Stop the Electric Car Insanity

electric car

I talked on the air last Saturday about the General Motors announcement that by 2023 they would have 20 different all-electric vehicles.  That is slightly over five years from now, but that’s only the tip of the iceberg.  Other automakers are rushing an additional 50 all-electric cars to market before 2022.  Even vacuum cleaner maker Dyson says it is investing 2.6 billion dollars into a new electric car.

Automakers Want To Be Like Tesla, But Why?

Automakers love to grab headlines, and nobody does it better than Elon Musk, the CEO of Tesla.  One has to assume this rather sudden interest in all-electric vehicles has something to do with this.  Call me crazy, but I always wanted to emulate people who were wildly successful.  Are the auto CEOs not looking at the public data available on Tesla?  Thirteen years in business, not a cent of profit.  Worse, according to Bloomberg, Tesla will have burned through 10 billion dollars of cash (yes, billion with a b) by the end of this year.

Behind The Numbers

We have all these all-electric cars coming at us, but who is showing interest in the United States in electrics?  Today, there are a total of 13 different all-electric car models you can go out this afternoon and purchase.  So how many have been sold this year?  Through August, approximately 105,000 all-electrics have been purchased in America.  There is a slight margin of error because unprofitable Tesla doesn’t actually make public their sales numbers (inquiring minds want to know why) but even if you assume they sold every vehicle they produced, the 105,000 number should be really close.

Although 105,000 of anything is a lot, that is out of 12,883,917 sales of all vehicles through August 2017.  Do the math and you’ll see that even with 13 different models of all-electric vehicles, sales of electrics have accounted for .08%.  Keep in mind too, those dismal sales numbers include a federal tax credit of $7500 on almost all the all-electrics, and most states offer additional tax credits, some up to $5000.

Automakers:  We’ll Make It Up In Volume

We’ve covered the fact that after 13 years of trying, Tesla has yet to make a profit, but again they keep their numbers close to the vest.  The CEO of GM has publicly said they lose $9000 every time they build a Chevy Volt.  Although that is not a good business model to me, GM is doing better than Fiat Chrysler.  Its CEO says they lose $20,000 per vehicle when they build a Fiat 500 electric vehicle.

Turn The Calendar Ahead To 2023

Let’s say the fantasies of all these automakers bringing electric cars to market come true.  We’ve got 13 available today, 20 more coming from GM, and then 50 more the rest of the automakers say is in the plans by 2023.  That is 83 different models of all-electric cars that will be available.

So far this year, the average monthly sales per electric car on the market is 1018. Project that out and let’s aggressively say all 83 electric models sell the same 1018 vehicles per month, which means electrics will sell almost 85,000 per month, versus 13,245 per month today.  Even if the average loss of profit comes down dramatically by 2023, the automakers take a bath.  If the $7500 federal tax credit stays in place, it will come at a cost to taxpayers of over 7.5 billion dollars.

Many Unanswered Questions

Is America ready to make the transition from a traditional gas engine to an all-electric vehicle?  Many questions remain, and I hear them from listeners all the time.  The most common are about:

  • Range anxiety, the fear of getting stranded, which happened to me with the very first electric car I ever reviewed.  This is a real fear for some people, especially if an electric car is all you own.  Today, most can go 60-100 miles before needing to be charged, with a couple of vehicles getting between 200-300 miles.
  • What effect does weather have on my range?  Hot and cold weather can have a very adverse affect on battery life.
  • Chargers.  Other than home, how many chargers are going to be available?  Will they be the quick chargers or the ones that take many hours?  What will it cost me to charge my car when it is at home?
  • How will we ever dispose of all the batteries once they start going bad?  How much can be recycled from a battery pack, if any, and will they just end up filling landfills?
  • What happens to our already poor roads and highways?  All these electric cars will cut down on gas consumption.  Today, 18.4 cents per gallon of gas, and 24.4 cents per gallon of diesel go straight to the Federal Highway Trust Fund.  There is also on average 30 more cents per gallon of gas and diesel that goes to state and local roads.

In Conclusion

I want readers to know this article is not about my like or dislike of electric cars.  In fact, many of them, I really like.  This article is about automakers and the pace at which they plan to build electric cars.

Even if consumers decide to try an electric at twice the rate they are buying them today, it will still barely represent 1.5% of total sales.  If all these automakers build all these electric cars by 2023, there will be a huge glut of them, it’ll take massive factory incentives to move them.

My advice:  automakers slow down.  Let the market decide how soon people want to transition to all-electrics.  This is not a race, and if you are trying to make it one, you might not like first place.

Related Reading:

What You Need to Know about Electric Cars

Photo Credit: guteksk7/Shutterstock.com

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25 Comments
  1. JaimeInTexas 9 months ago

    An Elio styled autocar, electric, with about 120 miles max range, in the $9K range, I would buy right now. It would be my commuting car with occasional trips to nearby eateries.
    Feasible to build?
    Will Elio ever go to production?

  2. Steve Davis 9 months ago

    Nothing like a group of guys getting together in a garage on a Saturday to listen to the whirr of an electric motor and enjoy the ozone.

  3. JOhnny Doh. 9 months ago

    There is something rotten in all this electric car business. The fact that I will be ARRESTED and thrown in jail if I drive my electric golf cart to the beer store, but will be “given” $7000 if I buy a ridiculously expensive questionable tech “official” electric car says something.
    The IC engine is the ONLY thing I need an auto manufacturer for. If electric car tech was viable, we would be buying “motor wheels” on ebay and building our own cars in our garages with batteries from wal-mart. I visited Reno and went to the awesome car museum there. The OLDEST car there was electric.

  4. jim 9 months ago

    The only way I would drive a electric car is it would have to go 1000 miles until it needs to be recharged. What a joke and the Manufactures are wasting a lot of money for such a limited market.
    Jim Adams

  5. Peter Di 9 months ago

    I agree with you and to let the market place dictate the need or want to purchase electric cars. Just a couple of points. 1) There is some fear to the environmental with the impact of batteries. I would say the 100,s of thousand of hybrids on the roads have not had a detrimental impact and 2) The US is no longer the country that buys the most autos, especially if you combine the markets in China and Europe making a market that is twice as big as US. and they who are demanding more electric cars, right or wrong.

  6. John Clark 9 months ago

    I agree with you regarding the rush to build electric cars. Manufacturers are stampeding when they should instead be thinking. Until battery power can be depended on for extended miles and quick recharging, demand will remain quite limited. Conservationists extol the virtues of “clean energy” as a reason to buy, but how “clean” is the manufacture and eventual disposal of those batteries? I know little about how they’re manufactured; but when it comes to disposal, I’m very aware that dropping even the smallest flashlight battery into my city’s receptacles for garbage or recyclable pickup is verboten.

  7. Doug Johnson 9 months ago

    Hey Jerry:
    Great article on electric cars. I feel that the reality of just how deep the electric vehicle concept actually will penetrate into the auto industry has to do with recharging facilities. For example in many high density urban areas where city planners often allow housing units to be built without assigned parking places the residents will be forever behind the eight ball when it comes to recharging their vehicles. Critics will argue that those housing units are based on mass transit usage by the residents. Reality is that some will always have a vehicle and what about friends that may visit and need a charge for their electric vehicle. For now and in the future to successfully own and operate an electric vehicle the owners are tied to a predictable personal recharging source.
    So I agree with you besides many the other issues with electric cars, automakers need to tread carefully before running headlong into this emerging market.

  8. Ryan 9 months ago

    So people will get out of a gas powered car to an electric vehicle which is recharged by coal, nuclear and other methods? Doesn’t sound like you are “saving the enviroment” to me.

  9. Al Wondra 9 months ago

    Brilliant article . Just three more points : (1) If nuclear power is less , and usage of electric power for car charging is more , then there will need to be more coal and oil electric plants . (2) The internal combustion engine is far more reliable and convenient , than the shorter mileage capability and search for a charger . (3) Safety will be diminished if electric cars are weaker and fragile , whereas safety is enhanced with stronger and sturdier Wranglers and pick-ups . (Just wanted to get a plug in for the Wrangler ; I cannot even see a hybrid next to me .)

  10. Jack 9 months ago

    FYI, 105,000/12,883,917 is .8%, not .08%.

  11. William Lueg 9 months ago

    How much fuel is consumed by the electric utilities to maintain the battery charge? How does this fit in the total mine-to-landfill life of these cars? What happens when the tax money is not there to support manufacturing and sales?

  12. William Munny 9 months ago

    Electric car sales are heavily dependent on the $7,500 federal tax subsidy. When this goes away, and it will, there goes the sales. This country, nor any country for that matter, does not have the electrical infrastructure needed to satisfy electricity demand if everyone buys an electric car. And since fusion is not a viable means of generating electricity at this time, they will have to depend on natural gas, coal and nuclear energy to generate electrical power. Unlike the movies made in Hollywood, if they build them the consumer will more than likely not show up to buy their cars. So let’s say some liberal decides he wants to save the planet and buys one of Elon Musk’s $100K total electric cars. What happens 4 or 5 years from now when this good liberal finds out his battery pack needs to be replaced and it is going to cost $6,000 to buy and install a new battery pack. That $6,000 eats up what the liberal thinks he saved by not having to buy gasoline. So whatever is saved in not buying gasoline is spent on a new battery pack. The only way the American consumer will ever turn to full electric cars is if the government gets involved and issues regulations outlawing the internal combustion engine. Someone may be able to justify buying an all electric car for commuting the freeway between home and work but taking cross country trips in one is unrealistic. Just like global warming, I am afraid that this is another liberal idea that the majority of American consumers are going to buy into because of the economics involved. This is going to be a fiasco that may take some car manufacturers down the tubes if they invest heavily in manufacturing electric cars and they don’t sell.

  13. Tim Shevlin 9 months ago

    People like me, who have bought an electric car, love them and most don’t want to return to the ICE age. The problem today is threefold: the cars are still too expensive relative to similar ICE cars by the same manufacturer. Unless one drives an electric for at least a few days, the average driver doesn’t know, nor care about what he is missing. The electrics need to be sold, but that is problem #2: the dealers don’t like them because neither the sales rep nor the dealer service department make much money on these remarkably service-free vehicles. Problem #3 is that little or no advertising is done by the manufacturers. (Tesla: none!)
    Concerning profitability, we have a chicken/egg situation here. New technology takes time to mature enough to become mainstream. Why are you concerned about Tesla et al profitability? Just don’t buy their stock.

  14. jeff Daugherty 9 months ago

    Both state and federal government cafe requirwments have to be met with fleet mileage standards that will likely be only achievable by selling non internal combustion power. Plus, California is looking to outlaw all internal combustion engine sales by 2030. Looks like the cart is being pushed by the horse.

  15. John Blake 9 months ago

    One additional item not addressed is the source of power. The same people pushing electric cars are trying to get rid of coal, natural gas , and hydro power. It takes significant amounts of these to produce enough power to chage all these batteries. I have to assume they would have us install wind turbines and solar panels in our yards to charge the cars. Or esle we could install generators on our stationary bicycles. Do you have a week to charge your car before you need it again, especially in the rainy Pacific NW? Logic seems to have no place in these arguments.

  16. Wbv 9 months ago

    The tax credit should be eliminated. Any government funding might go into super capacitors with advanced materials like graphene. A break through there could make a big difference. Otherwise, this is another boondoggle that needs to end

  17. Kathi 9 months ago

    Last I heard, (coal-burning) electricity was bad for our environment. So, how can all-electric vehicles be good for our environment?

  18. Dr. James Nager 9 months ago

    Thanks for the thoughtful article. I do find an element of ‘get a horse’ in it. Maybe your next article on the subject would be, “How the Nation Will Adapt to Electric Vehicles”. Love your show. Enjoy the newsletter.

  19. Pete Ruff 9 months ago

    I really like what you say about electric cars. I feel you didn’t give enough attention to the bribes the Federal and state governments are handing out. Take away the bribes, and I’m betting the sales of electric cars will run out of juice, like a depleted battery.

    Cheers,
    Pete

  20. George Hamilton 9 months ago

    Then there’s the question of where does the extra electricity come from? Current sources: https://www.washingtonpost.com/graphics/national/power-plants/?utm_term=.977aa82d11eb . Coal and natural gas make up 65%. US consumed 3.41 billion barrels of oil last year https://www.eia.gov/tools/faqs/faq.php?id=23&t=10 . A barrel of oil is equivalent to 1628.2 KWH https://www.unitjuggler.com/convert-energy-from-boe-to-kWh.html . The total would be 5552 billion KWH or 5.552 billion MWH(1000 KWH). Total US electric generation was 400 million MWH in July of this year. https://www.eia.gov/electricity/ . If you assume level production year round, total production would be 4.8 billion MWH(400,000,000 x 12). Total US production could not power our cars and we might want to light our homes and run our factories.

  21. Richard Garnes 9 months ago

    This is being driven by China and their huge city pollution problem and the fear of the US auto makers missing out on this market opportunity.

  22. Tracey 9 months ago

    Although I agree with every point you made and have exactly the same concerns, I heard the driving force is the demand in China which the reporter said is a bigger market than the US. Do you have those numbers?

  23. Jerold Tucker 9 months ago

    Add in the demand for electricity to charge the electric vehicles and the push to close power plants or replace with solar or wind (which are not effective) and the electric vehicle may be a garage queen.

  24. Michael Schelin 9 months ago

    Hi Guys, I’m in favor of both types of cars. Like everything in the world there are pros and cons on both. Many have been addressed by you and the great listener comments I’ve read. How about a much larger hybrid system that will address the 100-200 mile range issue of an all electric car and then put a small gas powered charger in for much longer trips and when you run out of juice. Oh yeah, Chevy Volt comes to mind. So what I’m saying is just put in better batteries (which don’t really exist yet but I have read that they’re coming) in to the Volt and you’ve got the best of both worlds. Problem solved. By the way my Ford C-Max rocks. It really needs bigger batteries. Thanks Mike

  25. harry sawyer 2 months ago

    How many of you have gas powered fans and washing machines? the answer is none. electric propulsion is more powerful and efficient than what IC engines provide. The problem has always been the battery. Today, the battery technology is here and finally these cars are on the streets. Why are you all fighting a lost battle? I understand why the dealership does not like EVs. As Jerry says, they make their money on repairs. EVs have the promise to reduce maintenance costs. How often do you have your fan serviced? (well, the washing machine is another story…) The car manufacturers must plan out their new models year in advance. They see the writing on the wall and don’t want to go out of business.. New enterprises don’t often make money at first, but eventually they can (see APPLE Computer). I’d take these developments as your queue to look into it. You might like it.

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