Electric Vehicles: Hot New Technology, or Bust?
In this series of blog posts, RFF researchers Virginia D. McConnell and Joshua Linn take a look at the current state of the electric vehicles (EVs) and the effect of current and future policies on the market. Click to read the first, third, fourth, and fifth installments.
Some news reports suggest that sales of electric vehicles (EVs) are booming, but others say sales are far short of expectations. Consumer responses to EVs are bound to be complex, because they depend on many factors including vehicle performance, price, convenience of use, and other attributes compared to alternatives. Here we look at the evidence about EV sales over the past few years, compared to sales forecasts.
First, EVs have important advantages for consumers: in pure electric mode, they have excellent torque, which means that they are responsive and accelerate quickly, much more quickly than conventional vehicles. (Though they tend not to reach the same top speeds as conventional vehicles, topping out at only 80 or 90 mph). Also, all-electric vehicles often have limited range due to battery size. For example, the Nissan Leaf can go between about 70 and 80 miles on a charge. The Tesla Model S, a very high-end all-electric sports sedan, is an exception: with its large battery pack, it can travel about 200 miles on a charge, and has a lot of power even at high speeds. Consumer Reports rated the Model S as its best car for 2013—in fact the best they had tested since 2007. Other EVs have also won awards from consumer groups: the Chevy Volt, the first plug-in hybrid electric (meaning that it runs on a charge or with gasoline), won the Motor Trend Car of the Year in 2011.
But have sales met expectations? Two EVs have been available since 2010: the Volt and the Nissan Leaf. Sales of both have lagged manufacturers’ original sales expectations, but other sales metrics suggest more mixed results.
Originally, GM hoped that sales of the Volt would increase rapidly over the first few years. Forecasts were for global sales to increase from about 10,000 for MY 2011 to 45,000 by MY 2012 and 60,000 by MY 2013. Actual sales have been much lower. The first full year of sales for the Volt in 2011 were only 7,671, and in 2012 they were 23,461 in the U.S. market (about half the 2012 forecast; the U.S. accounts for most of the global market). The Volt plant in Michigan even had to shut down for a few weeks in November and December of 2012 because of high inventories. However, the Volt is selling well compared to other high-end mid-sized cars, such as certain Acura, BMW, and Infiniti models. Predictions of sales of the Volt in 2013 are for about 30,000 in the U.S. market, but so far in 2013 sales are only slightly higher than in 2012. Half of the market for Volts is in California.
Sales of the all-electric Leaf have been lower than for the Volt. Originally, Nissan had hoped to sell 20,000 Leafs per year, but in 2011 and 2012 it sold only about half that estimate. 2013 sales have been better, partly driven by a $6,000 price cut. So far in 2013, sales of both vehicles are about the same but are lower than hoped-for levels.
Tesla Model S sales have been strong, even relative to its competitors. Tesla plans to offer 20,000 Model S vehicles in 2013, which would give Tesla nearly 10 percent of the market for passenger cars priced at or above its base price of around $62,000. Tesla benefits from subsidies, especially in California (more on these policies in a future post).
By May 2013, there were more than 100,000 EVs on the road.
But new vehicle technologies are always adopted over time—how do EV sales compare with other technologies? The figure below shows cumulative sales by month after initial introduction of various EVs compared to the well-known Prius hybrid-electric (introduced in 2000). All of the EVs appear to be doing roughly as well or better than the Prius did in its first few years of sales in the U.S. Currently the Prius HEV sells about 235,000 vehicles nationwide (roughly 2% of all sales), and it is the best-selling vehicle in California. But one should be cautious before drawing broad conclusions from this comparison because there are many things that can influence sales.
So, although EV sales have been below expectations for a number of early models, sales have been increasing over time. Some EV models are doing reasonably well in the market compared to close competitors. But are the large federal and state subsidies the reason? In the next post, we’ll look at the decision to choose an EV from a consumer’s perspective.