The slow birth of the electric car

Tesla is releasing the Model S into a market that isn’t ditching gas anytime soon

Tesla Motors Model SThe electric car company, Tesla Motors, plans to unveil a new prototype this week, the Model S. Judging by the early photos leaked on the Internet, it will have all the sleek, sports-car looks the company is known for, but with one very important difference: the price tag. Unlike Tesla’s US$109,000 electric Roadster, the new car will cost less than US$50,000, the company says. That’s still pricier than your typical four-door family car, but cheap enough for Tesla to move beyond selling cars to Hollywood celebrities and start courting the all-important mainstream customer.

So far, Tesla is little more than a fringe player in the auto industry. It has a 1,000 person wait list for its Roadster, but that says as much about how slowly the cars are being built than it does about demand. Since its launch in 2006, Tesla has delivered just 250 Roadsters, which it now makes at a rate of 20 per week. Tesla is also not making money yet, and late last year had to borrow $40 million from investors. It says it could be profitable by later next year.

Since Tesla and competitors like Fisker Automotive set up shop in Silicon Valley, Calif., there’s been a lot of talk that they could one day unseat Detroit by leading the industry into the age of electric cars. The Model S, when it hits the market in late 2011, will be an important test of not just the company’s ability to become an industry contender, but of just how ready the driving public is for an all-electric car. The company is breaking ground, and a lot of other car makers will be cautiously watching to see what happens.

In California last week, U.S. President Barack Obama announced US$2.4 billion in spending for the development of electric car technologies. To drive his point home to the masses, he also appeared on The Tonight Show with Jay Leno, where he declared the electric car the future of the America auto industry. For a country notorious for its obsession with SUVs, muscle cars and all things gas-powered, it was a dramatic signal. But there are still some very tough questions about just how easy and realistic the transition will be.

Take, for instance, how reluctantly hybrids—the first step towards an all-electric vehicle—have been embraced by American drivers. In recent months, hybrid sales have tanked (along with those in the rest of the auto industry). The best selling hybrid, the Toyota Prius, still accounts for only a tiny fraction of all cars sold. (Toyota has sold roughly a million of them in the past decade, while it has pumped out a hundred times as many conventional cars). At G.M., less than 2 per cent of all Chevy Malibus sold last month were the hybrid version. Chrysler recently closed an entire hybrid plant.  At the end of the day, auto makers have only grudgingly been offering hybrids to a population that’s proven to be very unenthusiastic about buying them.

Sales aren’t likely to pick up in a meaningful way anytime soon. Car companies are having a hard enough time selling massively discounted new, gas-powered vehicles. (The Detroit Free Press recently noted the average cost of a used 2008 Honda Accord EX sedan was $21,544, while a new 2009 model was $80 less.). Add to this the fact that gas is cheap again and environmental concerns have taken a back seat to economic ones, and selling pricey hybrids is like trying to sell caviar on the sinking Titanic. The only auto segment that seems to hold a lot of promise lately is ultra small, cheap vehicles, like India’s $2,000 Tata Nano, which was unveiled this week.

What this suggests is that any real growth in the electric car industry could be over a decade away. At the very least, a number of important factors need to change—the price of oil, for starters. Oil prices need to rise back to at least the level they were at last summer ($140 a barrel) for car buyers to start worrying about fuel efficiency. (The price of oil is now at about $50 a barrel). Even at $170 a barrel, the cost of ownership of a hybrid only matches that of an advanced diesel car, according to a recent report by the Boston Consulting Group. The cost of batteries also needs to fall dramatically for fully electric cars to be competitive with hybrids. Batteries now cost an estimated $14,000 for each electric car.

Even if government steps in with big subsidies, the cost of electric cars remains problematic. G.M. has promised to mass produce an electric vehicle, the Volt, by the hundreds of thousands. “Even at that volume, and sharing platform costs with the [electric] Chevy Cruze which is planned in the 300,000+ unit volume range, the Volt will still be priced at or above $40,000, making it one of the more expensive Chevy’s ever produced,” wrote Darryl Siry, an analyst with Peppercom Strategic Communications and a former Tesla Motors executive.

With all these challenges, it is likely that even by 2020, the internal combustion  engine will remain  “the dominant technology,” according to the Boston Consulting Group. That’s unlikely to change even if oil prices skyrocket to $300 per barrel, it notes. All told, the group estimates that by 2020 there will be 1.5 million electric cars in Japan, China, Western Europe and North America—or just 2.7 per cent of the total market. Most of those cars will be small, urban vehicles (which are cheaper to build).

Tesla’s Model S will no doubt grab some well-deserved attention this week. The company has also slowly been building a retail front, with plans to open stores in London, Chicago, and several other U.S. cities.  And this month, it announced it will start selling cars in Canada. But even as the world’s auto makers promise to follow with their own electric cars, this will be only a cautious first step in what’s sure to be the very slow birth of the electric car.




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The slow birth of the electric car

  1. Wow people should go back and learn a little history as the electric car was around before the combustion engine – it was cheaper bang for the buck gasoline was

  2. I agree with Wayne. The technology of the electric car goes way back and the time has come to get these cars to market wide scale.. What better way could there be to stimulate the economy than by putting gas revenues back into the pockets of Canadian Consumers so we can kick start the economy again. If I could purchase one with five seats for the same price we paid for my Toyota, I’d put my money down right now.

    • “If I could purchase one with five seats for the same price we paid for my Toyota, I’d put my money down right now.”

      But that’s the problem…the technology doesn’t yet exist to do that, or to give you the speed and range you want. Sure the electric car was around before the gasoline engine, but those cars had a top speed of about 20 mph and a range of about 10 miles. Wonderful in 1895, not so good today…perhaps in another 20 years, the gas engine can be retired, but even that’s optimistic.

    • You have answered your own question as to why there are no electric cars. 1. They cost too much. 2. They have limited range. 3. Where do you suppose the electricity to charge the battery comes from. Answer. I was listening to a scientist on CBC radio last year who made the point that if a handfull of people were recharging their vehicles off the grid, no problem. If everyone was doing it, HUGE problem. The North American electrical grid runs pretty close to capacity most of the time. What do you suppose would happen if everyone switched to electric cars anytime soon. Year after year, Ontario politicians vow to close all the coal fired generating stations but can’t do it because the system could not make up the short fall. Weather Obama likes it or not a huge amount(about 40%) of US electrical production comes from coal. That is not going to change anytime soon. More electrical cars after a certain point in N. America will cause more pollution, not less. It’s called the law of unintended consequences. Cheers

      • There are no electric cars because the oil companies don’t want there to be electric cars.

        Simple.

        If you’re Buddy Huge Oilman and knew your immoral annual bonus and your company would disappear within 5 years if electric cars were the norm, would YOU buy in?

        Nope. Didn’t think so.

        • Here we go again. For the record I am not in the employ of “big Oil”(I wish), nor do I have any shares or monetary gain form “big oil” . Finally, could you use more cohearant language. You sound silly. You syntax is so bad I’m not sure if I am the “evil oilman”, or someone else is. You call yourself writerwriter. Now that’s funny.

          • No one is implying that you, specifically, are in any way involved with ‘big Oil” (by the way, both words should be capitalised).

            If “you are (which is the un-contracted form of “you’re,” and referring to the hypothetical) Buddy Huge Oilman (a colloquialism for an oil executive) and your (hypothetical) … annual bonus…. would you buy in (as in, if you were this hypothetical person in this hypothetical situation)…

            Actually, my syntax is perfect, despite your inability to comprehend it or metaphor contained within.

            By the way, the word is coherent, not “cohearant,” and you’re missing a necessary comma between “Now” and ” that’s funny.”

            Any further questions?

  3. Who trust Gm with their Volt? Everyone forgets the EV1 that GM crushed. Why did GM use these blueprints to start reproducing them this year?

  4. EV1….
    GM along with Toyota and Ford all had Electric cars back in the 90′s and they all crushed them.
    They didnt even use the BEST resorces they had to make those cars.

    I work in the oil field and it creats jobs for this overpopulated world. the Electric car would help the enviroment but it would remove money and jobs from alot of us.

    GM Ford Toyota im sure they have Electric car projects that they are constantly keeping uptodate and when they feel that they need to release it they will untill then were going to get 10 year old cars and trucks. We shouldn’t have bailed out GM or anyone else if a company is going to die let them die if they relize that they are on there own then mabey they would actually try to be productive.

    • I am no big fan of electric cars as is pretty obvious from my previous comment here. However it would not reduce jobs much in the oil patch, just shuffle them around. People will say they want them but wouldn’t buy them for all the obvious reasons. My main objection is that they are for the most part a self rightous feel good exercise by obnocious phoney do gooders like Sting. He shows up at the Grammies in a hybrid. Then he and Bono hop on a private jet back to their mansions and pat each other on the back for “saving the planet”. Close to half the electrical production in North America froms from coal fired generators. Like it or lump it that will not change anytime soon. Wishin’ and hopin’ and windmills will not change that. Changing from burning gasoline to more coal doesn’t make sense.

      • Wow. Jealous much?

        What does your opinion on the lives of people you know not at all and nothing about have to do with the issue at hand.

        A more interesting question is why GM discontinued their E-Volt car 20 years ago.

        • Most likely because they couldn’t make as much profit as they could producing Suv’s, large pickup trucks and other gas guzzlers(by the way, I have never owned either). They were producing exactly what people wanted until the oil companies killed the golden goose. Again writerwriter, for God’s sake take an English 101 class, your sentence structure is horrific. From your garbled text I think you imply I am jealous of Sting and Bono.(It’s difficult to figure out). Actually, I have lots of music by both. I simply don’t agree with there hypocritical lifestyle. In an ironic twist, Bono, in a moment of clarity, owned up the very fact that he was the biggest eco-sinner of all. Last I heard, he had not given up the private jet and was gearing up for a massive world tour with the other lads. Finally, your logic is as hard to follow as your syntax. In case you didn’t notice, this site is an open forum to express opinions and ideas. I can only assume you feel noted “scientists’ like Sting, Bono, Gore should be the only ones to express opinions because….they are famous? It always comes down to the same drone from the politically correct eco crowd. If you don’t agree with them you are an agent of “big oil”(once again, don’t I wish), or just don’t understand the science. Cheers.

  5. How does perform in snow?

    • It’s not a matter of how they perform in snow, I’m sure they would be as good as a traditional drive train. The major issue for Canada is battery problems in cold weather. Just like all batteries, efficiencies go way down when the temperature goes down. Unfortunately, global warming seems to have missed Canada this last decade so you could be in trouble if you find yourself in gridlock on your commute home in Febuary. A last thought on batteries. You may think you are saving the planet by plugging into an outlet. In the majority of North America, you are likely just transfering the CO2 around, as much of the power on the grid comes from coal, oil or natural gas generating stations. When conventional cars are scrapped, the biggest problem is dealing with the 40 lb. battery. With electric cars, that 40 lb. problem is now a 400/500 lb. headache. Cheers

  6. I remember waiting patiently in the nineties and anticipating talk of the first electric cars to be rolled out in 2002 then it was pushed to 2010. I really wanted one. Now I’m stuck with a noisy dirty fossil “fool” gasoline car. It is hard for me to believe Exxon mobile would want to relinquish it’s world domination of profit for eco friendliness. Keep waiting. The bait is out, but they still want your money for oil.

  7. I signed up for a Tesla 2 years ago and am taking delivery in 5 weeks.

    During those two years I watched Tesla develop and run through all the challenges that the new technology had to go through.

    You folks can mock Sting – Bono as much as you like, but understand that without ‘early adopters’ ready to plunk down a $50K deposit and wait for 2 years this type of technology would never get past the prototype stage.

    Now Tesla can take all the hard lessons they learned on the spoilt sting/bono crowd and apply that to the high part of middle market with their model S sedan. In turn, they can take those lessons and go further into the mass market from there. the ‘do-gooders’ do good.

  8. I’m not sure where Nick Cook gets his information, by stating that “GM along with Toyota and Ford all had Electric cars back in the ’90s”. GM was the ONLY maker who produced more than prototypes, i.e. cars that consumers could acquire and drive, rather than just show or display models which may or may not have even had powerplants. He is correct, however, in stating that the electrics were all crushed, but it was GM who did that. The EV-1 was branded a Chevrolet, and was offered to selected loyal GM customers on a three-year (If I remember correctly) lease, the terms of which did not allow renewal or purchase at the lease’s end. They were quite costly, based on their utility and basic features – they weren’t luxo boats or high-performance sports cars – but they had a feature that almost all their customers liked – they could be plugged into an ordinary electrical outlet and recharged, and for those cars which were used for average commuting and running around town (which is the type of driving that about 90% of us do on a daily basis) that was acceptable, if not nearly ideal. Beats dealing with stinky gasoline, for sure.
    In Canada, their practicality still has to be assessed, especially during our colder months, which in many areas comprises the larger part of the year. Despite that, the technology would develop solutions for this limitation. How many people recall that, only fifty or sixty years ago, many people still parked their cars in the late fall, took off the tires and stored them, drained all the gasoline and coolant, and took the bus or streetcar everywhere until spring? At about that time, ethylene glycol became the antifreeze of preference, tire makers promoted snow tires for winter use, and oil companies modified their fuels for better winter performance, and soon almost everyone was driving year-round. I think similar solutions will be developed for electrics if the market is faced with their inevitability.
    As for the issue of transferring the pollution from the roads to the power plants, even coal-fired generating facilities pollute less than the cars in any of our cities which line up and run at idle at Tim’s and Mickey D’s!

  9. This article makes no mention of the dozens of new electric cars and hybrids currently being developed by almost every car company in the world , and as such is ill-informed and wrong.

    Many of these cars will be on the market in 2010 , and most people living in large urban traffic /pollution congested cities will welcome them , wordwide.

    • Actually, it does point out that all other car makers are developing electrics and specifically mentions the Volt and Cruze. But there are critical questions about those cars: the price, the demand, the infrastructure, the battery limitations, and so on. This is not to say they won’t be popular, just that it will take some time for all these issues to get worked out.

      Given the track record of hybrids, I seriously doubt that “most” people in large urban areas will be driving electrics in the near future… certainly not with gas prices where they are now.

      • Everybody knows that the status quo must change or the world will become hopelessly polluted with gas engines , especially with the growth in China and Asia . Hybrid cars are the bridge and electric plug-ins and fuel cells may be the next-term solution to global warming/pollution . What is the “price” of not changing ??.
        I am not sure what you mean by the “track record” of hybrids . The Toyota Prius has been a resounding success , and both Honda and Toyota will be offering cheaper models . The Malibu is considered a “soft hybrid” , with only enough battery power to idle . You can buy a Canadian made Zenn for about $14,000. This and other mini-electrics are perfect for inner-city transport , and they don’t use expensive batteries .

        Government has the opportunity now to nudge the industry in the right direction , and I understand Obama is offering financial incentives for North American battery production , a key economical factor. I expect nothing from the Harper government , they just need to stand out of the way .

        Are you aware that New York City had a fleet of electric taxies in 1907 ???

        • Again, I wish the electic car business well. I truly hope someone out there has a product people don’t have to be “nudged” by government to buy and someone with a business plan to get it off the ground. However I just don’t see millions of people lining up to put their names on waiting lists for electric cars. I was in business for myself and on the road(and in the air), constantly for over 25 years. Was in constant contact with everyone from small shop keepers to regional managers and top exects from national firms, all over the country. In all that time I never met anyone who expressed the slightest interest in electric cars. The old saying, “build a better mouse trap and the world will beat a path to your door” just doesn’t seem to be happening here. Again, electric cars just move the CO2 from the tailpipe to the smokestack. But hey, if it makes ya feel good, knock yourself out kid. Cheers

          • Electricity will be far cheaper per unit distance travelled than gasoline. I think that counts as a better mousetrap. And yes, some of that electricity will be created using fossil fuel sources. Electric cars are more efficient, so that even if all the electricity needed is created from coal, the least efficient fossil fuel, it will result in lower overall emissions than gasoline. Centralized combustion makes scrubbing easier, to reduce particulates and other smog-related pollutants, as well carbon capture and storage. Also, aside from batteries, electric cars ought to be very reliable, with substantially fewer moving parts.

  10. “Electicity will be far cheaper per unit travelled than gasoline.” On what basis do you say that? I have not seen any statistics to indicate that. Or do you mean you expect that to happen in the future? What is the equvilant mpg right now? Another problem with electrical costs is that in virtually all areas there is even less compition than among the oil companies. The price of gas goes up and down but in my entire life my electric bill has gone one way only. Where I live I watched the price of gas collapse from about 1.40 a liter to .66 a liter and drift up to around .80. Oil was 147 a bbl, went to 36 and now sits at 48. Stunningly the power company was just granted a 10% increase by our gutless government. Just like every other year. The power utility had record profits but that wasn’t enough it seems. If you are that concerned with efficiency why not buy a smart car. They get 80 mpg.,use conventional technology so someone besides the dealership can repair it for you when the warentee is up. I have asked people who own them and they are generally satisfied with how they work in the real world. Owners of hybrids are grumbling that preformance was not exactley as advertized. Can’t imagine what dealerships are gouging people for to repair and maintain exotic technologies that no one else knows how to repair. Also when a smart car is done there is no massive battery to be dealth with. Oh and by the way scrubbers do not remove CO2. Carbon capture is so far a pipe dream. No doubt the snake oil salesmen will be hard at work selling that goofy idea and it will come in at ten times the costs quoted. I actually worked on a scrubber system as a systems operator. The costs and technical problems were out of this world. You can do it but it ain’t easy and it sure as hell ain’t cheap.

    • “Electircity will be far cheaper per unit travelled than gasoline.”

      I agree, that statement is nonsense. The opposite is true.

  11. Electricity for electric cars : In Canada 75% of electricity is from non-polluting sources , mainly hydro and nuclear. In the U.S. 50 % in non -fossil . There you have a 75% and 50% reduction in pollution . France , for example , is about 100% nuclear .

    Electric cars will be plugged in overnight when there is excess capacity on the grid , ie hydro dams don’t stop running at night .

    Pollution, even from coal fired plants , is removed from large urban areas where the population is choking on car exhaust , to remote areas where the power plants are placed.

    Any additional power needed to supply the grid would come from hydro,nuclear,wind,solar, or other non-fossil based sources.

    China will be the worlds largest producer of electric cars , I hope North America will make some too.

    Welcome to the future all ye Luddites.

    • Yes and China is building one coal fired generating station a week, no scubbers, no carbon capture. You still ignore my basic argument. You are just shifting the pollution around, not really reducing it. You do not address the issues of cost of electricity for consumers which is a total monopoly almost everywhere. Nor do you adress my suggestion of switching to a smart car which gets 80 mpg and does not require turning our whole transportation infrastructure inside out. I get the feeling if a smart car system got 800 mpg it just wouldn’t do because it doesn’t jive with your puritanical eco-religion. You claim cars can be recharged at night when the grid is underused. That will insure more coal will be burned. Most jurisdictions(mine included) attempt to use the least offending sources of power as much as possible, and the most polluting, least. Your hairbrained scheme will likely insure the coal fired plants will be churning out the CO2 well into the night. And please George, stop the name calling, it grows tiresome, listening to the “eco-angels” name calling anyone who happens to disagree with their eco-religion. Cheers.

  12. This article is correct about current public sales, but greatly overestimates the problems with electric cars and vastly underestimates their potential and advantages.

    There are quite a number of studies that show that electricity is far cheaper than gas, if for no other reason than you can centralize it, rather than trying to make a small gas engine efficient. Electric motors are by nature much more efficient than gas (no leaking fuel, less waste heat, less internal friction).

    See: http://auto.howstuffworks.com/electric-car1.htm
    “To compare the cost per mile of gasoline cars to this electric car, here’s an example. Electricity in North Carolina is about 8 cents per kilowatt-hour right now (4 cents if you use time-of-use billing and recharge at night). That means that for a full recharge, it costs $1 (or 50 cents with time-of-use billing). The cost per mile is therefore 2 cents per mile, or 1 cent with time-of-use. If gasoline costs $1.20 per gallon and a car gets 30 miles to the gallon, then the cost per mile is 4 cents per mile for gasoline. ”
    And they are using a higher electricity cost than we pay in Ontario.

    Moreover, all forms of electricity generation, even coal, for electric cars would produce less pollution than current gas engines; and all that is required is an investment in the grid, which has to be done anyways (and is the main solution Ontario is pursuing to cover the shut down of the coal plants – importing during peak from Quebec & the States). There is plenty of power, the only issue is peak demand – hence the need to develop a smarter grid, to even out demand, saving the environment and cash.

    Check out Hot, Flat & Crowded by Thomas L. Friedman for a good discussion of the potential of an expanded smart grid and electric cars. He’s much more insightful than the author of this article and has a much better grasp on the technology and its potential..

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