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Why Nobody's Buying Ford's Electric Car

http://www.fool.com/investing/general/2013/01/28/why-nobodys-buying-fords-electric-car.aspx

John Rosevear
January 28, 2013

Psst.

Want a sweet deal on an electric car?

No, I'm not talking about Tesla Motors' (NASDAQ: TSLA) hot Model S, the one electric car – heck, the one car – I get asked about more than anything else. Tesla's got plenty of orders coming in for its sleek electric ride, and I don't expect the Silicon Valley automaker to be offering discounts anytime soon.

But if you're OK with something a little humbler, the deals are getting a lot better, starting with the latest one from Ford (NYSE: F).

And that – and some other recent news from the Blue Oval -- says quite a bit about the near-term prospects for electric cars in general.

A good car that isn't selling
Ford's electric car, the Focus Electric, is no Tesla Model S – but it's a pretty good package. It has received great reviews -- Consumer Reports called it "solid, sophisticated, and a delight to drive" – and most who have driven one have raved about the little car.

But the problem for Ford is that the list of people who have driven one is really short. After building over 1,600 examples, Ford sold just 685 Focus Electrics in 2012.

What's holding buyers back? A big part of it is price: At $39,995 until recently, the Focus Electric was over twice the price of a (quite efficient and fun to drive) entry-level, gas-powered Focus – and the Electric has a shorter range (about 80-100 miles depending on conditions) and less storage space than the regular model, because of its bulky batteries.

Ford isn't the only automaker to see disappointing electric-car sales, of course. Nissan's (NASDAQOTH: NSANY) LEAF fell far short of sales targets last year. Nissan recently responded with a significant (18%) price cut for the LEAF, and last week it became clear that Ford would follow suit.

Ford is now offering big discounts of over $10,000 on Focus Electric leases and has cut the electric car's cash purchase price by $2,000. The upshot is that consumers can now lease a Focus Electric for $285 a month, according to Ford. That seems like a good deal, but the recent history of mass-market electric cars suggests that it's unlikely to make a big impression on car shoppers.

Electric cars are a hard sell
Clearly – with the notable exception of Tesla – electric cars aren't succeeding with consumers at anywhere near the rate that their proponents had hoped for just a couple of years ago. While General Motors' (NYSE: GM) Chevy Volt has posted respectable sales in recent months, sales volumes are still far below GM's initial hopes for the car. And while it's based on advanced electric-car technology, the Volt is essentially a hybrid – a category that consumers have been happy to embrace.

Given the slow sales (so far) of mainstream electric cars, it's not a surprise that automakers are taking a harder look at other alternatives to