The Electric Car’s Same Old Problem

OP-ED: Automakers are struggling to make money off mainstream electric cars. But many consumers won’t buy in until they’re given an incentive to accept less.

One unwritten rule of product design says that if you’ve given your customer a popular feature, don’t dare take it away.

Therein lies the problem with the mainstream electric car. Today’s cay buyers have been spoiled. They assume that they should be able to take their cars on vacations, on weekend trips, or on treks to drop the kids off at college. Thanks, gasoline.

Electric car enthusiasts don’t like that argument. And to some degree, they’re right. On average, driving is mostly about short trips – to work, to the gym, to the grocery store. Unfortunately, modern consumers don’t buy cars based on their average needs. They buy for their exceptional needs.

Gasoline has taught them that. For all its faults, gasoline is still an amazing fuel. While battery makers burn the midnight oil trying to figure out how to reach a specific energy of 450 Wh/kg, gasoline already offers 12,000 Wh/kg. Even if you account for efficiency differences, the contrast is still enormous.

It doesn’t matter if consumers understand the concept of specific energy. They’ve absorbed the lesson as a matter of car-buying utility. One car offers them long, simple trips. The other car … well, it’s getting there.

That’s why the recent hand-wringing about the possible loss of tax credits for electric cars is unsurprising. The simple truth is that electric car manufacturers are still scuffling around, trying to figure out how to make money off small, mainstream EVs. They need those tax credits because they’re losing cash on every electric car they sell.

Auto executives don’t like talking about financial losses, of course, but if you listen hard enough you can easily get the gist of their electric car experiences. Volkswagen, which is doing penance by loudly proclaiming its commitment to electric cars, admitted to The Wall Street Journal recently that “small battery-driven vehicles won’t be cheaper than their diesel equivalents until 2030.” And GM exec Mark Reuss  told reporters that his company wants to be the first to produce “electric cars that people can afford at a profit.” Implied was the fact that GM and its competitors aren’t making a profit on EVs today.

Even Tesla, Inc. – which sells big, expensive EVs – is still struggling with the bottom line. Recently released numbers showed that Tesla lost $330 million in the first quarter of 2017. Those losses were 17% more than the first quarter of last year.

Tesla, Inc. lost $330 million in the first quarter of 2017. (Source: Tesla, Inc.)

No one was ever more forthright about this matter than Sergio Marchionne, the refreshingly honest chief executive of Fiat Chrysler Automobiles. Talking about his company’s all-electric Fiat 500e in 2014, he said , “I hope you don’t buy it because every time I sell one it costs me $14,000.”

Apparently, not much has changed since 2014. The numbers, maybe. But the principle lives on.

The electric car cognoscenti would, of course, correctly point out that EVs have a great deal to offer. They’re efficient; they handle well; their acceleration is amazing; and they’re beautiful, in some cases.

Comments

I think electric air planes or air flying machines make much more sense because the cost of fuel is high and many of the enthusiasts fly local. I see a much better market because the craft could be made less expensive than a standard gasoline driven unit and it would be easier to control. All in all looking at flying is expensive and there are few inexpensive alternatives to flight. As far as large planes they should be run by some sort of atomic generation as they pollute more.

Joe, That won't work. Even hobby pilots take occasional long trips. An automobile user might commute to work and make local shopping trips most of the year, but take two long vacation trips--and a pilot will do the same thing. For what it's worth, when I was actively flying, much of my flying was done in southern Minnesota, but I regularly courted my fiancee, 500 miles away in central Illinois, via Cessna 150.

Fuel is a small part of the cost of operating an airplane. Aircraft have very stringent requirements and regulations before anything is put onto an aircraft. If the engine dies, tire goes flat, or any number of things happen in a car, you typically end up safely coming to stop along side the road. In a plane, it's an emergency and you're options for pulling over are pretty limited. Result being, lots of testing and regs. which equals: every thing on a plane is expensive.

Also weight is one of the biggest factors in airplane design and performance and batteries aren't light. It comes back to energy density. Same problem for atomic aircraft. Getting a reactor, shielding, and method of heat transfer that doesn't dump radioactive particles into the air stream is extremely heavy.

I'm really glad to see an article describing gasoline as an energy storage entity. Like a battery. It is a very efficient one, but a dirty one. Many people fail to grasp that oil is not an energy source. It is a battery that is storing energy that was produced by the sun a very long time ago.

There might be two solutions here. First is that a 2-car family would have a gas car for long trips and an electric for short trips, and the electric could get by with limited speed and range. Another approach is battery exchange stations. This would eliminate charging time problems, and the station could exploit intermittent renewable electricity. Clearly this would require industry standard batteries.

A problem with battery pack swapping is that a pack's viability depends a lot upon its age and how well it was cared for. When you swap you don't know what you're getting, and a warranty won't make up for a premature failure that leaves you stranded.

I purchased a brand new Volkswagen that left me and my family stranded at the side of the highway 6 times over the course of its warrantee period. Being ICE does not proof you against that. Being electric is a lot simpler, so less likely to strand you prematurely.

There is nothing simpler about a current electric vehicle system. In addition to having a very complex proprietary control scheme it has a high voltage electrical system that is far more dangerous to service than a gasoline powered engine. So even a skilledengineer will not be able to do any road-side repairs on an EV.

What they mean about "simpler" is comparing the number of moving and wearable parts in an EV vs. an ICE. I agree that the high voltage is dangerous, but few people today can do road-side repairs on a modern ICE vehicle too.

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