Where We’ve Been, Where We Are, And Where We’re Going
Back in 2011, I was able to drive home in my Nissan Leaf after waiting nearly 18 months on the reservation list. I was one of the first people in Texas to own a Leaf. At that point I honestly thought that by this point today half of new car sales would be electric and charging stations would be at every grocery store, school, and workplace.
Now, fast forward to 2016 and things aren’t much different. The only real difference between today and 5 years ago is that I do at least see other EVs on the road. Not every day, of course. Maybe every other day. Of course, in Texas the selection of vehicles is much smaller than people in CARB states. So when I see another EV it is usually a Volt, Leaf, or Tesla. I occasionally see an i3 or Ford Energi cars, but they are harder to spot since they look exactly like their gas counterparts. The point is, I’ve been at a loss as to why more people haven’t adopted EVs and PHEVs.
This last year (2015) was sort of a sales slump for the whole EV market in the US. Many excuses have been made as to why that is. And I’ve been skeptical of some of them. But here’s a run-down of the common reasons.
1) Politics – I think we all remember the lies that have been spread in the early days about EVs, particularly the Chevy Volt. Everything from fires, to tax payers paying $275,000 for each one sold. Certain right-wing news organizations and talk-show hosts used every opportunity to turn people against the Volt. Why? Because somehow the car had been associated with Obama. And anything that is associated with Obama must be bad. I don’t think these people had anything personal against the Volt. It was just like anything else, such as Obamacare. As soon as Obama’s name was attached to it, the right-wing hated it. That’s just politics and the other side is just as guilty of this sort of thing. The good news is that most of this has passed and the public has a pretty short memory, which is obvious every time gas prices go down and people start buying monster gas-guzzlers only to be surprised when gas rises again.
2) Georgia – Georgia’s incentive disappeared in June of 2015, likely causing a good 20% downturn in EV sales on its own, hitting the Leaf harder than any other EV.
3) Prius Plug-in – Phasing out of the PiP last year also made a good dent in over-all EV sales. During the height of its sales in 2014, it was adding 1,000 to 2,000 units per month to the overall EV tally.
4) Osborne Effect – With the new Volt and Leaf announced with significant upgrades last year, many people held off buying a current model, preferring to wait for the next generation. In fact, this issue continues today as many people are now holding out for a Bolt EV or a Tesla Model 3. Also the i3 is suffering from this now.
5) Dealers – While some dealers are enthusiastic about selling EVs, most have not been. Many dealers have been actively hostile towards EVs trying to steer potential customers away from them because they are too much trouble to sell and not profitable enough for them compared to gas cars.
Now, let’s talk about the elephant in the room. It is my firm belief that most manufacturers have really not been motivated to sell EVs. Even if the cars are technically profitable, I think they are less profitable than similar gas models. So, much like the dealers, the manufacturers have had the same attitude. Why sell somebody a Volt, for example, when the Cruze is so much more profitable? Most of the manufacturers only got in the game to comply with CARB rules in the first place. Hence, the plethora of compliance cars that are not available where I live because Texas has no requirements to sell EVs.
And then there’s the issue of selection. Why are there no EV or PHEV pickup trucks from the likes of Ford, or GM? Obviously they have the capability to make them. Let’s face it, certain people love SUVs and trucks and they won’t buy anything else. So even if they’d like to go electric, they aren’t willing to drive a sedan or sub-compact in order to make that a reality. I believe this all goes back to the manufacturers. They only want to sell a certain amount of EVs and thus have no motivation to offer these types of vehicles.
So, that’s where we’ve been and where we are today. Now that I’m much more seasoned and wise to the market and my expectations are more in line with reality, I think I can confidently make some predictions about the next year or two.
The most important EV news over the last 5 years has been the reveal of the Tesla Model 3. Many manufacturers have known this was coming. But, I think they have all probably been surprised by the scope of it. Now many of them are probably in a panic. The Model-S and X were not competition to anyone except the luxury brands.
For example, Ford and GM had nothing to really worry about. However, the Model- is going to change the market much like the iPhone changed the cell-phone market. For the fist time ever, EV sales from Tesla are going to start eating into sales of gasoline cars by the major players. This changes the entire dynamic because no longer do companies like GM and Ford have to make EVs to comply with CARB. Now they have to make and sell EVs to prevent sales being lost to Tesla. So now GM would rather sell you a less profitable Volt than not sell you anything at all, due to the sale being lost to Tesla.
So how will the other manufactures compete with the Model 3?
General Motors – I believe the 2nd Gen Chevrolet Volt was designed with the idea of doing battle against the Model 3, even before they knew what the Model 3 would be. The Chevrolet Bolt EV was probably also conceived for this reason. GM hasn’t been sitting around doing nothing.
Neither GM vehicle has shown the type of excitement by the public that Tesla has. But that doesn’t necessarily mean anything in the long run.
For example, Android phones compete well with Apple’s phones, but Apple is the only one that creates that public excitement and has lines of people at their store. I believe the 2nd Generation Volt is going to show some increased sales. It’s hard to say yet due to limited inventories, but we’ll know for sure by August. I’m expecting monthly sales to perhaps double or triple the previous generation.
Ford – Ford’s efforts have been minimal to this point, yet surprisingly successful. I believe their strategy from the beginning with the Energi cars has been to minimize the cost of producing a PHEV, believing that sales would never be strong enough to justify a dedicated platform. Of course, what they now have is a self-fulfilling prophecy. Since their vehicles are inferior to dedicated products, they are naturally limiting the sales of those vehicles.
Frankly, none of their vehicles are likely to compete with Model 3. The closest thing they’ll have is the new Focus Electric that’s supposed to be on the way with more range and fast charging. But I doubt many informed shoppers would choose that over a Tesla. I don’t see much change in Ford’s monthly EV sales.
BMW – An interesting case, BMW never fails to provide some drama with their monthly sales numbers. But one thing they are doing is diversifying by offering many different electrified models.
The i3 is the one that took the largest sales plunge, but I believe this is also due to the Osborne effect. Once their new i3 with longer range shows up on the market (it enters production in July – details), I expect sales to rise back to traditional levels. But the vehicle is too polarizing to ever be a huge seller. I don’t really ever expect to see the i3 sell more than 2,000 units per month. However, I do see BMW staying near the top of the sales charts just due to the multiple different models they will have.
Nissan – I think the 1st generation Leaf is wilting. For the longest time, it was the only capable EV being sold nation wide. I think many of their sales were to people who wanted an EV and the Leaf was pretty much the only viable choice. But the Leaf has a polarizing appearance to it and since there are so many alternatives now, I think people are moving away from the Leaf to other brands.
Even the increased range of the latest model hasn’t really caused a surge in sales. If anything, one might say it is the only thing keeping the sales from tanking even further. However – Nissan will probably be revealing a 2nd generation Leaf sometime this year. They have already said the body style would be more mainstream. So Nissan may have a Tesla competitor up their sleeve. We’ll just have to wait and see.
Toyota – I wouldn’t have even bothered to mention Toyota until recently. As I pointed out in my previous article, I expect the all new, Prius Prime to sell very well, perhaps as many as 50,000 per year, or more. I doubt many EV enthusiasts will rush out to buy one, but the general population of Prius buyers will be the target.
And it’s obvious by the large center touch screen that Toyota has been paying attention to Tesla. I’m not sure there will be a huge amount of cross shopping between Model 3 and Prius Prime, though. I would not be surprised if Toyota has a Model 3 competitor in the works, though. It may be a year or two before we see it.
VW / Audi – I don’t really see that they have anything now or on the horizon that is going to compete with the Model 3. I think they have some serious work ahead of them if they want to stay in the game. Their best hope would be to bring the GTE model to the USA.
Kia / Hyundai – I know they have the new IONIC coming (both in BEV and PHEV versions) and also PHEV versions of their Sonata (Hyundai) and Optima (Kia). However, I don’t expect any of these vehicles to compete with Model 3. I do expect them to be cumulatively adding at least 1,000 to 2,000 units per month to the overall EV tally, though.
Tesla – Odd that I am including it here. But the Model S might lose some sales to the Model-III. It is too soon to tell. It could have the opposite effect as well, with the Model 3 bringing more attention to the brand and those who don’t want to wait might spring for an Model-S today. I don’t expect the Model-X to be affected, and I expect to see continued increase in sales from the X, adding an additional 2,000 sales to the overall EV tally.
So, my prediction for the next year or two is overall good, in that I predict a very noticeable rise in EV sales by the end of this year and carrying on into next year, driven mostly by increased number of available models as well as large increases for GM and Toyota. Once things are in full swing I expect to see these monthly numbers on average from the big players:
2,000 – Tesla Model X
2,000 – Tesla Model S
3,500 – Chevrolet Volt
2,000 – Chevrolet Bolt EV
4,000 – Toyota Prius Prime
1,200 – Nissan Leaf
1,000 – Ford Fusion Energi
600 – Ford C-Max Energi
800 – BMW i3
That’s 17,100 already just from the main players. I would expect to see over 20,000 units per month with all of the smaller players added in. Which puts us near a quarter-million for a year. Once Model 3 hits the market in volume, I wouldn’t be surprised if it will add an additional 250,000 units per year all by itself, maybe more, thus boosting the entire sales tally for 2018 to be half-a-million EVs sold in the USA.
There are some other considerations as well, that I don’t know how might play out. It is assumed that many people may hold out for a Model 3 instead of buying a current generation EV. That’s certainly possible and likely in many cases. However, the opposite is just as likely to be true. People may suddenly start craving that Model-3 but don’t want to wait 2 to 3 years to get one. So instead they start shopping around for something now. Thus Tesla continues to build public interest in the entire sector.
Also, manufacturers like GM may want to take advantage of Tesla’s delay and start advertising the Volt and Bolt EV. The last piece of the puzzle is the government subsidy for EVs. What will happen when it phases out? My hope is that the increase in sales of EVs will further reduce battery costs to the point that manufacturers may be able to cut prices so that the consumer won’t see all that much increase in cost. (fingers crossed)
How will we know when we’ve reached the tipping point? Simple. This is my prediction. Mark my words. They day that Tesla announces an EV pickup truck, is the day that will prove we are there. Why do I say that? Because the moment Tesla announces a truck, GM and Ford will absolutely have to create something to compete with that, knowing that Tesla would be cutting into their bread and butter. And they won’t create pitiful EV trucks just to comply with CARB. They’ll create GREAT trucks to compete with Tesla. They’ll have to. Once the market of EV pickup trucks is cracked, you can say goodbye to the oil age.