Has the electric car revolution stalled?
Much-hyped battery maker A123 Systems (NASDAQ: AONE) filed for bankruptcy this week, hoping to get its assets sold to big-league auto supplier Johnson Controls (NYSE: JCI). Meanwhile, one of A123's key customers, Fisker Automotive, said that production of its next model – originally slated to start this quarter – was unlikely to get rolling until 2014 or 2015, as it confronted a whole series of problems.
Fisker and A123 were both recipients of funding made available by the Obama administration, which put $5 billion behind its pledge to get a million electric cars on U.S. roads by 2015. Other recipients have fared somewhat better, but it's still a fair question to ask: Has the revolution stalled?
Or perhaps more to the point, was the promise of electric cars overblown?
So far, just one success story
Proponents of electric cars have one promising success story to point to, of course: Silicon Valley's Tesla Motors (NASDAQ: TSLA) is actually producing an all-electric car that is getting good reviews – and Tesla has plenty of eager customers lining up to get one.
There's no doubt that Tesla CEO Elon Musk and his team have executed very well on their audacious plan to roll out the Model S, an all-electric luxury sedan with impressive range. But despite its popularity with the well-heeled gadget-geek set, it remains to be seen whether Tesla can break out of its technophile niche and into the mass market.
The challenges that Tesla, and any other maker of pure electric cars, will have to overcome are formidable. Consumers who are used to gasoline technology – and who are finding that new cars get better and better fuel economy with each passing year – have so far decided that the hassles of an all-electric car aren't worth the savings.
But the electrification of the car is gaining ground – with hybrids.
Hybrids have upstaged electric cars... for now
General Motors (NYSE: GM) just announced a $35 million investment in a Detroit factory that will build the Cadillac ELR, an upscale coupe set to use the same drivetrain technology found in the Chevy Volt. While the Volt is often perceived as an electric car, it's actually an unconventional hybrid: A four-cylinder engine serves as an on-board generator to recharge the car's battery pack.
The ELR will be an interesting niche product, one that should help GM recoup more of its expenditure on the Volt program. But more and more mainstream hybrids are being sold. Sales of Toyota's (NYSE: TM) Prius – now a family of three hybrid models – have nearly doubled year-ago U.S. totals through September.
Meanwhile, Ford (NYSE: F) – which has invested heavily in improving the fuel efficiency of its conventional gas-powered models -- has also been ramping up its hybrid offerings. The Ford C-MAX, a direct competitor to the large Prius v, began arriving at U.S. dealers in September. And the hybrid version of Ford's hot new Fusion sedan has just hit the market, and sales are expected to be strong.
Contrast with Ford's own electric car, the Focus Electric, which has sold just 236 examples through September.
The upshot: A long way to go for EVs
Toyota, Ford, GM, and the other major automakers will continue to cover all of their bases by developing EV technology (as well as other alt-fuel technologies like fuel cells). But clearly the momentum is with hybrids. Unlike EVs, hybrids require no changes in consumer behavior – they're functionally "normal cars."
While there will always be room for a well-executed niche product like Tesla's Model S, better hybrids, along with improved internal-combustion drivetrains like Ford's EcoBoost engines, seem likely to keep the electric-car revolution from gathering steam for quite a while yet.