Electric vehicles lose their buzz (and sales)

ev charging stationCCD Editor’s note: Even with the Feds giving EV buyers $7,500 in tax credits, after the initial thrill wears off quickly, so do the supposed gains. Obama’s big push for ‘sewing machines on wheels,’ and his disdain for compressed hydrogen fueled vehicles, is another reminder that people want cars that can travel more than 100 miles, require low maintenance, and can be filled up in in a few minutes. From the Detroit News (h/t Gator):

It’s a buyer’s market for drivers interested in new or used electrics and hybrids.

Sales of new electric cars and hybrids, according to automotive research and shopping site Edmunds.com, are at their lowest level since 2011 — the first full year of sales for the groundbreaking Chevrolet Volt plug-in hybrid and Nissan’s all-electric Leaf. So carmakers are paring prices in an effort to get them moving.

Furthermore, motorists who leased those first-generation cars, and have decided not to buy them, are turning them in. They’re on dealer lots with still relatively low mileage, and at prices considerably cheaper than the new ones.

Even with $7,500 federal tax credits and other incentives, automakers such as General Motors Co., Ford Motor Co. and Nissan have dropped prices in an attempt to move their new hybrids and electrics. Cadillac became the most recent to reduce the sticker on an electric car, when it whacked $9,000 off its ELR plug-in hybrid last week.

“That’s the reality of the situation,” said Jessica Caldwell, senior analyst for Edmunds.com. “They have to push them out at those levels for people to be interested. It really seems like the cachet of EVs and hybrids has faded away.”

It’s no mystery why these cars aren’t moving at a brisker pace. Stable gas prices, fuel-efficient internal combustion engines, continued uncertainty about electrics by some motorists and the availability of relatively cheap used electrics and hybrids make new ones a hard sell. Yet automakers offer them as part of their effort to meet fleet-wide fuel efficiency standards set by the U.S. government.

“EVs are just not selling; even hybrids and plug-ins are slow,” said Caldwell. “There’s some concern.”

Cars with advanced powertrains represented just 2.7 percent of U.S. vehicle sales through the first three months of this year, according to Edmunds.com. That’s down 1 percentage point from a high in 2013 and the lowest quarter since 2.5 percent the last three months of 2011.

“There’s a lot going against EVs right now,” said National Automobile Dealers Association senior analyst Laurence Dixon.

Like outright sales prices, lease costs on new electrics continue to come down. GM last week announced zero down and $139 per month for 39 months on the all-electric Chevrolet Spark and lowered the starting sales price on the Spark to under $20,000. Nissan is leasing the Leaf, which starts at about $21,500, at $199. Both include $7,500 federal tax credits and current offers.

Edmunds.com reports that leases comprised nearly seven of every 10 plug-in cars that drove off dealer lots from January through March.

The unprecedented leasing rates means a steady supply of used all-electric and plug-in hybrid electric vehicles will continue to feed the market in the coming years.

Lease prices plummet

New mainstream plug-in hybrid electrics can sell for more than $30,000 with up to $7,500 in federal tax credits. But used models are selling for less than half of their original amount.

Used plug-in car values have been lower than comparable vehicles with traditional combustion engines since launching, due to the heavy federal tax credit and inflated pricing, according to Kelley Blue Book director of residual value consulting Eric Ibara.

“All along, we had a very strong suspicion that they wouldn’t hold the same (residual value) percentage with traditional vehicles,” he said. All electrified vehicles besides the Toyota Prius plug-in and high-end models such as the Tesla Model S have performed at about the same depreciation rate, Ibara said.

KBB reports that after 36 months, vehicles with traditional gasoline combustion engines such as the Nissan Sentra and Chevrolet Cruze hold their residual values 10 to 15 percentage points higher than the Leaf and Volt, “which is quite significant,” Ibara said

That means consumers looking to purchase a used Chevy Volt, which can drive roughly 35 miles or more on all-electric before using a drop of gasoline, should be able to find a comparable used Chevy Cruze for about the same price.

2012 Volt for $19,000

Superior Buick GMC in Metro Detroit last week sold a 2012 Volt with fewer than 23,000 miles for about $19,000. On the same lot sat a 2013 Chevrolet Cruze with about 5,000 more miles for just under $18,000.

Dan Aliff, pre-owned vehicle manager at the dealership, said he’s had a hard time keeping used Volts in stock, due to their pricing. “They don’t stay around very long,” he said. “They definitely perceive them as good deals.

“For what they save in gas mileage alone basically makes their car payments.”

According to AutoTrader.com, the average price for 2014 model-year and older Volt, Leaf, Ford C-Max or Spark EV is under $20,000.

NADA’s Dixon said as more plug-ins and all-electrics enter the used car market, they will drive prices down even further, and likely exceed demand.

“Used EV demand arguably is going to be weaker than what it would be for new EV demand,” he said.

Dixon said even if the price of a used electric vehicle is the same price as a car with a traditional combustion engine, the rate of depreciation is expected to be greater over the long run. “That’s in addition to any cost concerns you have with expensive componentry that malfunctions down the road,” he said.

Big battery expense

The largest expense is expected to be the batteries of the vehicles that are speculated to cost thousands, if not tens of thousands, of dollars.

Kelley Blue Book’s Ibara said that while the vehicles haven’t been around long enough to know how they will depreciate long-term, the cost and longevity of the battery could play a very large role in a vehicle’s value.

“It wouldn’t make sense to replace a 12-year old battery with a new battery that’s going to last 12 years, because chances are the car’s not going to last that long,” he said.

Despite the uncertainty around electrified vehicles, automakers continue to invest billions in the technology and produce new advanced powertrain vehicles to meet state regulations and coming federal fuel and emissions rules.

“The government’s going to keep pushing it, but there is time to pause right now,” Edmunds.com’s Caldwell said. “At this point, this whole market is fairly robust regarding choices.”


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    Geez, nobody wants a car that runs for 30 miles or so and needs hours of recharging. And on top of that the ‘fuel tank’ wears out, needs replacing every 3 to 5 years costing thousands… And creates a pile of chemical waste that’s unheard of…


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    The really good thing about electric vehicles is that they don’t get their charge from electricity produced by emission-producing power stations.


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