Tag Archives: EVs

EV Sales: 2014 and 2015

Why Did U.S. EV Sales Decline in 2015 Versus 2014?

2015 was a disappointing, but not unexpectedly so, year for sales of electric vehicles.

In the U.S., according to InsideEVs, electric vehicle (EV) sales actually declined 5.3% to 116,548 compared to 123,409 in 2014. Worldwide, however, EV sales increased 39.6% to 447,617 from 320,713 in 2014. EV Sales: 2014 and 2015

Why the drop off in the United States?

With global sales increasing nearly 40%, why did EV sales in the United States take a backward step in 2015? I think there were 5 primary reasons:

1. No new mainstream models. Unlike 2014, which saw the introduction of the BMW i3 (11,024 units sold in 2015), 2015 didn’t see any major new entrants into the EV market. The Tesla Model X (expensive and not mainstream) didn’t launch until December.

2. Leaf and Volt getting a bit stale. Ranked at #2 and #3 in EV sales for 2015, the Nissan Leaf and Chevy Volt both declined in sales versus 2014. Each are a few years old now and are not generating any excitement among consumers. The updated 2016 Chevy Volt, a very nice refresh that is getting very positive reviews, didn’t hit dealers until the end of the year and so didn’t have an impact on sales.

3. Decline in gas prices. According to GasBuddy, the average price of gasoline in the U.S. for 2015 was $2.40. This compares to a national average in 2014 of $3.34 according to AAA. With gas prices going down instead of up, there was little incentive for U.S. consumers to trade in their gas guzzler for a plug-in car.

The gas-price decline likely had the biggest negative impact on sales of Ford’s Fusion Energi and C-MAX Energi PHEVs and the Toyota Prius PHV. When comparing the extra cost of these 3 plug-in hybrids, many would-be purchasers probably opted for the regular hybrid versions instead.

4. Dwindling supply of early adopters.The decline in sales of the Nissan Leaf and Chevy Volt are a clear sign that the first wave of early adopter buyers of EVs has peaked. The Nissan Leaf is a highly praised car, but one that many consumers find unattractive and not practical with a range of around 100 miles.

Chevy Volt, the highly regarded PHEV (plug-in hybrid), likely can attribute a decline in sales to the fact that Chevrolet was launching an entirely new version at the end of 2015. When combined with declining gas prices, no new models to get people excited – the second wave of early adopters simply never materialized.

5. Buyers are waiting for the Chevy Bolt and Tesla Model 3. Many interested EV buyers sat out 2015 as they await the next generation of 200-mile range “affordable” EVs. The 200-mile range, $35,000 Chevy Bolt may launch at the end of 2016 or early 2017. The much-hyped Tesla Model 3, also with an expected range of 200 miles and base pricing in the $35,000 to $40,000 range, could go into production sometime in 2017, but more likely 2018.

While these cars will be more expensive than alternatives like the Leaf, Volt, Fiat 500e and in the same ballpark as the BMW i3, the expected range of around 200 miles will be key to attracting a new, and larger class of EV buyers.

What Will Happen in 2016 and 2017?

With gas prices expected to remain low this year and no new mainstream EVs being introduced  (the Chevy Bolt will reach production at the end of 2016 at the earliest), 2016 will likely be another disappointing year for EV sales in the U.S. I expect global sales, however to see another strong year of growth of at least 25%.

2017 should see a return to solid growth in the U.S. with an updated Nissan Leaf, the Chevy Bolt reaching dealers and the possible launch of Tesla’s Model 3. Hopefully, we will see some other new models or updates from the likes of Ford, BMW, Audi, Mercedes and others. But beyond the supply of new models, the impact of gas prices is a huge wildcard.

In future posts, I’ll go out on a limb with my predictions for when sales of EVs in the U.S. will finally start to take off.

Tesla Selects Nevada for Gigafactory Battery Plant – But Can They Deliver?

The worst-kept secret in years … Tesla selects a Nevada site near Reno to build their battery factory.

The key questions that the battery and car analysts are raising among all of the excitement, include:

1. Will the factory get the cost of the car batteries low enough so that Tesla can actually price its Model III near the $40,000 range that is being promised. Many analysts are saying no.

Rendering of the Tesla Gigafactory to be built near Reno, Nevada
Rendering of the Tesla Gigafactory to be built near Reno, Nevada

2. Will the plant be built and operating by 2017 and in time to launch the Model III that year?

3. And finally, Tesla is saying by 2020, the factory will be able to produce enough batteries for production of 500,000 Teslas. To achieve this goal, and assuming the company means EVs with their branding, as opposed to also including platforms made for other brands, in 2020 they would likely have to sell:

– 300,000 Model III
– 100,000 Model X
– 100,000 Model S

While not impossible, especially with the growth opportunity in China, by comparison BMW sold 294,000 3 Series sedans in all of 2012. So the Model III, which Elon Musk has said is targeting the 3 Series and Audi A4, would have to match that volume.

What do you think, can they reach this level of sales in roughly 6 more years?

Understanding Elon Musk and Tesla

I’m a HUGE Tesla fan and Elon Musk fan boy. Tesla is simply one of the most important companies of our lifetime. The Model S is an amazing and important car, but when Tesla launches the Model III in about 2017 – it will probably be looked at as the most pivotal vehicle in the last 100 years.

Elon Musk’s vision is not really about building a great car company, but rather being the company that is a change agent and is a key catalyst for getting consumers and the other auto companies to embrace electric vehicles. Along the way, Tesla is becoming a great auto company that is building not just good EVs, but some of the best cars ever, period.

Tesla Motors logo
Tesla Motors logo: Source Tesla Google+ page

And the company is changing aspects of how cars are manufactured, sold and serviced. And then think about their Supercharger charging stations, the Gigafactory battery plant that is coming in a few years and the amount of robots used to build their cars – right here in America, in the high-cost-of-living Bay Area.

A lot of people simply don’t understand Elon and Tesla. They are focused on whether Tesla ismaking a profit? On how many cars they sold in the most recent quarter? This type of myopic thinking simply reveals that a lot of people still simply don’t comprehend what Elon and Tesla are undertaking. Tesla is a bit like Amazon in that Amazon is still losing money, but they are becoming world dominating – that is their larger goal. Making a profit can come later.

Tesla is also not looking to become a dominant auto company or even necessarily the largest manufacturer of EVs long term. The ultimate measure of Tesla’s success will be how much of a force their success was as a catalyst in the transition of GM, Ford, Chrysler, BMW, Mercedes and Toyota, etc away from ICE-powered cars to electric?

I’m betting that Tesla and Elon will achieve their vision and goal – but unfortunately not for many, many years. The first major inflection point for EVs will not come until after the Model III is launched and EV sales likely won’t explode until around 2025.