Weatherdem's Weblog

Bridging climate science, citizens, and policy

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Slow 2011 Hybrid Car Sales & $4 Gas

I’ve read numerous articles in the first week of the new year describing the “disappointing” sales numbers of hybrid and electric vehicles in the U.S. in 2011.  It somehow makes sense to declare a subsector industry dead after sales came in under expectations.  Interestingly, the same hybrid/electric naysayers didn’t have the same opinion when internal combustion car sales tanked a few years back.

Here is the latest article, written from the Detroit Auto Show.  It brings together a couple of salient facts which aren’t explored in any depth.

Hybrid sales waned as gasoline prices ebbed in 2011, declining to 2.2 percent of the market from 2.4 percent a year earlier, according to the research firm LMC Automotive. Meanwhile, sales of the Nissan Leaf electric car and the Chevrolet Volt plug-in each fell short of expectations.

Analysts do not expect the segment to grow significantly this year: the combination of gas prices below $4 a gallon and higher upfront costs for the cars is not attracting consumers.

I understand the higher upfront costs, especially in the continued economic malaise that most Americans are experiencing.  The $4 per gallon of gas is an interesting factoid to throw in there though, don’t you think?  After all, we’ve only visually seen $4 gas once so far.  Gas prices in 2011 came close to $4, but the magic `4` never appeared on signs.

Which brings me to the following: demand in 2011, especially the 2nd half of 2011, was multiple percentage points below demand in 2010.  Yet gas prices rose to close to $4 anyway.  It’s all supply and demand, you might say, especially demand in other countries which would lead to higher fundamental prices.  Well, oil prices shot up in Feb-Apr from $84 to almost $114 per gallon, then fell back below $80 by Sep (when gas prices were highest, despite slack demand in the U.S.).  Oil is trading at more than $100 per gallon again now, yet gas prices continue to decline.

No, there are more variables than simply supply and demand at play.  $4 gas represents an important psychological barrier for traders just as it does for gasoline consumers.  There is incredible pressure to keep prices from rising above that threshold because too few people can think critically: when prices pass the threshold, one trader panics, then most everybody else panics.  Consumers are just as irrational, however.  More than anything, they sense that $4 gas represents some kind of significant threshold, even though too few consumers can analyze at which threshold gas represents a significant point at which their household budget is adversely affected.  Moreover, consumers have an irrational desire to recoup additional costs of a hybrid/electric vehicle inside of 1 year.  Where are their similar demands for products they’ve been buying their entire lives?  It really doesn’t exist.

In 2000, Toyota sold 5,600 Prii in the U.S. (the 1st year available).  In 2011, Nissan sold 9,700 Leafs in the U.S. (the 1st year available), or 73% more units than the Prius.  75% more sales of just 1 new hybrid/electric is a very significant number.  Imagine if there were 73% more sales of a new kind of cell phone than a different cell phone 10 years after the first was introduced.  That would be touted as a wild success story.  The poor treatment of the hybrid/electric vehicle segment is pitiful.  Is there a long path toward 1.5 million electric vehicles on the road by 2015?  Yes, there is.  But you might want to share with the rest of the car industry that having aggressive 2015 goals is a really bad idea.  I doubt you’ll receive much of an audience.


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General Electric To Buy 25,000 Electric Vehicles

Expect more of this kind of news: General Electric has seen the writing on the wall and has decided to buy 25,000 electric vehicles for its fleet by 2015.  They will make an initial purchase of 12,000 GM cars, beginning with the Chevy Volt.

This is good news on a number of fronts.  Most importantly, tens of thousands of electric vehicles on the road means that much less oil needs to be drilled, transported, sold and burned in the United States.  The next phase in a 21st century grid will require less coal and natural gas burning, but less demand for oil is good for the environment and our national security.  It demonstrates that electric vehicles are viable transportation choices for fleet cars, which means cars like the Volt will be on the road and visible to the public in greater numbers sooner.  It will allow for smarter grid technologies to be implemented in more places.  It will help push the cost of electric vehicles lower moving forward.  Hundreds of thousands of electric vehicle sales will have to be made to start doing this.  The more, the merrier.  This will have a direct and nearly immediate benefit to GE – they are developing charging stations to sell.  There’s nothing like real-world use to make charging stations’ performance more efficient and robust.

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Better Place Continues To Grow Viability

A working alliance with General Electric and $350 million raised lends substance to the upstart Better Place, hoping to catapult fully electric vehicles with long ranges into the automotive marketplace.  Future work to help consumers negotiate utilities access to battery power when not driving would help Better Place and the U.S.’s antiquated grid design.

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More Electric Car Charging Stations To Come

This is good news in a time when “natural gas vehicles” are being pushed by some in the dirty energy industry:

Only a few hundred public chargers exist now, but several government grants totaling more than $115 million will help add thousands more, including in San Diego, Detroit, Washington, D.C., and Bellevue, Wash.

Electric vehicle advocates hope more will be built by private retailers and restaurants, using the charging stations to draw in customers the same way coffee shops offer Wi-Fi.

Those grants are puny in comparison to the scale needed to develop this new industry, especially in light of President Obama’s stated goal of 1 million electric vehicles on American roads by 2015.  Still, I suppose some small grant are better than none at all.

Once electric vehicles become a growing portion of the transportation marketplace, efforts to stop building dirty energy facilities and build up clean energy facilities will also become commonplace.  I look forward to that day.

BetterPlace continues to make progress around the world implementing their vision for deploying electric vehicles.

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Surprise! Electric Cars Have Plenty of Range for Daily Driving

I’ve always found people’s reticence about buying electric vehicles because they wouldn’t be able to drive far enough to be based on uninformed opinions.  With a range of 100 miles, the vast majority of Americans would be able to drive to work and back home, with short jaunts for lunch and errands in between, on a daily basis without having to rely on public charging stations.  With a recharge time of 4 to 8 hours, a majority of Americans would simply be able to plug their cars in at home every night; no other shift in driving behavior would be needed.  Drivers would spend less time on a weekly basis plugging their cars in at home, and in the worst-case scenario in public, than they do at gas stations today.  Really, the only obstacle is likely to be psychological.  Most people don’t like to change their habits.  The fact that the cost to charge an electric vehicle is less than the cost to put fossil fuels in their tank is also largely lost on the public so far.

A new study supports my gut feeling:

Studies of drivers who already have electric cars are finding that they prefer the convenience of charging at home, and despite their vehicles’ limited range, most are able to avoid public charging.  The relative lack of these recharging locations could prove less of a deterrent to electric car acceptance than was expected.

Much like the community that formed around Prius drivers supporting each others’ attempts to maximize miles per gallon, communities which have been chosen as test markets have also coalesced together.

MiniE drivers posted their locations on a Web site they shared, so if one of them found themselves far from home with a low battery, they could head to another MiniE driver’s home for some electrons to get home.  This self-organized grass-roots support network that sprung up through the use of social media is an example of how electric car test drivers have communicated with one another and with carmakers even without organized surveys like Turrentine’s.

Unsurprisingly, it seems that corporations continue to underestimate the power that social networking can provide to boost their products.  They’re largely using it in unsophisticated fashions.

Now, this isn’t to say that public charging networks won’t be needed.  Market acceptance is likely to increase as people see charging stations in places where they normally drive.  But at the end of the day, real-world use has demonstrated that the “chicken and egg” question that too many thought existed simply doesn’t.  Electric cars aren’t solely dependent on public charging stations.  Public charging stations instead are more dependent on electric cars, as I thought would be the case.

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Clean Energy Newsmakers: Carlos Ghosn, electric vehicles, Better Place

Nissan’s CEO Carlos Ghosn understands the risks that future oil prices and climate change will have on transportation and responds by pushing electric vehicles.  He’s a visionary that has feet solidly on the ground.

As 2010 auto shows move around the country, the hottest vehicles are the cleanest vehicles: hybrids and electrics are garnering plenty of attention and praise.  They are only beginning their path into the U.S. auto market, but will soon dominate it, I think.

One thing Republicans aren’t prepared to handle: business leaders asking Congress for prompt, decisive climate action.  More and more leaders are realizing how serious climate change is and want to get in front of it, not be run over by it.  Aspen Skiing Co. was one of 83 U.S. corporate leaders who say the U.S. is “falling behind” on clean-energy development.  Is it too little, too late, though?

I’ve followed the story of Better Place for a while now.  Here’s a strong video about investors on electric vehicles and opportunities opening up for Better Place around the world.  Better Place CEO Shai Agassi was on CNBC recently discussing what they’ve achieved in a short period of time.  Later this year, Israel is scheduled to become the first place where widespread implementation of the Better Place business model takes form.  Other locations will follow.

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Chrysler Shoots Itself In The Foot … Again. Good Riddance.

I haven’t been a fan of American auto manufacturing corporations for years.  By that, I mean the executives deigned worthy enough to run the companies … right into the ground.  I fully support the hard-working men and women employed by these over-sized behemoths.  The workers are the backbone of America’s middle class and receive my full support.  It’s not their fault their corporations have been run by greedy, immoral hypocritical liars for decades.

The latest proof?  Chrysler, who announced that they were dismantling their electric vehicle engineering team.  That’s the same team and program they promised American taxpayers would be in place as the begged for millions of our tax dollars to prop up their purposefully dysfunctional wasteland of a company.

This is obviously a very stupid move.  Regulations are now in place to force Chrysler and other car manufacturers to improve fuel efficiency (a standard Chrysler and the others paid millions of dollars to fight for years).  The cost of meeting these standards are not prohibitive.  Chrysler and the others exist in the European and Asian car markets, which have had more robust standards for years.  They chose to make inefficient vehicles for American customers.  Given the price of oil and gas, guzzlers are no longer profitable to make because the American public has shifted its buying habits.  Shutting down an electric vehicle engineering team as the marketplace transitions to more fuel efficient vehicles is an absurd move to make.

But it goes further than just that.  It hurts other corporations and other workers.  A123 systems manufactures electric batteries for use in vehicles, among other things.  They could be a viable American success story: using ingenuity and entrepreneurship to exploit a market need.  They contracted with Chrysler to provide batteries earlier this spring.  What are they supposed to do?  What happens if they fail because Chrysler’s executives decided they wanted to fail?  That unnecessarily hurts the entire hybrid and electric vehicle market.

Much like the Wall St. banks who gladly accepted trillions of taxpayer bailout dollars with few strings attached, Chrysler has spit in Americans’ faces.  By doing so, they cement the company as the most likely to fail moving forward.  They have continued their crappy decision making from the 20th century too far into the 21st century.  By doing so, I say good riddance.  One less non-responsive corporation in the marketplace will do nothing but benefit consumers.

[h/t Climate Progress]