Is the Electric Vehicle Industry Gaining Momentum?
There seems to be a lot of back and forth lately about the performance (or lack thereof) of the electric vehicle (EV) industry.
Reuters released a scathing article earlier this month on the lack of development of electric vehicles, citing inefficiencies in technology, bloated prices, and a lack of fueling stations as reasons the industry is “still not ready for prime time – and may never be.”
But the concept of all EVs being boring, unattractive, underperforming hunks of space-age junk is outdated, and quite frankly, it’s tiresome. If you look at the market trends with a different scope, realizing the industry is still in its infancy, EVs show great signs of vitality. In fact, some vehicles have earned very strong praise from critics and consumers alike.
The best example is the Tesla Model S – a sleek, all-electric vehicle that was named Car of the Year for 2012 by Automobile Magazine and again by Motor Trend Magazine, earning 2013 Motor Trend Car of the Year honors. Critics are impressed with nearly every element of the vehicle, including its engineering prowess, (and the 250 engineering patents Tesla has for it) its drive range, (which varies from 140 miles to 265 miles, depending on the model) and its appearance. Essentially, it looks like a sporty-luxury mix with the fuel efficiency of a Prius, (even more efficient, really) so what’s not to like? It also had modest success in the showroom, selling 1,500 units in December alone – despite its $60,000 MSRP. Tesla also recently announced they increased their production to 20,000 vehicles per year, which includes their X series and Roadster, in addition to the S series.
Despite still accounting for a small percentage of overall vehicle purchases, plug-in vehicle (PEV) sales more than tripled in the last two years – from 17,000 in 2011, to over 54,000 sold in 2012. What’s even more telling is that the Toyota Prius, widely considered the most successful, profitable granddaddy of all hybrid vehicles, actually sold less vehicles in their first two years in comparison to PEV sales in 2011 and 2012, respectively.
The industry is expanding at an impressive rate as well. Cadillac, Honda, BMW, and Audi will take their best shot at electric vehicles in 2014, pumping tens of thousands of additional PEVs into the market almost immediately. In addition, Pike Research also released a report earlier this year estimating that worldwide sales will strengthen considerably, eclipsing 3.8 million annually by 2020.
Sure, there have been bumps in the road in the development of the industry. The Nissan Leaf, for example, has been an automotive ‘flop’ up to this point – selling only 9,800 vehicles in 2012, well below its target of 20,000. But Mitsuhiko Yamashita, Nissan executive VP and leader of research and development, remains positive, “When new technologies are launched, sales do not grow as quickly as everyone expects… [but] with EV technologies continuously improving and with prices falling, there is a possibility that sales could explode.”
But to say that the EV industry is never going to flourish is as foolish as saying the solar industry will forever be in shambles because companies like Solyndra go out of business. There are over-performers and under-achievers in every industry, no matter how you slice it; it’s just the bell curve of business performance. If EVs are given a fair chance in the next five to ten years, and gas prices continue to climb, which all signs indicate will happen, I think it’s safe to say that the ceiling remains very high for EVs.
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