As an investor in General Motors in the middle part of the last decade, I watched in anticipation as the company announced plans to come out with an all electric car. Hippies everywhere rejoiced, anxious to drive a car that would minimize their footprint on the environment. They probably celebrated by eating some granola and wearing something made of hemp. Oh, and don’t worry about my General Motors investment. I sold well before they went bankrupt, making a nice profit.
Anyway, as they went through and ultimately reemerged from bankruptcy protection, plans for their electric car continued. They came up with a name, continued to test the concept, before finally deeming the Volt ready for consumers in late 2010. A year later, GM had ramped up production enough to expand the Volt availability to across the United States and Canada, as well as in parts of Europe and China.
There’s just one problem. Nobody is buying electric cars.
In 2011, GM produced just 12,400 Volts. They only sold about three quarters of them, or 8200 units. Think about this for a minute. In the United States alone, General Motors sold over 2.5 million cars. The Volt accounted for about a third of one percent of their 2011 sales. They made only 12,400 units, and they couldn’t even sell all of them. Thus far, the Volt has been a giant flop. There are all sorts of reasons why, all of which are different symptoms of the same root problem. Let’s see if you can figure it out.
First of all, there’s the cost of buying the car in the first place. The Volt has a price tag of a little over $40,000 CDN, before you factor in any rebates. The sticker price is pretty expensive for a subcompact car not much bigger than my Ford Focus. Sure, the fuel economy is outstanding, assuming you don’t travel any further than the range of the battery. (which is 40-80km, according to GM) Families with kids generally choose a vehicle that’s a little bigger than a small sedan. I wouldn’t want to ride in the backseat of the Volt.
The potential gas savings just aren’t there. Let’s say you spend $15k more for the volt than you’d pay for a comparable gas powered car. Let’s also estimate you’ll be using the normal gasoline engine 25% of the time, since most of us drive long distances, at least sometimes. The average Canadian spends about $2200 per year on gasoline. Even if driving a Volt cuts that down to $1100 per year, (which I think is a generous allowance) you’re still waiting 13 years before the investment becomes worth it. And that’s not factoring in a dime for the extra electricity needed to charge the thing.
Speaking of charging it, you can charge the battery by plugging it into a normal outlet, if you have 10-12 hours available to charge the thing. Or, you can upgrade to a 240 volt outlet, often at a cost of a couple thousand bucks if you live in an older home, to cut the charging time in half.
Oh, and it turns out the batteries may catch on fire randomly after an accident.
But hey, at least you’re saving the environment, right? Doesn’t that make it all worth it?
Remember when I alluded to the big problem with electric cars? Well, even though you’ve probably figured it out, I’m gonna give you the answer. They just cost too much.
Hopefully, by reading this blog, you’ve demonstrated you care about sustainability, at least a little. But unless your last name is Gates or Buffett, you have to make trade-offs. You just can afford to spend thousands more on an electric car, especially when a gas powered car will still get you to work. The extra costs just don’t make sense.
At what point do they? How much extra will the average person be willing to pay for a car to be sustainable? Well, a basic Prius can be had for a little over $27,000, at least in Canada. You’re already saving $13,000 by buying a Prius compared to a Volt. Judging by the dismal sales numbers of the Volt compared to the Prius, it turns out sustainable people are just as frugal as the rest of the population. Hey, who likes throwing their money away?
The price of gasoline isn’t high enough yet to make the fuel savings worthwhile either. Plus, car manufacturers have made better fuel economy a priority, meaning most every model gets better gas mileage than it’s predecessor. The benefits of lower greenhouse gas emissions don’t even get close to the benefits of saving money on vehicle costs, at least for the short sighted among us.
Ultimately, electric cars are going to have to get considerably cheaper before the 99% even consider buying one. If you’re in the 1% of sustainable folks, congratulations for being ahead of the curve. For the rest of us, we’d rather save money.
Do you own a hybrid vehicle or electric car? Have you, or are you, on pace to recoup the extra money it cost?