Not Sure People Want Electric Cars
January 5, 2019 at 3:52 a.m.
By Gary [email protected]
It was about Tesla, the U.S. electric automaker.
I’ve never been a big fan of government subsidies for this technology or that technology. That’s because, as I’ve watched these things over the years, I’ve noticed the government is usually a pretty lousy venture capitalist.
Seems to me that if something isn’t marketable in the private sector, no amount of government money thrown at it will make it marketable.
If pricey electric cars are marketable, consumers will buy them and they would be profitable whether they were subsidized or not.
Of course, the converse of that also is true. If pricey electric cars are not marketable, consumers won’t buy them regardless of the subsidies.
Take the Chevy Volt.
The Volt, a plug-in hybrid by General Motors, came to life in 2011. G.M. announced in November that it would stop making Volts in March.
From 2011 to the end of October, sales of the Volt and its derivatives worldwide came to about 177,000 units.
Automotive sources say that level of sales makes the Volt family of vehicles the world's all-time best-selling plug-in hybrid vehicle. It’s also the all-time top-selling plug-in electric car in the U.S.
So G.M. is halting production of the all-time, top-selling plug-in electric car. That says a lot by itself.
But how much money did the government pour into a car that not many people wanted to buy in the first place?
Well, when you total up all the tax breaks, outright subsidies and $7,500 tax credits to people who bought a Volt, it comes out around $3 billion. Divide that by the number of cars sold and you come up with around $17K per car.
Then along comes Tesla, which also reaped some $3 billion in subsidies.
The story this week noted that Tesla made about 9,300 more vehicles than it delivered last year, raising concerns among industry analysts that inventory is growing as demand for Teslas may be starting to wane.
No shock there.
From AP:
If demand falls ... the company will enter a new phase of its business. Like other automakers, Tesla will have to either cut production or reduce prices to raise sales. A drop in demand could also curtail the company's earnings and jeopardize CEO Elon Musk's promise to post sustained quarterly profits.
On Wednesday, Tesla did cut prices, knocking $2,000 off each of its three models. The company said the cuts will help customers deal with the loss of a $7,500 federal tax credit, which was reduced to $3,750 this month for Tesla buyers and will gradually go to zero by the end of 2019.
The cheapest Tesla you can buy right now costs around $44,000. Buyers may be holding out for the $35,000 model that is scheduled to come out later this year. Will buyers continue to jump into the electric car market after the tax credits disappear?
Tesla has sold about 360,000 cars since it began selling cars in the first quarter of 2015, which is quite a few more than the Volt, to be sure.
But one must wonder how Tesla will fair now that the early adopters have shaken out of the market. Will the mainstream auto market respond? Will Tesla remain solvent?
Time will tell.
From cars.com:
Tesla says its 60-kwh battery provides a range of up to 232 miles (the EPA says 208 miles), and the 85-kwh battery (a $10,000 option) provides up to 300 miles (the EPA puts it at 265 miles). Here are some examples for recharging times: With a single onboard charger plugged into a standard 110-volt outlet, Tesla says you will get 5 miles of range for every hour of charging. From zero to 300 miles would take about 52 hours at that rate. With a single onboard charger connected to a 240-volt outlet, which Tesla recommends, the pace can reach speeds up to 31 miles of range for each hour of charging, meaning a full 300-mile charge takes less than 9.5 hours.
My guess is that the average car buyer is just not in the market for cars like this – or cars in general, for that matter.
Ford and G.M. recently announced they will stop making sedans – except for Mustangs, Corvettes and Camaros.
Apparently, car buyers are not as fond of sedans as they are pickup trucks.
From autonews.com.:
Ford sold more than 450,000 of its F-series line — one every 35 seconds — from January through June. That's 4.2 percent more than in the first half of 2004, when it set an annual record of 939,511.
Ford will likely break the record, even though it’s four years into the F-150's product cycle, the market is declining, competitors have redesigned models for sale and there was a fire at a supplier plant that stopped production for more than a week in May.
Again from autonews.com:
"There's really nothing that's making this an easy feat," said Dave Sullivan, an analyst with AutoPacific. "There's a lot of headwinds, and there's a lot of choice for consumers. I think there's a certain amount of envy everyone in the auto industry is having over the F-series' success this far into its life cycle."
It’s hard to figure, isn’t it? Despite all the worries about climate change and the environment, U.S. car buyers are gravitating toward pickups and SUVs.
Tells me that the government – in spite of billions in subsidies – can’t convince consumers to buy electric cars.
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It was about Tesla, the U.S. electric automaker.
I’ve never been a big fan of government subsidies for this technology or that technology. That’s because, as I’ve watched these things over the years, I’ve noticed the government is usually a pretty lousy venture capitalist.
Seems to me that if something isn’t marketable in the private sector, no amount of government money thrown at it will make it marketable.
If pricey electric cars are marketable, consumers will buy them and they would be profitable whether they were subsidized or not.
Of course, the converse of that also is true. If pricey electric cars are not marketable, consumers won’t buy them regardless of the subsidies.
Take the Chevy Volt.
The Volt, a plug-in hybrid by General Motors, came to life in 2011. G.M. announced in November that it would stop making Volts in March.
From 2011 to the end of October, sales of the Volt and its derivatives worldwide came to about 177,000 units.
Automotive sources say that level of sales makes the Volt family of vehicles the world's all-time best-selling plug-in hybrid vehicle. It’s also the all-time top-selling plug-in electric car in the U.S.
So G.M. is halting production of the all-time, top-selling plug-in electric car. That says a lot by itself.
But how much money did the government pour into a car that not many people wanted to buy in the first place?
Well, when you total up all the tax breaks, outright subsidies and $7,500 tax credits to people who bought a Volt, it comes out around $3 billion. Divide that by the number of cars sold and you come up with around $17K per car.
Then along comes Tesla, which also reaped some $3 billion in subsidies.
The story this week noted that Tesla made about 9,300 more vehicles than it delivered last year, raising concerns among industry analysts that inventory is growing as demand for Teslas may be starting to wane.
No shock there.
From AP:
If demand falls ... the company will enter a new phase of its business. Like other automakers, Tesla will have to either cut production or reduce prices to raise sales. A drop in demand could also curtail the company's earnings and jeopardize CEO Elon Musk's promise to post sustained quarterly profits.
On Wednesday, Tesla did cut prices, knocking $2,000 off each of its three models. The company said the cuts will help customers deal with the loss of a $7,500 federal tax credit, which was reduced to $3,750 this month for Tesla buyers and will gradually go to zero by the end of 2019.
The cheapest Tesla you can buy right now costs around $44,000. Buyers may be holding out for the $35,000 model that is scheduled to come out later this year. Will buyers continue to jump into the electric car market after the tax credits disappear?
Tesla has sold about 360,000 cars since it began selling cars in the first quarter of 2015, which is quite a few more than the Volt, to be sure.
But one must wonder how Tesla will fair now that the early adopters have shaken out of the market. Will the mainstream auto market respond? Will Tesla remain solvent?
Time will tell.
From cars.com:
Tesla says its 60-kwh battery provides a range of up to 232 miles (the EPA says 208 miles), and the 85-kwh battery (a $10,000 option) provides up to 300 miles (the EPA puts it at 265 miles). Here are some examples for recharging times: With a single onboard charger plugged into a standard 110-volt outlet, Tesla says you will get 5 miles of range for every hour of charging. From zero to 300 miles would take about 52 hours at that rate. With a single onboard charger connected to a 240-volt outlet, which Tesla recommends, the pace can reach speeds up to 31 miles of range for each hour of charging, meaning a full 300-mile charge takes less than 9.5 hours.
My guess is that the average car buyer is just not in the market for cars like this – or cars in general, for that matter.
Ford and G.M. recently announced they will stop making sedans – except for Mustangs, Corvettes and Camaros.
Apparently, car buyers are not as fond of sedans as they are pickup trucks.
From autonews.com.:
Ford sold more than 450,000 of its F-series line — one every 35 seconds — from January through June. That's 4.2 percent more than in the first half of 2004, when it set an annual record of 939,511.
Ford will likely break the record, even though it’s four years into the F-150's product cycle, the market is declining, competitors have redesigned models for sale and there was a fire at a supplier plant that stopped production for more than a week in May.
Again from autonews.com:
"There's really nothing that's making this an easy feat," said Dave Sullivan, an analyst with AutoPacific. "There's a lot of headwinds, and there's a lot of choice for consumers. I think there's a certain amount of envy everyone in the auto industry is having over the F-series' success this far into its life cycle."
It’s hard to figure, isn’t it? Despite all the worries about climate change and the environment, U.S. car buyers are gravitating toward pickups and SUVs.
Tells me that the government – in spite of billions in subsidies – can’t convince consumers to buy electric cars.
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