Long Gas Lines Still Don't Make EVs a Buy

While Hurricane Sandy forced me out into the night to sit in '70s-style gas lines to fill my truck's gas tank and a couple of cans to power my generator, I got to thinking that, in addition to feeling like I was in Soviet Russia waiting for my ration of toilet paper, maybe I should have bought an electric car instead of the pickup I did. Rather than sitting in miles-long gas lines, I'd be driving by them, waving smugly at all the fools still bitterly clinging to their gas-hogging cars.

Of course, it then came to me why I was in line for hours on end: I was using a generator to provide a modicum of electricity to my house that had been left powerless by the storm. A Chevy Volt or Nissan (NASDAQOTH: NSANY  ) Leaf might have bypassed a whole bunch of gas stations, but eventually it would need to be recharged, and without power I couldn't do that. Possibly I could use my generator to recharge the batteries, but I'd still be sitting in line to get gas for it.

One hot car
There are other environmental concerns as well with EVs that aren't in the owner's manual. The auto blog Jalopnik reported that 16 Fisker Karmas, the sleek luxury electric hybrid, were parked at Port Newark and were flooded by the hurricane's storm surge. While any car, gas or electric, would suffer significant damage and probably be totaled as a result, it seems the Karmas "caught fire and burned to the ground."

That's not something that typically happens to a gas-powered vehicle, but it is something that's happened previously to Fiskers and General Motors' (NYSE: GM  ) Volt, as quite a few of the cars have spontaneously combusted. And EVs require special maintenance, like not allowing the battery charge to get too low and not parking it for extended periods of time without recharging it. Otherwise, as one Tesla (Nasdaq: TSLA  ) owner found out, you run the risk of turning your high-priced auto into a "brick."

Many of the problems associated with the self-combusting autos were due to batteries produced by the now-bankrupt A123 Systems. It had to recall its entire production run consisting of tens of thousands of batteries because of faulty manufacturing issues, costing it tens of millions of dollars.

Yet Nissan also had battery problems for its cars operating in Arizona. Seems they experience a greater-than-average battery capacity loss because of a "unique usage cycle": Higher-than-average operating miles in high-temperature environments over a short period of time causes them to burn out. I guess Arizona businesses that are reliant on their cars shouldn't plan on switching to EVs anytime soon -- or should buy a Volt or Tesla instead, since they use battery-cooling technology .

A blackout on gains
Alternative-fuel vehicles are still selling well, so long as you count hybrids like Toyota's (NYSE: TM  ) Prius in the mix. The Fool's Chris Baines points out that EVs and hybrids are the second biggest-selling vehicles in the U.S., behind Ford's (NYSE: F  ) F-pickup series (that's what I ended up buying). When states like California are experiencing gas prices of $5 a gallon (and not even from shortages caused by a major hurricane), there may still be some sense to it all.

Yet if you exclude the Prius, then the market continues to show that EVs are still a fringe niche. Chevy may have sold more than 19,000 Volts this year, certainly moving a lot more than it had in 2011, but it remains a tiny fraction of the overall car market and it's only because the company is virtually giving them away that it can claim the sales-leader title. Reuters estimates that GM is losing $49,000 on every Volt it builds, and it's had to resort to extremely low-cost lease deals -- $199 a month! -- to move them off the lot. While GM may dispute the actual loss per vehicle,Nissan and Toyota aren't willing to bleed themselves to move their cars, and that probably explains why their sales numbers are a lot lower.

Fill 'er up!
From technological issues to cost to environmental challenges, the EV and hybrid market still can't compete with its fossil-fuel rivals. Whatever the future holds for the niche, I think we'll look back on the current alt-fuel car market as one that wasn't capable of rising to the challenge and still not ready for prime time.

My guess is that the alt-fuel vehicle that will catch on will be natural gas ones. Although engine maker Westport Innovations (Nasdaq: WPRT  ) reported bleak guidance as OEMs cut back on production, it will ultimately power the car that's able to make its mark on the auto market. As the infrastructure is built up to support the industry, we'll see nat-gas vehicles proliferate. Until then, however, I'll sit in my pickup waiting for my ration of gas to get me through the cold night.

Get your motor running
Ford has been performing incredibly well as a company over the past few years -- it's making good vehicles, is consistently profitable, recently reinstated its dividend, and has done a remarkable job paying down its debt. But Ford's stock seems stuck in neutral. Does this create an incredible buying opportunity, or are there hidden risks with the stock that investors need to know about? To answer that, one of our top equity analysts has compiled a premium research report with in-depth analysis on whether Ford is a buy right now, and why. Simply click here to get instant access to this premium report.

Rich Duprey has no positions in the stocks mentioned above. The Motley Fool owns shares of Ford, Tesla Motors , and Westport Innovations. Motley Fool newsletter services recommend Ford, General Motors, Tesla Motors , and Westport Innovations. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (5) | Recommend This Article (6)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 05, 2012, at 7:34 AM, jimillo wrote:

    I can't believe this passes for 'analysis'. As a Volt owner, a few 'facts' need to be fixed. But note that with a simple hookup of a 1500 watt inverter, many Volt owners have a quiet powerful generator to run a refrigerator, sump pump, and gas or oil furnace. A very useful tool after a disaster like Sandy.

    Myth: "A Chevy Volt or Nissan Leaf might have bypassed a whole bunch of gas stations, but eventually it would need to be recharged, and without power I couldn't do that."

    Fact: No Chevy Volt ever needs to be recharged. Ever. It is a 'dual fuel' vehicle: It can use either grid-electricity or gasoline for its motive power.

    Myth: "Reuters estimates that GM is losing $49,000 on every Volt it builds."

    Fact: This has been discredited many times. What the Reuters 'analysis' did was divide the total development costs by Volts sold year to date. A similar 'analysis' was done a few months after the Volt started selling, and estimated the losses at $250,000 per Volt. Using the same logic, even a small business like a local restaurant loses thousands of dollars per customer in their first week of business. Obviously, you have no idea how a business works in allocating startup/development costs.

  • Report this Comment On November 05, 2012, at 8:03 AM, JRP3 wrote:

    Let's see, the Volt and Karma are not EV's but hybrids. Volts have never spontaneously combusted, in fact there is no evidence of any Volt catching fire in the real world do to use, charging, or accident.

    The new Tesla Model S will not "brick".

    Finally, you should have gotten a propane fueled generator instead of gasoline.

  • Report this Comment On November 05, 2012, at 9:24 AM, DaveSRQ wrote:

    You can make electricity from a generator and fuel your EV. However, you cannot make gasoline to fuel your gas powered car.

    If your home has natural gas, just purchase a natural gas generator, and make all the electricity you want for your EV.

  • Report this Comment On November 05, 2012, at 11:00 AM, electrafool wrote:

    Rich wrote: "Yet if you exclude the Prius..."

    Which is like saying you are still on your diet after eating an entire wedding cake for breakfast. Biggest selling car ever.

    In the last few years electric cars have been silently moving around immediatly after disasters. Power is easy to get into a car directly. Oil needs power to be refined then it has to get to gasoline pumps that need power at that specific location. An EV just finds any working plug.

    There is so much wrong/old/and blatant misinformation that I would recommend to pretty much ignore this fool's opinionated rant.

  • Report this Comment On March 02, 2013, at 11:57 PM, drice1 wrote:

    The meteorologists are pretty good in my part of the country, they can predict a hurricane up to a week in advance; plenty of time to make sure my EV is fully charged before the storm arrives...

    and, after the "big-one" hits, I will gladly give you a ride to a gas station to fill-up your gas jugs...LOL

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