I like the earth, and I want to keep it a happy place to live. Subsequently, I really like the idea of sustainable energy and less pollution. With that being said, it might surprise you to know that when it comes to investing in electric vehicles, I'm betting against our commander in chief. Here's why, and how it affects your pocketbook.
Time to rake up the leaves
I don't like waste. And I really, really don't like $1.4 billion in waste. Especially when I'm the one paying for it. That brings me to Nissan's (OTC: NSANY) Leaf. Fools, the Leaf might just be the most hideous car known to man. It's ugly. Look, I want to save the planet, but I don't want to look like a complete dingbat while doing it. Nor do I want to be stranded in the middle of Timbuktu.
One of the big problems with the Leaf is its limited range of 73 miles per charge. A 2011 study by Indian University School of Public and Environmental Affairs found that of the 2,300 drivers surveyed, most were not interested in EVs because of their limited range. The results showed that consumer interest was a 2.67 on a scale of 10 -- 10 being the highest. But did Nissan listen? Nope.
Nissan has admitted its "arrogance " when it comes to Leaf sales, as the prediction of 20,000 Leafs sold in the U.S. in 2012 actually turned out to be a whopping 9,819. That's up from 2011's 9,674, but not nearly the 39,000 annually Nissan predicted to get the $1.4 billion Department of Energy/Obama grant.
Ford does it better?
In 2009, the government loaned Ford (NYSE: F ) $5.9 billion to help with its development of EVs and hybrids, as well as to retool its factories to make them more compatible with building smaller, more energy-efficient vehicles . Well, congratulations, taxpayers. In 2011, Ford had a limited release of the Ford Focus Electric. Guess what? It goes a full 76 miles per charge ! Even better? It charges twice as fast as its competitors so you can hit the road with a fully charged battery after only... 4 hours. In case it's not clear, my enthusiasm is sarcastic.
The good news is the Focus Electric looks more like a car than a deranged ladybug, but there are some who criticize Ford's EV as being no more than a compliance car, one built solely to appease government regulations. This comes from the fact that the Focus Electric is only available in certain areas such as California, and that in 2012, Ford sold a staggering 685 Focus EVs -- again, sarcasm. Ford argues that the Focus Electric is not a compliance car, and the slow sales are from Ford allowing demand for the EV to grow organically. Still, with a range of 76 miles per charge, high demand seems unlikely given consumers' range anxiety.
Government Motors to the rescue?
The news isn't much better for Government Motors, er, General Motors' (NYSE: GM ) Chevy Volt. The Volt can go 35 miles per charge, but it has a backup system of gas that extends the range to 350 miles . That takes care of range anxiety. And as an added plus, the fear of looking like a dingbat is nonexistent as the Volt looks more like a sporty sedan. However, during the auto bailout, GM received roughly $49.5 billion from taxpayer funding, which left many harboring resentment against the company.
Additionally, GM hasn't been able to regain market share, and even after pumping over $1.2 billion into the Volt, sales have been slower than anticipated, even though they tripled in 2012 compared to 2011. What's worse, GM's market share has slipped to an 88-year low, and the future remains uncertain. That's bad news for the government, which still owns 500 million shares that it wants to sell back to GM. So long, tax dollars.
The beauty among the beasts
In 2009, Tesla Motors (NASDAQ: TSLA ) received $465 million in low-interest loans from the Department of Energy to build an affordable EV -- $365 million of that was earmarked for the development of the Model S . Fools, of all the cars listed, this is the one I want to succeed. It's beautiful. And range? Not an issue for the Model S. For the 40-kwh battery, you can get a reported 160 miles per charge. For the higher-end 85-kwh battery, one charge will take you 300 miles.
So what's the problem? Well, the base price for the Model S starts at $52,400. That's not exactly "affordable." As an underscore to this, according to Tesla's latest quarterly report released on Nov. 7, Tesla began manufacturing the Model S in June 2012, and as of Sept. 2012, it had produced 359 Model S vehicles and delivered 263. Tesla stated that it expected to deliver 2,5003 to 3,000 in its fourth quarter, but those results aren't out yet. When Tesla VP George Blankenship was asked about it at the Detroit Auto Show in Jan. 2013, he declined to answer.
Furthermore, Tesla has admitted that since its inception, it's been plagued with massive losses, and has used approximately $651.1 million in operations through Sept. 2012. As of Sept. 30, 2012, it had $85.7 million in cash and cash equivalents, and had an operating free cash flow of -$233.11 million -- not exactly the warm fuzzies for investors.
Tesla has said that to help with volume it plans to build a smaller vehicle that it thinks will sell for around $30,000. According to Tesla chief designer Franz von Holzhausen, however, the small car is "still a doodle on a napkin," and it'll be another three to four years before it appears. Let's hope Tesla can hold out for that long because with it's "affordable" car starting at $52,400, I don't see it ramping up the volume, and thereby profits, anytime soon.
To be fair, EV sales have improved over the past few years. In fact, in 2012, the electric-car market share made up 3.38%. That's up from 2011's market share of 2.23%, but when you compare that to 2007's market share of 2.99%, the numbers aren't exactly impressive. I get that Mr. Obama wants to get more EVs on the road, and that's an admirable goal, but consumers are less than enthused about the electric vehicles currently available, and the money the government invested doesn't seem to be paying off. Consequently, I'm not ready to throw my investing dollars into EVs just yet.