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Why So Many Critics After 17,000 Electric Vehicle Sales in First Year?

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"Why So Many Critics After 17,000 Electric Vehicle Sales in First Year?"

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by Randy Essex and Ben Holland, cross-posted from the Rocky Mountain Institute

Figures this week showed that the first mass-produced electric cars in the United States, the Nissan Leaf and Chevrolet Volt, had total sales of 17,345 in 2011, the first year in which they were available. Compared with sales of 9,350 gas-electric hybrids in 2000, the first year the Honda Insight and Toyota Prius were offered in the U.S.—where total hybrid sales have now topped 2 million—17,000 might seem like a decent start for EVs.

Instead, they are under fire—even as gas prices jumped because of Iran’s threats to close the Strait of Hormuz, a chokepoint in global oil trade.

The Washington Post [last] Sunday called for elimination of the $7,500 tax credit for EV purchases, and Mike Kelly, a congressman from Pennsylvania who is a car dealer, has introduced legislation to end the credit.

Rocky Mountain Institute sees EVs as a crucial step in moving the United States away from fossil fuels for reasons of national security, human health, environmental protection and durable economic advantage. EV benefits go beyond fuel economy.

Reinventing Fire, RMI’s new, peer-reviewed book backed by 30 years of Institute research, shows that EVs—ultimately made of ultrastrong, ultralight materials that dramatically speed energy savings—can become energy storage vessels that feed electricity back into a revamped, more-secure electrical grid.

A great deal of difficult work on how we generate and distribute electricity stands between today’s reality and that vision, extending far beyond EV sales and incentives. Recognizing that Washington is all but paralyzed by partisan gridlock, Reinventing Fire calls for no new acts of Congress. Business must lead this ambitious transition to a safer, cleaner, stronger America, with rational state-level regulatory changes.

Of course people respond to incentives, and the EV tax credit—written to phase out when a manufacturer’s sales hit 200,000—is a proven way to spur a socially desirable change. Governments have long subsidized transportation, directly and indirectly, from granting rights for oil drilling to building our vast network of roads with tax dollars. Because Congress has approved tougher fuel economy standards, creating an incentive for EV buyers similar to the hybrid incentive that was phased out as sales grew would seem like consistent policy.

These calls to repeal the EV credit show both that the nation can’t necessarily count on Congress to guide its energy future (though, in fairness, Congress is a long way from acting on this) and that the nation’s media are adopting a flawed narrative about EVs. It is becoming pro forma that news stories about EVs say that Volt and Leaf sales disappointed this year and that the Volt is under investigation for battery fires. (General Motors on Thursday announced a fix to strengthen the Volt battery case, a day after niche EV maker Fisker, which has had no fires, recalled 239 cars to study similar issues.) Most EV media pieces—the Post editorial being no exception—lack context about early hybrid sales and the fact that two Volt fires started under extreme conditions in a laboratory, unlike the tens of thousands of real-life fires each year in gas-powered vehicles.

The Post editorial (which incorrectly said the Volt fires occurred in “road tests,”) took this tilted narrative to a new level, saying, “The Obama administration says that the credit helps build a market for EVs, which helps create jobs. Given the price of eligible models, like the $100,000 Fisker Karma, that rationale sounds an awful lot like trickle-down economics. …” The piece cherry-picked the Fisker’s price tag as an example of overpriced EVs, but made no mention of the best-selling EV, the Leaf, which lists for about $32,000 before the tax credit.

Despite criticism, experts believe EV sales will grow. LMC Automotive, which doesn’t count the Volt as an EV because it has an onboard generator that kicks in when battery gets low, projects pure EV sales of 95,000 by 2016. (GM plans to produce about 60,000 Volts worldwide next year.) “The Volt fires and the Fisker battery issues may scare some people off, but so far no one has been hurt or injured so I don’t think the market will collapse,” said Mike Omotoso, senior manager of Global Powertrain Forecasts for LMC. A survey by Pike Research found that 40 percent of Americans—a very sizeable market but down from 48 percent two years ago—are “extremely” or “very interested” in owning an EV.

Federal policy aside, tax credits can be driven at the state level. For instance, Colorado has had a tax credit that goes up to $6,000, depending on the price differential between the EV and a comparable internal combustion vehicle. RMI’s Project Get Ready, which works with partner cities and private business to help prepare the nation for EVs, has seen growing movement toward incentives at the state and city level.

RMI has long advocated carefully designed, revenue-neutral “feebates” that can be enacted at the state level. (In fact, the California Legislature passed such a program in 1980, but it was pocket-vetoed by Gov. George Deukmejian.)

A feebate system, which is agnostic toward vehicle technology, levies a fee on the least efficient models in each vehicle class to finance a rebate for the most efficient vehicles in the class. The more efficient the auto, the bigger the rebate. In this way, the government doesn’t pick winners or steer consumers away from, say, crossover vehicles that can four children, a dog and some sports equipment. Feebates provide a powerful price signal that influences auto-buying decisions the instant they’re made and maintain a continuous incentive for automakers to innovate.

Here, the Post editorial, in its short-sightedness, helps make RMI’s case:

“Electric cars are not likely to form a significant part of the solution to America’s dependence on foreign oil, or to global warming, in the near future,” the Post says.

This is not a near-term battle that can be won by whipsawing manufacturers between tougher fuel economy standards and repealed consumer incentives. If we as a nation view it that way, we will continue to wring our hands when madmen threaten to close the Strait of Hormuz and will continue to tie our security to the stability of Saudi Arabia and its royalty’s ability to manage the oil market.

We can aim high, striving to end America’s fossil fuel dependency by 2050 by engaging our ingenuity and private enterprise engine to claim a $5 trillion prize and lead in the world’s clean energy race. An alternative to that is to bicker over short-term incentives and outcomes and to put innovation in a shooting gallery because it didn’t take over the U.S. vehicle market in its first year.

Randy Essex is editorial director at the Rocky Mountain Institute; Ben Holland is a project manager on the electric vehicle team at the Rocky Mountain Institute. This piece was originally published at RMI.

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29 Responses to Why So Many Critics After 17,000 Electric Vehicle Sales in First Year?

  1. Steve says:

    Yes! Thank you. You nailed it, in my opinion. Most of the media’s coverage of EV’s is so clownishly negative and misleading, I often wonder if the misinformation is guided by some ulterior motive or agenda.
    There is one other point I would like to add. The media constantly proclaims that low sales prove low demand. Not so. For example – I personally placed a reservation for a Nissan Leaf in April of 2010. I am still waiting — the waiting list is very long (and depends on where you live) and i will probably get my car around Q3 2012. So clearly demand is high, and production can’t keep up. The media’s pants are on fire.

    • Mary Hughes says:

      I am in the same boat as this reply. When so much of the United States can’t get the Leaf because it is not available in our area, how dumb to put out these figures as a representation of acceptance of these vehicles. Thanks for a well stated reply.

  2. clays says:

    This all misses one critical point. Yeah, electric cars can help us get off middle east oil, but in the environmental issue they don’t do much. Their decreased emissions are offset by the increased electricity generation (and related emissions) required to charge them. So really your just replacing one polution (car emissions) with another (power plant emissions).

    • Joe Romm says:

      No. Zero carbon electric sources are abundant and cheap. Not so with carbon free petrol.

    • john atcheson says:

      Well to wheel, even with the average fuel mix in the US, Ecars cut carbon and other pollutants.

    • Steve says:

      EV’s are cleaner. This has been worked out carefully in terms of carbon emissions per mile driven. Even in the “worst case scenario” where all of the electricity feeding the EV comes from coal — the emissions are still about half that of a standard gasoline car (or about the same as a Prius). Most of the US has an electric grid much cleaner than this worst case scenario. And as time goes on, the grid will get cleaner.

      • Chris T. says:

        Not only are EVs cleaner and more efficient, it’s just become possible to install roof-mounted solar PV that costs the same as utility-supplied power even in low-power-price states. A complete system is now available for $1.85/watt:

        10.42KW Grid-Tie with 248w Solar Panel ($1.85 per watt!)
        Item#: 10416w-pv-kit
        Availability: Usually ships in 3-4 business days
        Regular price: $62,496.00
        Sale price: $19,358.00

        (A “business scale” version (122 kW) is available from the same seller for $1.81/watt.)

        This is a lot of money up front, but in sunnier parts of the country—especially California, Arizona, and New Mexico, but even in Utah and Colorado—the fully installed price, amortized over 20 years, is about the same as “retail” electricity in Utah, which is one of the US states with cheaper electricity.

      • jk says:

        I’ve been driving a LEAF for six months. Very pleased so far. I subscribe to my local utility’s green choice option (wind power and landfill methane), so my car is not powered by coal. Even with the additional cost of the green choice subscription, I figure I’m paying less than 3 cents per mile.

    • This is one of the sticks that the media love to use to bash electric vehicles. It sounds good and has impact… unfortunately it is completely WRONG in many ways!

      Firstly, there is a mix of renewable and non-renewable sources for grid power. OK, the renewable percentage is not as big as we would like but it is growing.

      Then every EV on the road removes our dependence on oil and oil imports.

      Then there is the efficiency of burning coal/gas at a power station vs burning oil in a car… it is hugely more efficient in a power station. Not only that but power stations have complex systems for reducing emissions so what emissions it does make is much cleaner. Also, the emissions are usually away from urban areas and so away from large population areas.

      Then EVs can be charged from home solar PV systems where there are no emissions and no CO2… I don’t see many gasoline cars being able to do that.

      All in all, the CO” and emissions impact of EVs is massively better than any gasoline car ever could be!

      Please media, please stop speading these urban myths. Isn’t it time the media woke up and smelled the coffee?

    • Ernst says:

      @Clays:

      Filling up your ICE car also causes emissions because manufacturing petrol and diesel consumes electricity that comes, mainly, from burning dirty fossil feuls.

    • vfx says:

      Locally sourced coal and US natural gas that is burned to make electric transportation energy is not at the whim of foreign politics or insane dictators.

    • Zarwin says:

      Apart from the other energy costs, just the raw “electricity” required to get the fossil fuel from the earth to the gas tank seems to be roughly 7.5 kwh per gallon of gasoline. This amount of electricity should be able to charge an EV, like the Nissan Leaf, enough to go 30 miles. So logically, a gasoline powered car that gets 30mpg uses the same amount of electricity as an electric car of the same size, making the entire comparison, for the most part, nonsense.

  3. SecularAnimist says:

    Like solar energy, electric cars reduce demand for fossil fuels, thereby reducing the profits of the fossil fuel corporations.

    Which is exactly why both are being subjected to the onslaught of dishonest attacks from the corporate media — which has been well documented by numerous articles on this site, though most authors seem loathe to acknowledge that it’s a deliberate propaganda campaign, preferring to suggest that media attacks like the Post op-ed are simply “short-sighted” rather than deliberate, calculated anti-EV propaganda.

    • So, what I don’t understand is why the fossil fuel companies don’t embrace the future instead of fighting it and help encourage EV take up? If they installed charging stations at their gas stations (where it was suitable to do so) and actually started making a profit from EV drivers, instead of seeing them as a threat, so they would continue to thrive and EV take up would be significantly increased.

      It is going to happen with or without the help of the big oil companies so it might as be with and they can then also benefit.

      • catman306 says:

        Most convenience stores with an oil company logo are really owned by independent businessmen who might not have the money to install charging stations. But the oil companies should be able to afford and install such anti-pollution measures and profit from their usage. So why don’t they?

  4. B Waterhouse says:

    Bought a Prius in 2006 to use the car pool lane to drive t to work. No problems yet at 60,000 miles. Reliably get 44 mpg. Bought a Leaf a few months ago and love it. Now retired and drive 20-60 miles a day, so an overnight charge @ 110V is all the Leaf needs. Leaf maintenance appears to be rotating tires. Part of auto industry resistance to hybrids and electrics may be the much lower maintenance costs with fewer, cheaper trips back to the dealers, especially with the Leaf. I also paid a small premium for each car because I didn’t get them through waiting lists (my dumb). Paid the premium on the Prius because an unexpected job transfer put me on a long freeway commute. Bought the Leaf at premium because i feared repeal of the fed and Cal tax rebates. Press reports about low numbers of Leafs (Leaves?) and Volts built always fail to mention that virtually everyone built has been sold – there is no lack of demand.

    • JP White says:

      It is true the LEAF and other EV’s have lower maintenance costs, however Nissan have compensated for this by making annual brake fluid changes part of the maintenance schedule. Check your manual.

    • John Hollenberg says:

      I have 6,000 miles on my Leaf for the first 6 months of ownership. It will reduce my gasoline consumption from about 500 gallons per year to 100 gallons per year. Also pay a small premium for Green power from LA DWP, but fuel cost is still about half the cost to fuel a Prius. An EV isn’t just an environmental choice, it is a good financial move. If gas prices remain at $4.00 I will save over $11,000 in fuel cost over 100,000 miles.

  5. John Tucker says:

    The whole volt thing is ridiculous. It needs to be looked at and fixed but none of the fires actually occurred immediately after the accident. The issue doesn’t warrant the negative attention by any stretch of the imagination.

    Its still one of the highest rated and most liked vehicles ever made.

  6. fj says:

    I support Amory Lovins and The Rocky Mountain Institute 100% including the $7,500 tax credit that the government offers purchasers of electric vehicles even though it is far from clear that EVs are a serious solution; and my best reason, and not a good one at all, being “climate pragmatism”; something that Joe Romm and Climate Progress does not sanction.

    It is very clear hybrid active transportation including net-zero and near net-zero mobility, vehicles and transit are the way to go. The technology is here-and-now, low cost, safe and fully accessible to both developing and developed worlds. In addition to providing minimal burden on the environment and maximum emissions reduction, it is also extremely agile technology easy to adapt to the rapidly changing conditions caused by accelerating climate change.

    Early stage technology has existed and been broadly deployed for many years and a substantial portion of the world population currently uses it — greater than one-half billion cyclists and 1.5 billion electric bike riders being about half China’s population alone — where walking should be considered the baseline mode, and cycling should be considered the next step with an increase in efficiency, speed, and range of 3 to 4 times.

    In the developed world there have been some successes in places like The Netherlands and Denmark where deployment seems to be about 40-50% but, for any real success this scale of deployment should be pervasive. Rapid deployment of pubic bicycle systems seems to be accelerating the process but not nearly enough for several reasons easily remedied and at least somewhat dependent on political will.

    Technological hurdles seem to be minimal for complete net-zero and near net-zero mobility solutions providing practicality, speed, range, safety and cost benefit significantly beyond current practice with again, the major hurdle being non-technical and political.

    • JP White says:

      Pubic bicycle systems. Is that a reference to the World Naked Bike Ride? :-)

      Sorry I couldn’t resist, the typo is hilarious.

      You make good points.

  7. Joan Savage says:

    Looking at a preview of electric vehicles across price ranges, I was struck that businessinsider reviewers left out the Tesla S Model which is pre-sold out for 2012. However, they included a $22K hybrid delivery van by Ford that looks like a move into an important niche. Given the time delivery vans spend idling and giving off fumes, this is a most welcome development. (Disclaimer, I have no investment in any car company or their suppliers.)
    http://www.businessinsider.com/electric-cars-2011-2010-12#ford-transit-connect-3

  8. Rabid Doomsayer says:

    Actually a pretty awesome result. This is pretty much the first year and new things always take off slowly.

    As fuel prices skyrocket, which they will, electic cars will look even more attractive.

  9. We need to distinguish between plug in hybrids like the Volt and pure EV’s like the Tesla. At this point in time the plug-ins are more practical since they can function as pure EV’s for the daily commute while making it practical to take long trips. They also don’t require special infrastructure. Plug in hybrids will provide the pressure required to drive the development of cheaper, lighter power storage. Do your calcs on the size of battery required to reduce liquid fuel requirements by 80%.
    There is a need to keep up pressure to reduce total energy consumption per km

  10. The US led the world with its emission trading scheme for controlling SO2 emissions. What most people don’t realize is that, unlike the European ETS the US system used offset credit trading. With this offset credit trading credits are issued to generators with below target SO2 emissions while above target emitters have to buy these credits from the low emitters before they can emit. Unlike the European ETS, no money is transferred to government revenue.
    Offset credit trading is a good system for controlling average emissions. It would seem an ideal system for controlling the average emissions of new and imported cars.
    See here for more details.

  11. BBHY says:

    The US spends about a billion dollars every day for imported oil. Once that money leaves the country, it is lost, no longer available to help the US economy.

    Electric cars keep that money in the US economy. So, if the complaint is that the US electric grid is not clean enough, wouldn’t $3.6 Trillion dollars over the next ten years go a long way toward improving the grid with clean generation and more efficient power distribution? We might even have more jobs ad a stronger economy too.

  12. I’m one of the 93% of very satisfied Chevy Volt owners–highest customer satisfaction of any current car. Clean air, much less CO2, 2 cents per mile to drive, quiet and powerful and really fun to drive–what’s not to like, unless you’re an oil company.

  13. tina juarez says:

    Thank you for this document.
    I have some questions:
    -If you add production EVs to DIY conversions- there are over 2000 in the SF bay area alone, the drop in the bucket gets bigger. Has anyone ever done an EV census?
    -FOUR main high power lines march into the nearby TESORO refinery. How much electricity does it take to make gasoline?
    -If that electricity is “dirty” electricity, doesn’t that make gasoline powered vehicles double dirty?
    -I see readymade Teslas and Tangos[semi-ready made] out at the EV drag races, but they are never mentioned in the US made car stats. Why not? even if they are considered niche markets they are US designed & PRODUCED.
    -Can the DIY innovators that are the cutting edge of this technical transformation get some recognition? Please. I will accept affordable access to US-built LiFePos batteries. Please!