7 Things to Know About Electric Vehicles

While persistently high gasoline prices are prompting more consumers to consider an electric car -- aka a battery electric vehicle (BEV) -- most automakers are not taking this market seriously. Technological advances in recent years make electric cars look increasingly attractive.  Those who ignore the future may find they have no future.  This article is about how 5 companies are approaching electric car sales and the possible long-term impact on their investors.

1. Nissan and Tesla dominate U.S. electric car sales

Two of the smallest automakers by market cap, Nissan  (NASDAQOTH: NSANY  )  and Tesla Motors  (NASDAQ: TSLA  ) , at $44.2 billion and $18.6 billion, respectively, dominate the electric car market in the US.  Together, they account for nearly 88% of sales.

Source: InsideEVs.com

Ford  (NYSE: F  ) , General Motors  (NYSE: GM  ) and Honda  (NYSE: HMC  ) combine for just 6% of the EV market. Last year, total sales at Ford, GM and Honda were flat or declined, while Nissan and Tesla enjoyed rising sales. 

Ticker 2012 YoY Change in Sales
F (1.5%)
GM 1.3%
HMC (11.3%)
NSANY 7.2%
TSLA 102.3%

An examination of their approach to the market makes it clear that Nissan and Tesla are committed to electric cars, and Honda is getting religion.  Ford and GM, in contrast, are only playing the emissions compliance game.

2. Some prices are too high for the target market

Except for Tesla, the other automakers mentioned have targeted the small car market. Unfortunately, in some cases, the prices aren't very small.  To keep things simple, let's look at the lowest trim offerings for their electric cars.  The cars are: the Ford Focus Electric, Chevy Spark EV, Honda Fit EV, Nissan Leaf S and Tesla Model S.

The Chevy Spark EV is the cheapest, with a base price of $19,995 after the $7,500 federal tax credit, followed by the Nissan Leaf S.  But, buyers with taxable income under $45,900 won't be able to take full advantage of this credit because their taxes are too low. 

Ticker Model MSRP Price after Federal Tax Credit
F Focus Electric $35,200 $27,700
GM Chevy Spark EV $27,495 $19,995
HMC Fit EV $37,415 $29,915
NSANY Leaf $28,800 $21,300
TSLA Model S $69,900 $62,400

Source: FuelEconomy.gov, GM.com

Ford's MSRP of more than $35,000 is still unrealistically high, even after the $4,000 price cut.  Do some of these automakers really want to sell these cars?

While Honda's sticker price is high, that's irrelevant, because the company is only leasing its 2014 model (see below).

3. It's been suggested that automakers lose money selling electrics

Last month, Kelley Blue Book suggested that most companies lose money on electrics.  Eric Loveday of InsideEVs.com believes that only Nissan and Tesla are making a profit on their sales.

It is no secret that Ford would rather sell hybrids.  And Toyota may abandon the RAV4 EV because of losses, and just buy the emission credits it needs in California.

4. Cars with driving ranges less than 100 miles are unattractive

In a global survey conducted more than two years ago, only 20% of Americans said they would consider buying an electric car with a range of 100 miles or less.  Yet that is what most automakers offer.  

Ticker Model Battery Size (kwh) EPA Mileage Range Cost to Drive 25 Miles
F Focus Electric 23 76 $0.92
GM Chevy Spark EV 21 82 $0.87
HMC Fit EV 20 82 $0.87
NSANY Leaf S 24 75 $0.87
TSLA Model S 60 208 $1.05

Source: FuelEconomy.gov

Only Tesla meets range expectations.  By targeting the luxury market first, it can deliver a car with the necessary range.  Tesla's mass market car will also have a minimum range of 200 miles.

5. Owners show disinterest in cars with limited cargo space

While all of these cars are surprisingly roomy, cargo space is another matter. The first figure is with the rear seats up and the second, with them down. 

Ticker Model Passenger Space (cu. ft.) Total Cargo Space (cu. ft.)
F Focus Electric 90.7 14.5/33.9
GM Chevy Spark EV 86.3 11.4/23.6
HMC Fit EV 89.3 12.0/49.0
NSANY Leaf 92.4 25.4/31.4
TSLA Model S 94.0 31.6/63.4

Source: Manufacturers' web sites.

While Ford, GM and Honda's designs apparently ignored parents shopping with children in tow,  Ford seems to have at least recognized the problem after the fact. Its website features its "Cargo Management System."

Wow, big enough for a gym bag and a pair of shoes!  

Nissan's decision to not skimp on storage space, coupled with its realistic price, helps to explain the Leaf's popularity.

6. Charging times are too long, but some automakers don't care

One major issue with battery-powered EV's is charging time. Below, you can see how long it takes each vehicle to reach a full charge. 

Ticker Model Charging Time (hrs) @240 volts
F Focus Electric 4.0
GM Chevy Spark EV 7.0
HMC Fit EV 4.0
NSANY Leaf S 7.3
TSLA Model S 10.0

Source: Manufacturers' web sites.

Charging time for the Leaf S can be reduced to 4 hours using an optional 6.6 kwh charger.

Though Ford, GM and Honda are ignoring the issue,  Nissan and Tesla are addressing the problem by building fast-charging stations which can provide an 80% charge in 30 minutes or less.

Nissan will install more than 100 fast charging stations at its dealerships. Tesla expects to have Superchargers in most metropolitan areas this fall, and cover 98% of the US population and parts of Canada in 2015. Charging is free.

Tesla also offers a battery swap program, which can get you on your way in 90 seconds.  Cost is $60-80--about the same as most fill-ups.

7. SOME ELECTRIC CARS ARE NOT AVAILABLE NATIONWIDE

The limited availability of the Chevy Spark EV suggests that GM is more interested in satisfying environmental regs than selling cars. 

Ticker Model Current Availability
F Focus Electric Nationwide at dealers with charging stations
GM Chevy Spark EV CA and OR only
HMC Fit EV CA, OR, NY, NJ, CT, MA, MD and RI.
NSANY Leaf S Nationwide
TSLA Model S Nationwide with some difficulty 

Sources: Ford.com, Engadget.com, Honda.com.

In fairness to Honda, it is testing a three-year lease-only program priced at $259/month.  It provides everything, including collision insurance.  Buyers just have to purchase liability insurance.

Dealers are fighting Tesla's direct sales model in Colorado, New York, North Carolina, Texas, and Virginia. But their argument that it threatens the franchise system is baseless, because Tesla has no dealers of its own, and thus is not competing against them. 

The vehemence of this resistance demonstrates dealers understand the seriousness of the threat represented by electric cars with 200-plus mile ranges once an adequate fast-charging system exists. Businesses don't waste resources fighting phantom threats. 

The bottom line.

If gas prices remain high, electric cars will continue to grow in popularity.  In two and a half years, Tesla expects to offer a mass-market car with the range necessary to appeal to a wide audience. Like Nissan, it's coupling that effort with the construction of a nationwide network of fast charging stations.

But I believe that none of the other four automakers will have an affordable 200+ mile range car for sale by the end of 2015, because of their inferior and more expensive battery technology. This head-in-the-sand approach is not viable long-term. Automakers without competitive EV products could lose share to those who do.


Read/Post Comments (17) | Recommend This Article (7)

Comments from our Foolish Readers

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 August 27, 2013, at 3:51 PM, EarlRichards wrote:

    Plug your Tesla S, electric car into your household, solar array.

  • Report this Comment On August 27, 2013, at 4:08 PM, hunter3203 wrote:

    A few points.

    Tesla has been late to market with each car they've introduced. So I think it's very unlikely their new more affordable car will be introduce in early 2016. More likely either late 2016 or 2017.

    You left out the Chevy Volt. They have the only affordable car that both has pure EV range and a range that is competitive or greater than a competing ICE vehicle. That's the only solution that is available in that price range today, some 3 years prior to Tesla's even promised date for their affordable car.

    What battery technology of Tesla's are you referring to? I'm not aware that they have access to any unique technology that makes their car better or cheaper.

  • Report this Comment On August 27, 2013, at 5:08 PM, Cara64 wrote:

    "Tesla late to market"??? Perplexing comment since Tesla has been leading the market on PEVs (plug-in electric vehicles) and leading the way on the infra-structure with the Supercharger network.

    http://www.teslamotors.com/enthusiasts/blogs/tag/model-s

    http://money.cnn.com/2013/05/30/autos/elon-musk-tesla-superc...

  • Report this Comment On August 27, 2013, at 8:20 PM, p366 wrote:

    Tesla's batteries are produced by Panasonic which has a stake in Tesla. Rather than a large Li ion battery, Tesla uses 6000+ small batteries, so-called 18650's--18 mm x 65 mm. These batteries have been around for over 15 years, so the tech is well- developed and cheap. It is estimated that Tesla pays as little as $150-175/ kwh for its batteries vs. all others paying $500-600/kwh. Experts believe that it could take until 2020 before the batteries used by all the other automakers fall in price to what Tesla is paying now.

    I left out the Volt because it is a hybrid. It is not an all-electric vehicle. Its electric only range is just 38 miles.

    Pam

  • Report this Comment On August 28, 2013, at 9:47 AM, newmcc wrote:

    Interesting article. Tough to draw conclusions from a very small sample size, but I think you've done justice to many of the points around early market success (or not) of the leading offerings.

    One factor that is tough to measure, but in my opinion really important, is that of drivability/excitement/low-end torque. It was a surprise to me how much fun the Volt is to drive--and even Consumer Reports had a blast driving the Tesla.

    As a Volt driver, I'd have to say that you've miscategorized it as a 'hybrid' and leaving it out of this comparison. The Volt is pure electric drive and for my (and the vast majority of Americans, by the way) daily commute it is all-electric all the time. When the battery is depleted, the on-board gas-powered generator steps in and makes electricity to power the electric drivetrain. Thus the tongue twisting "extended range electric drive vehicle" moniker that GM has given it. "Hybrid" it is, but only in the sense that it gets the electricity for its drivetrain from two sources--the 16kWh battery system and the on-board gas generator.

  • Report this Comment On August 28, 2013, at 10:43 AM, p366 wrote:

    Consumer's Reports also found the Chevy Spark EV peppy, calling it "no golf cart." It does 0-60 in just 7 seconds vs. over 9 for the Ford and costs $7700 less. Other than the cargo space, it looks like an attractive vehicle. Unfortunately, it is only being sold in CA and OR.

    Pam

  • Report this Comment On August 28, 2013, at 4:59 PM, RussellL wrote:

    "This article is about how 5 companies are approaching electric car sales and the possible long-term impact on their investors."

    So which one will make us more money?

    I say TSLA.

    They have the only EV that performs like a car powered by an ICE.

  • Report this Comment On August 30, 2013, at 2:50 PM, MariahRobertson wrote:

    Electric cars are the way of the future, but they aren't ready to be widely used yet. We need replacement fuels now to create competition in the fuel market. Competition will drive down gas prices, and offer consumers choice at the pump!

  • Report this Comment On August 31, 2013, at 2:58 AM, bicycle2marin wrote:

    What about Smart electric drive? $139/mo is definitely affordable.

  • Report this Comment On September 01, 2013, at 12:09 PM, p366 wrote:

    bicycle2marin,

    Yes, the Smart ED is definitely affordable. We are limited to 5 tickers and I chose the Spark because it it is quite peppy, getting to 60 in just 7 seconds.

    It was a toss up between the two because both vehicles sales are rather meager July YTD: 173 for the Smart vs. 130 for the Spark. However the Spark was just introduced in June.

    Pam

  • Report this Comment On September 01, 2013, at 5:12 PM, BobWallace wrote:

    4. Cars with driving ranges less than 100 miles are unattractive.

    If you live in a multi-car household in which on any given days one vehicle never drives more than 100 miles why would making one of your vehicles be "unattractive"?

    Do the math. A $20k vehicle that costs 4c per mile vs. 8+c for a $20k 50 MPG hybrid can make an attractive modification to the monthly budget.

    Someone commuting 60 miles a day, 15,000 miles a year is going to save well over $600 per year.

    6. Charging times are too long.

    If you drive close to 100 miles per day and are home less than 7 hours per night.

  • Report this Comment On September 01, 2013, at 11:32 PM, p366 wrote:

    BobWallace,

    Logic has little to do with people want.

    See the following article about the results of a global survey of prospective buyers

    http://www.fool.com/investing/general/2013/08/30/7-key-point...

    Pam

  • Report this Comment On September 10, 2013, at 1:37 PM, jimillo wrote:

    "4. Cars with driving ranges less than 100 miles are unattractive."

    The market actually seems to be saying that cars with less than 200 mile driving ranges are unattractive. Less than 4% of the ~140-mile range Model S were being ordered, so Tesla cancelled that version.

    I've had a Volt for over 2 years, and in the year before I bought my Volt I was considering either the Leaf or Volt. I only have a 20-mile round trip commute, so it would seem that the Leaf's 70+ mile range would be fine. We are a typical two-car family, and of course we could always use my wife's Fusion for longer trips, but there were a few incidents in the year before I bought my Volt that made me stay away from the Leaf. For example, a sick daughter at college 60 miles away, and my wife not being able to get her, so I went. Total miles for the day were about 140, without any charging opportunity. I had other unplanned situations in which I needed to go 70+ miles in a day when my wife was at work.

    Because I was thinking about buying an EV, I was accutely aware of these situations. Interestingly, I never had an unplanned need to go over 200 miles in a day in the year before I got my Volt, or in the two years since I got it. This is why even nice vehicles like the RAV4 EV with a 100+ mile range are not selling well.

  • Report this Comment On September 10, 2013, at 2:17 PM, jimillo wrote:

    "4. Cars with driving ranges less than 100 miles are unattractive."

    I concur, but would extend that to say that the market actually seems to be saying that cars with less than 200 mile driving ranges are unattractive. Less than 4% of the ~140-mile range Model S were being ordered, so Tesla cancelled that version.

    I've had a Volt for over 2 years, and in the year before I bought my Volt I was considering either the Leaf or Volt. I only have a 20-mile round trip commute, so it would seem that the Leaf's 70+ mile range would be fine. We are a typical two-car family, and of course we could always use my wife's Fusion for longer trips, but there were a few incidents in the year before I bought my Volt that made me stay away from the Leaf. For example, a sick daughter at college 60 miles away, and my wife not being able to get her, so I went. Total miles for the day were about 140, without any charging opportunity. I had other unplanned situations in which I needed to go 70+ miles in a day when my wife was at work.

    Because I was thinking about buying an EV, I was accutely aware of these situations. Interestingly, I never had an unplanned need to go over 200 miles in a day in the year before I got my Volt, or in the two years since I got it. This is why even nice vehicles like the RAV4 EV with a 100+ mile range are not selling well.

  • Report this Comment On September 10, 2013, at 2:18 PM, jimillo wrote:

    Sorry for the double-post. My first post didn't show up in half an hour, so I re-posted.

  • Report this Comment On September 10, 2013, at 2:35 PM, birder1500 wrote:

    One thing I always wanted was a car I had to plug in for 24 hours after driving it 100 miles. Such a treat.

  • Report this Comment On September 10, 2013, at 3:32 PM, jb80538 wrote:

    #8,

    They aren't as "green friendly" as they want you to believe.

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