What Keeps Killing Electric Cars?

  • Date: 10/04/16
  • Michael Lynch, Forbes

The problem for electric vehicles is the high cost and low performance of the batteries, and sleek design and a high-tech dashboard does not resolve this.

Many people think that the electric vehicle’s time has finally come, with the roughly 300,000 orders for Tesla’s Model 3 providing a boost to advocates who have been disappointed many times. However, this sector of the  blogosphere has a tendency towards uncritical thinking that deserves a lot more attention that it normally gets. History, as always, is informative.

An interesting piece from 2007 came to my attention recently, describing the apparent progress in the electric vehicle industry and suggesting a looming change in the automotive sector. It opened with “Putting the zoom into electric cars: Watch out, Detroit. A new crop of electric-vehicle startups aims to put a dent in the Big Three by applying the latest in high-technology engineering and design.” Granted, this was not a critical analysis of the industry but more of a general-interest story with the aim of cheerleading innovators, but it points to a number of problems with the sector.

Perhaps most informative was the status of the electric vehicles which the author (or an editor) described as the “Next Little Things.” The list seemed puzzling, as I recognized none of the names. Tesla was acknowledged separately, but an executive was quoted as saying they only aimed at a small subset of the market (which plan has since been modified), while others were said to be much more ambitious. Aptera, in particular, received attention for its unusual three-wheel design, described as looking like Batman’s girlfriend’s car, and the sales goals of 10,000 a month.

None of these vehicles is now in production, and most of the companies have disappeared, as have better known rivals like Fisker and A Better Place (a battery switching company), despite consistently positive coverage of them. A brief search suggests that only one of the companies, Zap, encountered significant skepticism, based on its record of unfulfilled promises and sales of a Chinese vehicle that proved to have serious quality problems. The others were typically heralded as revolutionaries who would transform transportation and the automobile industry.

The six companies seemed to have a similar operating concept: electric motors have many advantages over the internal combustion engine, they would reduce greenhouse gas emissions, and were particularly appropriate as commuter cars, where short driving distances and stop-and-go traffic is the dominant environment. Styling was often a focus of the manufacturers, who wanted their product to stand out and have a “wow” factor. The vehicles were marketed as commuter cars or second cars rather than primary transportation, unlike more recent designs like the Nissan Leaf, Chevy Volt and Tesla models.

Understanding their failure will help project whether success can be expected for newer vehicles and companies, notably Tesla. The challenges to building an electric vehicle company were many, and few were overcome. First and foremost, an auto company needs a certain infrastructure, including dealers and repair shops, to maintain its business. It is one thing to build a car, another entirely to build a car business. This is why so few small auto manufacturers exist and it was a challenge none of these overcame.

For electric vehicles, a recharging infrastructure is required as well (the gasoline and diesel distribution system are well-established), but this is not an insurmountable challenge, since the electric power system is ubiquitous. Unfortunately, conventional rates of recharge are slow and inconvenient, taking hours to bring them back to full power (or 80%), which is why Tesla is building a network of fast recharging stations, the success of which remains uncertain. Still, electric vehicle owners face an inconvenience penalty and one that remains unsolved. […]

Tesla believes that its new battery mega-factory will bring costs down enough to make the electric vehicle competitive, even without subsidies. But economies of scale have been achieved already, and a bigger factory seems unlikely to yield many savings. (Billions of dollars in subsidies will, at least initially.) The lithium ion battery simply needs to be replaced by a radically different design, which isn’t apparent yet.

Years ago, there was a cartoon showing Detroit auto executives around a conference table, worrying about the low quality of their vehicles. One exec jumps up and shouts “Cupholders!” The problem for electric vehicle is the high cost and low performance of the batteries, and sleek design and a high-tech dashboard does not resolve this.

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