Automakers Are Spending Billions Bringing New Alternative Vehicles to Market
The week started out with Tesla’s Chief Executive Elon Musk saying that the company would not try to raise any more cash this year to grow its operations. The market reacted on the positive side, with a possible inference being that it could not keep up with the demand for electric cars that are on its production line. In a way, that’s right.
Electric car sales are up 34 percent this year, says Sale Tracker. There are more than 110,000 vehicles through September compared to roughly 84,500 this time last year. To put that in perspective, about 17 million vehicles will be sold in 2016.
Part of the reason for the increase in electric vehicle sales is that Tesla has given the movement some cache. But the reality is that every car maker but Mazda has some type of electric vehicle or hybrid in production. And those cars are becoming increasingly affordable to the masses: around $33,000, on average.
“Consumer interest in buying electric vehicles is growing at the same time these vehicles are becoming more available and more attractive,” said Jack Gillis, Consumer Federation of America‘s Director of Public Affairs and author of The Car Book. “It does not surprise us that electric vehicle sales have grown more rapidly in their first four years than did those of hybrid vehicles.”
Let’s distinguish between all-electric cars such as those produced by Telsa and hybrids, such as those generated by Toyota and Chevrolet. Like the former, the latter plug in. But they can also run on gasoline.
But lower gas prices have softened the demand. Still, the federation says that carmakers have increased their efforts to offer new, longer-range, and lower-priced electric vehicles. This year, 13 car companies offer at least one electric option: Volkswagen is offering four models, while Ford, BMW, and Mercedes-Benz each offer three models, it says. Altogether, 33 different electric vehicles should come on line in 2017.
According to the Energy Information Administration, electric vehicles are 1.6 percent of overall car market. But that could increase to 6 percent in 2025.
Part of the reason is government incentives and requirements to reduce air emissions. Part of the reason is that the corporate community wants to set an example and to create greener brands. Still, the economics need to pay off.
“We doubt that automakers would be spending billions of dollars on electric vehicles if they did not think they could sell them to consumers,” says Mark Cooper, director of research for the federation.
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