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

Electric motors have been around a very long time. I wonder if the auto companies are "recreating the wheel" (I.e. "recreating the motor") or if they are tapping into existing manufacturers and their technologies as "partners". I know that battery issues are still a large problem, but Tesla has made their electric technologies public.

Al, I don't think you've been reading Design News regularly. Just do a search for ev new motor technology and you will find lots of articles on breakthrough inventions. The old brush-type universal motors don't seem to be getting much usage beyond. golf carts. Have you heard of Brushless DC (BLDC) motors? A quick search on Google patents for motor AND (electric vehicle) between January 2007 and May 2017 returns 1440 hits.

Sorry the above is somewhat unreadable. The UBM web function ate all my paragraph breaks. Too bad this was never tested before putting it into production.

I think you made my point. There are lots of new improvements on electric motors. However, are they made by and for the auto industry or by standalone motor manufacturers for motors used for other purposes? Companies need to partner with each other to improve both sides. Car manufacturers are experts in ICE, and make a lot of money building and selling ICE motors. If they sell cars with electric motors made by other companies, their personal profits will be reduced.

Auto dealers make a lot of money on repairs and fluid changes. They lose a lot of that with electric cars, so they're not too interested. Plus, they have to spend time and money to train mechanics to service electrics - which they'd rather not do.

This article may have been relevant a year ago but technically not today. Automobile manufacturers do not want the public to buy Ev's . Because they don't make enough money in the usual stream. Maintenance repair, etc. Ev1 was a historical example of that mainstream auto makers are only selling Ev's because the pollution of ice cars have forced governments to ban them. The cost of oil will go up as demand droppes. Our present electric production is enough to supply all the cars converted to Ev's

"The cost of oil will go up as demand droppes." Not sure about that. Usually a commodity's cost drops as demand drops, although sometimes it can rise again if demand resurfaces after supplies are cut back. Government subsidies can also play an important role in this.

Please save this article for 10 years so you can reread it in the context of one that was so off the mark as to be comical. Wake up.....the reason we call renewables by that name is they don't run out like fossil fuels. The also don't cause pollution and climate change. You are behind the curve of history and electric IS the future.

The notion of keeping two cars, one for local driving and electric, and the other, fueled by something combustible and for long-range driving, is for those whose wealth exceeds their intelligence. When someone creates an electric car with my station wagon's carrying capacity, its 500 mile range, and the ability to recharge/refuel in just a few minutes, but which is within a reasonable purchase-price range, then, maybe, I might replace my diesel-powered Volvo 245GL with it, and not until.

Maybe insults your intelligence, but many families have multiple vehicles for different purposes already. And you don't have to own a car for long-range driving - you can rent one for those few occasions. Even when they do market a car that meets your stated requirements, it won't be the ideal car for everybody.

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