The market seems marginal still, but is likely to come on fast.
NEW YORK (TheStreet) -- The numbers are in for 2011. Approximately 18,000 high-performance
electric cars were sold in the U.S. in 2011. By "high-performance" I
mean those electric cars that have a top speed at least 10% above 75
MPH and can accelerate to that kind of speed at least as quickly as
the average gasoline/diesel car.
The 2011 electric bestseller was the Nissan (NSANY.PK) LEAF with 9,674 units, followed by the Chevrolet (:GM) Volt with 7,671 units. Tesla (:TSLA) and Fisker combined delivered fewer than 1,000 cars in the U.S. in 2011. Chevrolet Volt
In all, it is estimated that approximately 13 million cars were delivered to consumers in the U.S. in 2011. This means that high-performance electric cars constituted approximately 0.15% of the total U.S. car market.
Aside from "high performance" electric cars, there are two types of definitions that need to be sorted out, especially as we enter 2012. The first definition is simply the one about "electric car." My way of drawing the line is to say that any car that plugs into a wall outlet qualifies, as long as it is high-performance. This means the Chevrolet Volt, Nissan LEAF and cars from Fisker and Tesla are included.
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Some people will object that Fisker and Chevrolet Volt shold not be called "electric cars" because they also have gasoline engines. I don't think this distinction is very relevant at this stage of the game. A Fisker is rated by the EPA at 32 miles of all-electric range, and the Chevrolet Volt at 37 miles. Both of those cars can perform across the entire performance range of the car -- maximum acceleration up to 100 MPH -- without the gasoline engine turning on, up to those distances (32 miles and 37 miles, respectively). Many people don't even drive more than 30 miles on the average day at all, so they would rarely consume a drop of gasoline during their regular commutes, in those cars. Shades of Gray
In 2012, at least two cars will enter the market that will muddy these distinctions. Let's start with the Toyota (:TM) Prius Plug-In, which is entering production now and should see its first U.S. consumer deliveries no later than March 2012. It has only a small battery -- I think close to 5 kWh, compared to the Nissan LEAF's 24 kWh and the Chevrolet Volt's 16 kWh -- and can therefore only travel approximately 15 miles on a full charge.
But the all-electric limitations of this car doesn't stop there. The nature of the Toyota Prius Plug-In's architecture also limits what you can do during these first 15 miles of potentially all-electric range. You see, the Toyota's electric motor is a lot weaker than the one in the Nissan LEAF, Chevrolet Volt and for that matter also Fisker and Tesla.
As a result, the Toyota Prius Plug-In will engage the gasoline engine when you apply the accelerator to approximately 75% of power, as well as probably over a certain speed, supposedly 62 MPH. In other words, despite that this car plugs into the wall, it can start acting like a regular hybrid car already after the first few seconds of driving, if you just apply enough power.
It is therefore a legitimate question whether the Toyota Prius Plug-In should be called an electric car, in the same way we would otherwise apply that label to the Chevrolet Volt and Fisker Karma. It cannot function without the gasoline engine. In contrast, whether it's the Chevrolet Volt or the Fisker Karma, you could theoretically remove the gasoline engine and drive those cars to their performance maximums -- just to 32 and 37 miles worth of range, respectively. Dawning Market
The Toyota Prius Plug-In isn't the only car to enter the market in this definitional gray zone. The Ford C-Max Energi will also enter the market in 2012, and it may have a similar architecture to the Toyota Prius Plug-In. I say "may" because Ford has not yet provided the crucial engineering details that would enable us to make the final determination -- but most indications are that it will be similar, even though its battery may be larger, which doesn't change the definitional principle here.
Ford is entering the market already this quarter with the $40,000 Focus Electric, an all-electric high-performance car. We really don't have a good sense of the sales expectations for this car, except to say that the geographic availability will be limited in the first half of 2012, and expanded to more states in the second half.
Let's tally the 2012 sales expectations for the U.S. market for these electric cars. These estimates are my own, using manufacturer guidance as one possible source: Nissan LEAF: 25,000 units Chevrolet Volt: 45,000 units Tesla Model S: 6,000 units Fisker Karma: 5,000 units Ford Focus Electric: 7,000 units Toyota RAV4 Electric: 4,000 units
That would be 92,000 units for the unambiguous high-performance electric car category in the U.S. market. Then add these two additional "gray zone" cars, as they reside in an area between extended-range electric cars and "regular" hybrid cars: Toyota Prius Plug-In: 12,000 units Ford C-Max Energi: 18,000 units
Adding these additional 30,000 cars, we arrive at a U.S. market-wide total of 122,000. Some lower-performance all-electric cars from Smart and Mitsubishi will likely add a few thousand units, yielding a total closer to 130,000, or approximately 1% of the U.S. car market.
In other words, we are talking about a U.S. market-wide growth rate of this segment from 2011 to 2012 of approximately 600%. How many 600% growth markets do you know? Yes, people laughed about the iPhone in 2007 too, but by the end of 2008 they weren't laughing anymore. Certainly not in 2009 or 2010. These markets are small now -- still haven't hit 1% of the total market -- but they come on fast, in a few short years.
Electric cars are currently more expensive to make than pure gasoline/diesel cars. Of course, electric cars are also cheaper to operate, given that they are more energy efficient, as well as the lower maintenance costs. An electric car has so dramatically fewer moving parts and reduced mechanical complexity, that you should be able to save close to $1,000 per year or in many cases more over the longer term.
One unanswered question with respect to cost is the eventual battery replacement. We don't know what these batteries will cost eight or 10 or more years ago into the future, when a replacement will eventually be due. This could be a significant variable, but eight years is a long time in technology, and we know what technology has done to the cost of other things in life.
In the future, the arguments in favor of electric cars are likely to shift to their silent and smooth operation. Basically, electric cars make for superior luxury. Once you have driven an electric car, returning to a gasoline/diesel car feels very agricultural with all their noise, shakes, vibrations and lack of smooth operation.
In the near term, electric cars are likely to be focused on the performance and luxury segments. Over time, as battery cost declines, this luxury technology will be accessible to a greater percentage of automobile buyers. Perhaps then, the electric car market share will go from 1% to something more like above 50%. That will likely take at least another five years or more.