Posts Tagged ‘Green Cars’

So on my last blog post, I might have been a little harsh in criticizing Tesla. I’m always the first one to admit when I’m wrong, and I have to give the automaker props for achieving success in an extremely competitive market. In my defense though, I did say that 2013 would be a ‘make or break’ year for them, and I’m leaning toward this year being a ‘make’ year for Tesla. 

There are three really good reasons why Tesla deserves kudos for a job well done, aside from the obvious, which is to say that not many car ‘start-ups’ historically have even survived as long as Tesla has. First off, they have managed to make a really good car, even if you ignore the fact that the model S represents a total deviation from the norm since it does not run on an internal combustion engine. Consumer Reports gave the model S a 99 out of  a 100 score, which is incredibly difficult. It also won Motor Trend magazine’s 2013 car of the year award. And if you have ever seen one up close, you can tell right away that the body lines are sleek and streamlined, and that it’s obviously a luxury sedan, and looks very well made. 

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The second thing that Tesla has done right is living up to it’s corporate guidance, in other words, when the company says it will produce 2,000 cars a month, pay back the Department of Energy loan early and achieve profitability, and then actually does those things, it’s no wonder the company stock has more than doubled this year. Investors like companies that do what they say they are going to do, because it makes them feel more secure about their investment, and it’s not easy to accurately predict the future, but not impossible if the company is managed well. But the third thing that Tesla has going for it is the smart entrepreneur that’s leading the charge. CEO Elon Musk is obviously no dummy, and I find it interesting that in all the recent accolades given to Tesla and what the company has been doing right, I don’t always hear that the guy in charge is largely in part the reason for the company’s success. 

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It’s sad that other companies like Coda Automotive have failed, and Nissan hasn’t quite lived up to its expectations in Leaf sales, but love it or hate it, the electric car is not going away. It still comes down to the cost of batteries in my opinion, which is partly why I think Tesla has done well. They didn’t bother trying to produce a low-end car that ultimately would have been too expensive anyway (because batteries just aren’t cheap), which is what Coda did. Instead, they made a really nice car to compete with the luxury sedan market, and have actually outsold the Mercedes S class and BMW 7 series models. Yes, they’re still a small fish in a big pond, but you know what, I think they’re doing pretty good with all things considered. 

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Time for an update on the green car market. I don’t need to remind anyone that with gas prices approaching $5 a gallon (I live in CA) the market for more fuel efficient vehicles couldn’t be better right now, or is it?

So, we all know that there are quite a few choices when it comes to hybrid cars, and while the Toyota Prius is still popular, Chevy’s new Volt has done a good job of reinventing the hybrid with a much more efficient system, despite some issues with battery recalls and in my opinion, bad press. Only problem with the Volt, I think, is the price, and the Volt is not alone. New entry Coda Automotive and it’s 100% electric vehicle boasts a nice range, arguably better than the Nissan Leaf, but comes at a hefty price of close to $40K, which is about the same as the Volt. Of course, the Volt has the advantage of NOT being a 100% electric vehicle, giving hesitant EV buyers the piece of mind to know that their foray into the green car market won’t mean worrying about being left stranded somewhere when their charge dies and there isn’t a recharge station near by. I think that fear will linger for a while, but honestly, EVs are really not meant to be a long, road trip type car anyway.

So, lets consider sales figures. Nissan is struggling with only 5,212 Leafs sold in the US as of October(from the Detroit News), a far cry from the company’s goal of selling 20,000 Leafs by the end of this year, but considering Nissan’s early entry into the market, the advantage to the average consumer is the availability of used vehicles for sale, and we all know used is a lot cheaper than new. You can’t buy a used Coda since it’s a new vehicle this year, but do a simple search on Craig’s List and you’ll find 2011 Nissan Leaf’s for around $25K, and yes, I understand that a new Leaf is about the same price as the Coda, but since it has been on the market longer, it has had some time to mature, with new infrastructure to go along with it. If you go to Nissan’s website and look for charging stations, it says there are currently 6,300 nationwide and growing, but more importantly, they have some new stations that can recharge your Leaf in about 30 minutes. I consider this a big plus in one of the EVs biggest barrier to entry among new buyers: fear of limited range and long re-charge times, cost, however, is still an issue, which is why being able to buy one used, is a huge plus.

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The Chevy Volt on the other hand has sold more than 16K units to date this year, which is three times what it sold during the same period last year. A used Volt will run you about $30K plus, which is a little more than a used Leaf, but again, with potential buyers being fearful of a limited re-charging infrastructure, the Volt should continue to do well.

Most surprising I think on the green car front is Toyota’s recent announcement to scrap plans of a widespread rollout of its pure electric mini eQ car. Having been the early adopter of green cars when it introduced the Hybrid Prius, now more than 10 years old, logic would dictate that Toyota should be ‘gung ho’ to rollout a pure electric car, not pullback and say the market isn’t ready due to high production costs, long recharge times and limited range, although that is all probably true, a market takes time to mature, and they should know. When the Prius was first introduced, it really was not a cost-effective solution, i.e., the high-cost of the car was not offset by the fuel savings. However, Toyota is introducing an all-electric Rav4 that it has jointly produced with Tesla Motors and plans to roll out just 2,600 vehicles in the next three years­–not exactly the same as when it introduced the Prius in the US in 2000 and sold closer to 6,000 of them that first year. Has Toyota lost its nerve, or are they just being smart about making their next move into the green car market? The recent bankruptcy filing of A123, the Waltham Mass-based lithium ion battery producer, may just be evidence that Toyota knows exactly what they’re doing. Much like Nissan, Toyota has its own lofty sales targets to deal with. The Japanese carmaker has projected it will sell between 35K to 40K plug-in hybrids by the end of this year in Japan, but has so far only sold around 8,400. Much like the other EVs and hybrids, the Prius plug-in isn’t cheap. The standard plug-in Prius starts at $32K plus and the plug-in Hybrid Advanced is closer to $40K.

Time will tell who will come out on top. I think the biggest fear about owning a pure electric vehicle comes down to running out of juice with no where close by to recharge it. When you think about it though, this really shouldn’t be a big deal since you should have some idea how far you plan on driving before you leave the house, I mean you do the same with gas don’t you? The other thing is Nissan makes it easy to find out where the recharging stations are, and have drastically improved the time it takes to recharge a car, not to mention AAA has trucks that will come out and recharge your EV in case that ever happens (see my earlier blog on this topic). I’m sure it took time for a gas station to appear on nearly every corner, but think about how much work was involved in digging up the ground to install huge storage tanks, etc., all things you would NOT have to do to create a recharging station. A bigger issue is the need for better battery technology. Lithium is a highly unstable metal that is dangerous and expensive. I honestly believe this is a bigger barrier to entry than anything else. Admit it though, wouldn’t like to NOT have to buy gas?