The electric vehicle, or EV, boom some had hoped for obviously didn't take place in 2011. The Nissan Leaf and General Motors (NYSE: GM) Chevy Volt barely counted sales into the thousands each month, and a high-profile launch from Fisker has been disappointing to say the least. But there may be some room for optimism in the EV market.
As fellow Fool Alex Planes pointed out last week, EVs are actually on a faster adoption curve than hybrid vehicles were more than a decade ago. And companies may finally be releasing products that fill the needs of consumers. That doesn't mean there haven't been growing pains in the process, but EVs may be leaving their pimply, teenage years and entering a more mature stage of development.
Learning from uninspired, mass-market flops
For some reason, auto manufacturers insist on making first-generation vehicles look like something a disappointed teenager gets for his 16th birthday. The first generation Toyota (NYSE: TM) Prius was a sad looking car, the Nissan Leaf looks more like an alien station wagon than a revolutionary vehicle.
These vehicles were so uninspired that only diehard early adopters have considered buying them. The Toyota Prius didn't see sales take off until it came out with its second-generation vehicle and now you can hardly tell a hybrid from a standard vehicle.
Some manufacturers are figuring out that EVs shouldn't look like something undesirable, and maybe the opposite should be the reason people are attracted to EVs. Ford's (NYSE: F) 2012 Focus Electric at least has thoughts of being a hip-looking vehicle. And Chevy's Volt would look fine in any driveway. It's an age-old adage but it's true today for EVs: sex sells.
Tesla Motors (Nasdaq: TSLA) has been extremely successful in selling purely electric vehicles because it knew that performance and looks were most important. The company set out to build a performance machine and put it in a body that would catch the eye of any car lover. The Model S, a sedan that will be released later this year, builds on that high-class style. It is more comparable to a BMW 5-series than a Toyota Camry in styling.
Last week, Tesla unveiled the Model X, a crossover that could have a 300-mile range. By 2014, when the vehicle hits showroom floors, Tesla could be leading the EV charge in sports cars, sedans, and even utility vehicles.
Range anxiety easing
The biggest reason to take another look at EVs is their improving range. When first introduced, a 50-mile range was about as far as you could go. Even newer vehicles have trouble breaking that barrier. The 2012 Focus Electric will only go 100 miles and new VIA Motors vehicles, powered by A123 Systems (Nasdaq: AONE) batteries, only project a range of up to 40 miles.
Some vehicles had a hybrid system that allowed gas to be used for farther trips. The Volt can go 35 miles on electricity, and the Fisker Karma can go 32 miles powered by A123 Systems batteries, but gas engines extend that range further.
Tesla has increased range to up to 300 miles, and IBM has its sights set on building a 500-mile range battery. If a 300-plus mile range becomes more commonplace, then I think you'll see EVs sales grow much more rapidly.
Charging while you wait
For now, charging an electric vehicle might as well be measured in days. Four hours to charge the 100-mile range Focus Electric isn't getting many people past their daily commute, much less a trip out of town.
That's changing as well, and with an increased charging infrastructure having an EV as your only vehicle won't be such a stretch. Tesla says the new Model S can be charged in an hour with fast charging stations being built around the country. Maybe a stop for dinner and a charge won't be so bad after all.
Who to keep an eye on
Electric vehicles really need three things to become a major force in the auto industry: increased range, fast charging, and a larger charging infrastructure. Tesla has shown that all three can be improved, and it may just be making EVs a viable part of our automotive future.
At the very least, improving technology and better design makes EVs worth another look for investors. Tesla, in particular, may be driving us into the future of the auto industry.
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