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ELECTRIC CAR SALES: WHAT IS THE FUTURE?

By Allen L Phillips

In the 2011 State of the Union address President Obama called for 1 million electric cars to be on the road by 2015.  He wasn't talking about hybrid cars like the Toyota Prius but pure electric cars with no gasoline engine.  Now with 2015 in the rearview mirror only about 330,000 are on the road with almost half of those in California.

Government is making a huge push with our tax dollars to drive consumers toward electric cars.  Federal spending is expected to reach $7.9 billion by 2019, including $2.4 billion in grants to companies making the lithium-ion batteries which power the cars.  (It's worth noting that those billions have not yet resulted in any substantial advances in battery technology.)  Additionally, there is a $7,500 Federal tax credit on the purchase of an electric car plus California rebates up to $2,500 car.  So why are sales lagging?        

Initial cost is a major factor.  The Associated Press calculated that even with a typical 16% sticker price discount and the $7,500 Federal Tax Credit it would take 5 years to pay off the difference in price between the electric Ford Focus and the popular gas model.

Driving range is a big problem with that same Ford Focus limited to 76 miles between battery charges and few of its competitors exceeding 100 miles.  Public charging stations are limited, especially outside of California which pretty much limits electric cars to short commutes.

Dealers don't push electric cars.  Most salespeople, paid on commission, don't know much about the electric cars and don't take the time to learn.  A salesperson can sell two gasoline cars in less time than it takes to sell one electric car because of having to explain the technology and get the customer comfortable with the different feel of driving an electric car.  Additionally,  the National Automobile Dealers Association says dealers make three times as much profit from service as they do from new car sales.  Electric cars need little service.

In the meantime, gas prices are dropping and gasoline engines are getting more and more efficient.  And in a stunner, the U. S. Energy Information Administration (EIA) predicts that gasoline and diesel powered vehicles will still make up 95% of all light duty vehicles sold in the year 2040.

Hold on a minute!  Let me do the math - that means that electric cars won't exceed 5% of vehicles sold for the next 25 years.  Given that, are we wasting our tax dollars on grants and subsidies?