking are self-employed home owners – no “workplace” charging and no off-street parking at home. I think this issue deters many would-be EV buyers.

In some European cities, groups may ask for a charger and get an on street reserved spot with access cards and time blocks shared between users.
Solar film and paint is also around the corner.
Soon when batteries will get you 300 miles and recharge faster, it will be easy to recharge while shopping at the mall, going to cinema or else, once a week.

Oh that sounds great. You get a timeslot from say midnight until 4am. Gotta love it!

All chevy will do with the Bolt is keep it one step ahead of model 3, if the model 3 never makes it to market, neither will the Bolt.

Would you care to elaborate? GM beat the Model S to market by two years with the Volt; why not with the Bolt? They already have the battery factory they are going to use.

Totally irrelevant The Volt and the Model S are NOT competing for the same customers and in no way compare.

Big Solar said:

“All chevy will do with the Bolt is keep it one step ahead of model 3, if the model 3 never makes it to market, neither will the Bolt.”

Actually, I suspect GM sees VW’s announcement that it’s going to shift emphasis to plug-in EVs as much more competition for its Bolt than Tesla, which after all is still very small for a company making mass produced automobiles; one which until just last month made only one model of car.

GM is certainly not going to throw away all the money it has invested in developing the Bolt, and in tooling up for its production. Not even if Tesla went out of business tomorrow. Tesla isn’t the only player in the EV revolution; it’s merely the most advanced.

I hope so..

Personally, I am oddly thrilled by the VW emissions scandal and the way that had brought EVs back into the spotlight in contexts of marketing by VW and Tesla, among others. (I know, Tesla doesn’t advertise, but the X launch event is a marketing message.)

I think (and hope) so too.

I hope they are pushed to consider larger BEV’s and PHEV’s than the Volt, Spark, and Bolt. Also for the BEV’s, options other than just CSS for fast charge.

Bolt and Model III will be 2 different markets imo.

The Bolt is a front wheel drive crossover/hatch compact car.

The Model III as being told by Tesla so far will be a BMW 3 series equivalent. Meaning it will most likely be Rear Wheel Drive or AWD, slightly larger than a compact sports sedan.

I completely agree with the premise of this article. EVs don’t solve a problem for the average consumer. In fact, they create additional problems around cost, range, refueling time, charger infrastructure, parking spots, aerodynamic styling, and weight. Consumers have 99 problems but the CO2 emissions of their car ain’t one.

There are some fuel cost and reliability benefits to EVs, and performance improvements for luxury buyers, but those don’t tip the scales for most. That, and not a whacky conspiracy, are why manufacturers aren’t plugging EVs hard. There is no sizzle on the steak. EVs can be great daily drivers under the right circumstances, but that’s impossible to convey in the showroom.

Ten years from now, the story may be different.

Wrong thinking will not be rewarded.

Do you speak from experience?

Of course. Experience is the best teacher, though the student must be capable and willing to learn from that experience.

Thanks for this perspective. I don’t think explaining an EV, trying making it understandable, really helps. Most people don’t understand how an ICE works but still buy them. You don’t need to understand it to use it.

Instead of focusing on boring left-brain stuff like gas prices and payback periods, marketing should highlight the other benefits an EV offers: refueling at home, no smelly exhaust fumes, reduced maintenance requirements, and a nicer, smoother, luxurious drive.

As a 2011 LEAF owner, my primary reason for hesitating to recommend non-Tesla BEVs to others is range. I’m in a semi-rural area (with comparatively high gas prices), and for most people I know here, a range of at least 150-200 miles will be needed for their comfort. The Tesla Model 3 and its competitors cannot come soon enough!

The 2016 Volt also seems compelling, but it’s handicapped in the minds of many by being a GM/Chevrolet product.

Price is a factor, but people are willing to pay quite a bit for vehicles that they like. Tesla is doing a great service by giving EVs the “cool factor”!

Yeah, in places like Montana where you might routinely drive 100 miles to go to the store in your truck, evs will probably never catch on.
They are primarily a city car phenomenon first, then as range increases and price decreases they infiltrate into the suburbs and lastly into the semi-rural areas, out in the sticks, where you live.

I know a fellow in Riverton, WY who sees a Tesla Model S in that smudge on the map, at the grocery store on a regular basis.

Having spent 22 years in Montana, I can say that only a very small percentage of my trips exceeded 100 miles. Having the ability to fuel at home and starting every trip with a full battery would have been a far greater advantage than quick refueling when I lived 32 miles from town. Average annual mileage per person is ~25% greater in California than in Montana. Cities there are much smaller, how may times do you want to go across town in a day, more than 20? When traveling long distances, use the other car, borrow or rent one suitable for such purposes. An EV plus a pickup is a very versatile combination for a family, like most, that has more than one vehicle. Eventually you will see Volt like powertrains in pickups which would be perfect in place like Montana as the vast majority of trips are shorter than the batteries range, yet still have the ICE engine to heat the cab and extending the range when needed. A bigger issue would be lack of clearance for deep snow, but that is not an issue with the EV powertrain, only the lack of vehicle selection currently available. The weight… Read more »
SparkEV Driver, I’d agree that there is untapped potential in places like Montana, but not for the same reasons. I previously lived (on and off) about 16 years in Montana. I’d agree on average that a lot of people have really easy, nice daily commutes. That was my situation when I was there in my adult years. But, myself and most other people I knew drove hundreds of miles on a pretty frequent basis to enjoy the great outdoors, visit friends in other towns, or access stores/services that aren’t in your current town. Kids competing in extra-curricular school activities (and parents supporting them) travel big time miles to make those activities possible. A few hundred miles flies by so much faster there than it does on the more populated areas on the west coast’s I-5 and east coast’s I-95 corridors. Also, there is a huge flux in the range between winter and summer there. Even when the weather is good, the travel average speeds on the highway aren’t conducive to optimized ranged. We took a week long trip back there at the end of the summer in our Volt. Worked great. After passing through Missoula, our trip wouldn’t have been… Read more »

When I got my SparkEV, I kept my gas car as back up. But with DCFC, I haven’t had the need to even start the gas car engine. I just came to Orange County Car show with 180 miles of driving with my SparkEV. I could’ve driven another 180 miles using DCFC to get back home today.

Until you experience how DCFC can basically eliminate range anxiety, 80 miles is a minor annoyance, not a problem.

Two factors not explored:
1. ~53% of vehicles sold in US in 2015 are Trucks & SUVs; while most PEVs are passenger vehicles (a minority of US fleet)
2. Average vehicle age is now over 12 years old. This means fewer vehicle owner are needing to purchase a new vehicle.

Note: Average PEV age is just 2-3 years old, with ~100,000 of the ~370,000 PEVs purchased since 2010 being under a year old. ie: 25-30% of PEVs in U.S. are in their first year of use!

The average person doesn’t care about their CO2 output. So that is not a selling point. I think a lot of people simply don’t understand the experience of driving an EV. Most of it is education. But I think the largest issue right now is lack of choice. The only EVs and PHEVs available are, for the most part, small cars. Yet, SUVs and pickup trucks are the big sellers in the market right now. Nobody seems to be attempting to produce a plug-in vehicle for that segment.

Via Motors has a Silverado based EREV pickup available at selected Chevy dealers.

Also a full size panel van version.

You do need to drive it quit a bit to make the numbers work.

All good points. At my place of work (medical profession, SoCal) EV’s have really taken off, with the parking lot 25-30% EV, and climbing. I think this reflect a) urban environment b)higher disposable income c) education level of buyers, but also d) value (500e is effectively free on lease if you factor in fuel savings and rebates… very popular commuter, where owner still keeps ICE car for longer trips). When I talk to people about EVs I find that those who’ve investigated them are usually put off by range, but more notably that very few really even bother to look at them, and are very misinformed. EVs are just not marketed aggressively, presumably because most manufacturers don’t see a return on investment, and look at EVs as a compliance issue only.

Quoting the article: “A new product does best when it solves a problem and that buyers can clearly see what the problem is.” Well, that’s one path to success for a commercial product. The other path has best been expressed as “Build a better mousetrap, and the world will beat a path to your door.” Right now, EV tech is only very slowly transitioning out of the early adopter stage. When the public perceives that EVs are actually practical, and are cost-competitive with gasmobiles, more and more buyers will start showing a preference for EVs. When EVs are that “better mousetrap”, people will buy them in droves. Quoting the article: “It’s kind of like the DVD market with the fragmentation of Blu ray, HD DVD and streamed content. No one sees a quality difference between them… Digital delivery is winning out, only b/c the infrastructure is there, and the problem/solutions are apparent.” 1. HD-DVD is an obsolete format. It couldn’t compete with Blu-ray. 2. The reason streaming content is winning out is because content providers don’t want us to own any movies or music, and not because consumers actually want to have to rent something every time they watch or… Read more »

Stop calling me an “early adopter”!

I like to sleep in late and I have a problem with commitments 😉

It is pretty simple to understand why sales growth is slow and why these reasons are not great.
1) EVs cost much more than ICE vehicles upfront. (Hard to argue with this. However, many people are not considering the tax-credit advantage. And people don’t know & appreciate that electricity is much cheaper.)
2) The range of most pure EVs is short and they do take a long time to recharge. (Hard to argue against this one. For now, I think most consumers should look at PHEVs like the Volt. And this is why we NEED the Voltec drivetrain in more body styles like pick-ups, minivans, SUVs, bigger sedans, bigger hatch-backs, wagons, etc.)
3) Consumers are scared of new things and are slow to change behavior.
4) Gasoline is currently viewed as being ‘cheap’. (Gasoline still costs some 3X as much as electricity!)

So EVs are still kinda stuck in the market of people getting them because of environmental, national defense, anti-oil, and cool technology reasons. The only exception is the Tesla Model S & Model X which just are cooler than comparable high-end gas cars at around the same price.

What electric car, aside from homemade, has a trunk full of batteries?

Focus Electric

I think all the Ford plug-ins lose trunk space due to batteries.

The 2001 Honda Insight (not the same model as the more recent Insight) was a two-door combined hybrid EV hatchback (not a plug-in EV) with, essentially, a trunkfull of batteries. That is, the “floor” of the storage space under the hatch was quite high, to allow room for the large NiMH battery pack, leaving the car with little storage space despite having a hatchback.

But yeah, statements like that one in the article suggest the author has somewhat limited knowledge of the current state of the art of mass-produced plug-in EVs.

Ford C-max Energi. You lose a lot of cargo area in the Energi version due to battery placement.

Give public a $30K BEV equipped with a 50Kwh battery, have a network of supercharger every 20 miles or so and problem is solved. I don’t think people care too much what kind of engine/motor a car has as long it is cheap and efficient (then it could be powered by H2O, cow dung etc.. who cares). Current charger network is a joke, only the EV enthousiast do not see it is a joke. I once mentioned here issue caused by absence of supercharger(s) between my home town and nearest capital (Brussels, 250 km away). Reply I got was: you just need to go out of your way 30km to find a supercharger… Yeah, sure…One should be able to do a 200km journey on a last minute decision with 20% battery capacity left. If not possible then let’s buy a VW diesel (they tend to be cheap second hand lately :-)).

All very nice…

But EU clearly show that almost all points in this article are BS.

To put it simply.

For majority of this year nobody sold EVs potential buyers wanted.

Buyers wanted SUVs. Nobody provided!
Buyers wanted those next gen cars already. Some even stopped sales of current gen!

With SUVs on the market USA growth will jump to EU levels.

That is all there is to it!

Yeah, I think the Outlander PHEV will probably be a plug-in that changes views.

Tesla X is here, and I think Volvo will have some bigger PHEV on the market before Outlander.

Outlander really got unfortunate that it was not designed for USA regulations, while Mitsubishi decided against conversions.

Sad, but maybe they where production constrained already? Or decided that gas version wont sale much?
PHEV one would be insta-hit, that for sure.

Lots of reasons why would be car buyers don’t even consider EV’s. Price is probably #1, but the other reasons are also compelling. Long charge time for short range is tough to deal with. Human nature is to stay with what you like, regardless of the potential benefits of new technology. Very good friend of mine drives a Nissan p/up. His commute is about 30 miles each way. When I talked about my Volt and how(with workplace charging, which I believe his employer has)he could probably drive both ways 100% on electricity, he admitted he had never even considered the Volt, and its much cheaper long term cost of ownership. Right now his truck gets about 20 miles per gallon. So he buys 15 gallons of gas per week. Even at $2.50/gallon, he is spending $150/month just on his commute. My guess is that he’d spend maybe $50/month on powering a Volt. He just wants to stay with what he has(and has another mid size ICE also, so he has the ability to travel beyond a BEV range if needed-notwithstanding the 300+ mile range of the Volt using the generator). Volt would make sense for him, but it’s not even… Read more »

Electric cars are evolving rapidly but normal people don’t follow their evolution.

In Quebec, we have now over 20 fast chargers (60 next year) from only one last year. Some would be buyers have excluded EV from old facts and it’s hard to make them look back at EV.

To 98% of population, a ICE car is nothing but a somewhat noisy BEV, very cheap, with a 2 min. recharge time and superchargers every 5 miles.

Does it help ?

That does help. That’s a very good way of putting it. I’m not sure that typical ICE drivers are even aware of the noise, vibration and odour of their cars since they’re so accustomed to them. EVs need to be experienced.

True, except the very cheap part. The BEV doesn’t have the $60 weekly gas bill, nor the $160 quarterly oil change, nor the $1000 biennial brake job.

Then this is what EV enthousiast should insist on, running cost. That would be the best way to promote EV’s as what I read here is mostly “EV’s” are clean. Who cares ? Not many.

$160 for an oil change? That’s a bit on the high side.

It is quite high. But high-end vehicle dealerships pull that off often. People will charge what the market will bear.

I was pretty much always too cheap to even use the cheap oil change places. Especially because many of them don’t even drain your oil using the plug on the bottom. Instead they use a vacuum system to suck out your old oil. And that tends to leave some of the gunk at the the bottom of your oil pan in the car thus is not as good as a traditional oil change.

When the Leaf, Volt and Prius are all negative comps compaired to last year (3/4 the top sales) you will have a bad year. 2015 is a throw away year for sales from when I care about. the new Leaf and Volt that will have higher numbers next year will make or break electric cars for the USA I think. Chevy wont make a ton of Bolts if the Volt sells bad.

Not really bad year; more an year before “new refreshed models” coming to market. All 3: LEAF, Prius, and Volt getting 2016 MY refreshes for the 2017 calendar year.

Another factor; 2015 is the first year that there were a significant number of used PEVs in the market competing with new PEV sales. Thanks in part to a large number of 2-3 year PEV leases coming to term.

The used PEV sales numbers don’t really get analyses, but one can consider that they’re likely 60-75% of new sales volume from a combined 2012/2013 average. (more speculation than solid data, to provide some perspective on used PEV numbers)

The only problem with the VOLT is rear seat headroom.
GM needs to:
1) Build a WAGON with headroom.
2) Review it’s human spec modeling. Kids today are Bigger.

Ford:
1) Needs to FIRE the current CEO.
2) Update the damned CMAX.

GM needs to go bigger . . . put the Voltec drivetrain into SUVs, a pickup, and minivans. Such cars will sell like hotcakes the next time gasoline heads towards $5/gallon.

Absolutely – I’ll never understand why they haven’t yet done this.

Many keep mentioning price being a constraint, and this really isn’t true any more. Nissan allows the finance entity (NMAC) to claim the Leaf federal tax credit and then they substantially lower the lease price for the customer to reflect most or all of this credit. Nothing down and $200-$275/month for 36 months and $11K residual if you want to buy at the end, what more can someone want? I suspect they just want a plug-in or full electric SUV or truck. For the bargain buyer or credit constrained, a used Leaf is a great buy.

As already mentioned, Nissan should really hit emotional ads that show smoke belching cars, people wasting their time at smelly gas stations, or just the serenity of listening to classical music in a quiet, refined Leaf. It’s easier to convince the typical idiot consumer with an emotional play.

Even the “Friends of Coal” yard sign (yes, there is real) citizens should be able to see the logic of buying an electric car and helping their favorite industry for a few more years.

May I suggest that calling 99% of car buyers “idiots” probably does not help your cause.

Why do I have to keep trotting out the biggest sales success of EVs?

Norway’s market penetration for EVs is fully 25% of all new cars sold, and it’s been that way for a few years now. Just as importantly, they’re doing that with only about 5% of the total number of car models available to Norwegians. There’s only about 5 models of electric cars being sold there, compared to the hundred or so that are on the market.

The primary reason for this is that you can buy an electric VW Golf for the same price as a gas-powered VW Golf. You’d have to have some really compelling reasons to even buy the GTI in the first place, because their running costs are 10x as much. Gas in Norway is far more expensive and electricity is somewhat cheaper than in the US. As a result, the EV is indeed outselling the ICE.

Level the playing field, and watch things take off on their own merits. EVs are a compelling product, but their cost holds them back.

There are those for whom a BEV is not viable for real reasons (lack of charging, rural distances, etc.). But on the whole, perceptions about range, charge times and price are a big part of what’s keeping people away. I say perceptions because for many people, BEV range is actually sufficient for commuting or a second vehicle; charge times are a non-issue if you consider most uses of the car, at least for homeowners (most charging is at night while you sleep); and prices are high but total costs are low because of incentives, rebates, low operating costs, etc. But people cling to their perceptions and resist change because that’s easier or simply because they lack sufficient info for anything better. Real life example: where I live the Spark could be leased for free ($139/month lease for 39 months with no down, but you get $5,500 back in combined state and local rebates — not a tax credit, but checks in the mail within 60 days of purchase). Yet the local dealer had only one Spark in stock, and I don’t know of anyone who took advantage of this. This is in a metro area of half a million people.… Read more »

Where do you live to get $5500 rebate? In CA, max is $4000, typical is $2500. I thought all CA local rebates are expired.

Regardless, SparkEV lease is $38/mo for $4000 rebate, $77/mo for $2500 rebate, which is cheaper than ANY car. I try to publicize it via my blog, I hope people see how good SparkEV can be. Around where I live, SparkEV’s been sold out for many months, and Chevy couldn’t (didn’t?) even bring one to drive EV week events.

http://sparkev.blogspot.com/2015/09/why-sparkev-by-sparkev-blogspot.html

Cody, Thanks for a very thoughtful and informative post. Your emphasis on the typical time scales of change in the auto market is important, and not discussed enough. I am actually working on a post that addresses this as well. One point which you down-weighted and brought up only in the end, is the production capacity. Just like EV “brand” loyalty, dealer know-how, etc. etc., take a good decade to develop, so does the sheer capacity of automakers and their suppliers to reach those critical market-segment-grabbing volumes and prices. On one smart point that you make I disagree. Yes, EVs might not solve any immediate pressing personal consumer problem (although a used Leaf, now costing <$10k, can give a low-income family the lowest-cost vehicle they'll find). However, the consumer economy is well past that. What kind of problem does the iPhone solve? Or to be more generic, what kind of problem did the PC solve? For documents people had perfectly working typewriters. They had no computing needs to speak of. Games could be played without a computer. Rather, this new product comes and it's exciting, provides a different qualitative experience, and is superior to the current default in so many… Read more »

Assaf,

To some degree what you say is true, however, traditional manufacturers can copy the key features ( over the air update, large display, better integration ) without going electric…

But not the smooth, quiet ride, nor the incredible acceleration that Tesla offers.

Assaf said:

“What kind of problem does the iPhone solve? Or to be more generic, what kind of problem did the PC solve? For documents people had perfectly working typewriters.”

I’m guessing you never used a typewriter much. The ability to make a correction to something you’ve typed and almost instantly print out a new copy, instead of having to re-type the entire thing, was quite revolutionary to those of us who grew up using a typewriter.

If a desktop computer was merely a fancier typewriter, then large businesses would still have secretarial pools.

But I agree with your larger point. For those who don’t see burning fossil fuel for daily transportation as an important problem, there is no significant “problem” which the EV solves. And there won’t be, so long as gasoline/petrol is so cheap. When the price of gasoline in the USA inevitably goes back to $4 per gallon, or higher, then EVs will start looking more attractive again.

bad guess regarding my age 🙂 I do remember those days.

Any alternative version of an existing product, can point to some problem with the current version that it solves. Like you’re saying, to the average consumer EVs can boast lower running costs.

But beating typewriters was not the home PC’s main selling point. Most people did not type lots of things up at home anyway. It was mostly about excitement and feeling part of the future.

Assaf said:

“But beating typewriters was not the home PC’s main selling point.”

*Shrug* I can’t speak for everyone, only for myself. The ability to type text documents, format them to create or fit a form, and to be able to store them for nearly instant retrieval, was the main reason, indeed nearly the only reason, I bought my first (256 IBM clone) desktop computer. I had earlier used a friend’s Apple II, and what impressed me the most was AppleWorks’ word processor. Primitive though it was, using a hard-wired 80 column text display rather than a graphic interface, it was still light-years better than using a typewriter.

In those early days, the Internet wasn’t a place to shop, and “social network” sites were electronic bulletin boards.

I guess a lot of people bought them as game platforms, but I’ve never bought a computer to be just a toy. It has to be able to do real work.

This is why rising gas prices would help EVs a lot. But that is not happening these days.

And worse, EVs may cause it not to happen because as long as there are at least moderate EV sales, the reduced demand will keep oil prices from increasing.

Eventually, we’ll have to tax gasoline higher. However, that doesn’t seem to be pushing EV sales real high in Europe. :-/

I think the lack of charging infrastructure for apartments/condos is a big problem that needs to be resolved.

Haha… regarding typewriters.

When the early adopters (2010/11) place orders for LEAFs & Volts, the were no tablet computers (ie: keyboard-less computers).

If ordering an EV in 2915, the chances are more likely to do it on a touch screen than physical keyboard. (either ordering, or communicating with sales associate, or representative)

Interesting how market and trchnogy has changed! 😉

Indeed!

When I visited the Tesla store in Kansas City, immediately inside the door was a giant monitor, which I discovered was a touch screen set up to let you configure a Model S to your specifications.

Tablets have been around since the early 2000s and predate the Netbook fad. Like the netbook, tablets are also a fad. All fads go through a cycle of rising in popularity and then waning, before rising again in popularity.

Cell phones started out big, got smaller and smaller, and now are going big again.

Tablets will all but disappear soon, but they’ll be back.

…and by 2915, computers better be reading minds, because who can be bothered to move fingers to convey thoughts?

Its much simpler than that.

Marketing can overcome ignorance in potential EV buyers. So:

total ev market=buyers+marketing

But marketers are all basically ignorant. So the formula is:

marketing = ignorance
total ev marketing=buyers+ignorance

meaning that the more marketing you have, the worse ev sales will be.

haha +1

Any good marketing or business developer knows that adoption of new products in the market usually take some sort of hockey puck trajectory, in that the first couple years is slow steady growth and then a HUGE surge as the product goes “mainstream.”

Yes, and if you do a bit of math, you find that most of the “projections” of ev sales growth are simply linear extractions.

Check out Tony Seba’s prediction. He says that the EV revolution will start between 2017 to 2018 and ALL mass market vehicles will be electric by 2030, making gasoline and diesel obsolete!

It is an hour video, but this EV section starts at around 52:30

https://www.youtube.com/watch?v=8xy1EDY7Ruw

I didn’t know that plug-in sales were considered to be slow. The last couple of months have seen drops in Leaf and Volt sales due to the new and improved models being released right about now. Makes perfect sense and does not require further explanation.

If the question was why mass-adoption hasn’t happened yet, well, that answer is not difficult, either. The plug-in market has not saturated the people with ready access to charging on-site (home garages, etc.).

Therefore, the issues for mass adoption seem straight forward to me: 1) most EVs are relatively short range, which, at least psychologically, seem insufficient to the un-initiated; 2) most EVs are also goofy or trendy looking – certainly do not have the mass appeal that the Model S design has, for example; and 3) total cost of ownership is all well and good, but if you can’t make the asking price, then none of that matters.

oh, and 4) if they don’t sell them, then you can’t buy them – supply constraints and limited market releases by many automakers cannot be ignored in the adoption discussion of plug-ins.

Very interesting analysis! Thanks for sharing your thoughts and hang loose in your fabulous part of the world!

True marketing would have found out if the market even exits for electric cars in the first place. Tesla did the “build it and they will come”, it paid off with rich people but that is not even close to what marketing does. They research, explore, project, model and determine if a market really exists at all.

Some other factors: 1) Habitual Lust and Emotional Buying. There is a segment of buyers who have invested part of their identity in their vehicles, and have done so since early childhood. It might be a brand identity (BMW guy or Ford guy), or it might be a truck owner identity. Whatever personal connection to cars these consumers have, are deeply habitual, and include strong emotional attachment. The challenge for EV’s is to break into this and replace old habits with new habits for this type of consumer. 2) Group Thinking/Safety in Familiarity. It is easy to purchase a product that you’ve already bought before, and been happy with. Especially if millions of other consumers do the same. Safety in numbers, and safety in familiarity gives the advantage to ICE cars with decades of sales success. Only sales success over time will change that. 3) Cars as a commodity device. Some consumers simply aren’t interested in their cars. It is just a device that they almost reluctantly need to own. They aren’t interested in cars, and aren’t looking for anything new. No change is easier. 4) Market Sector Diversification. There are literally millions of unique vehicle combinations of brands, models,… Read more »

This is a pretty well written piece and I agree with many of its points.

*sigh*. Too bad that most EV supporters don’t see that.

If you don’t see the issue, then you can’t work on resolving the issue.