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The Electric Car Industry Is Going to Make You Love Them

Public subsidies are driving purchases, but improvements in vehicle quality and the availability of charging stations could give electric vehicles a big boost in the years to come.

by Matt Smith
Dec 3 2015, 1:55pm

Imagen por Emilio Naranjo/EPA

How many people are ready to kick the century-old gasoline habit?

American car buyers are signing for more electric cars than ever, and more manufacturers are entering the market. The trade publication Green Car Journal just named the redesigned Chevrolet Volt plug-in electric vehicle its Green Car of the Year, citing the 2016 model's improved batteries, punchier pickup and extended range — 53 miles on battery power alone, 420 miles with its gasoline-powered backup generator kicking in.

But they're still a tiny fraction of the US auto market — about 1 percent of passenger cars. And their sales are supported heavily by federal regulations and tax breaks, including a tax credit that can knock up to $7,500 off the sticker price. That support may still be needed for several years before EVs are likely to stand on their own four wheels.

"What's going to be needed is an EV that can go 400 miles, that can hold a family of five and their luggage," said Jeff Cohen, founder of the Atlanta Electric Vehicle Development Coalition. "Until we get to that, I think we're going to need some kind of government support."

Related: It's Going to Be a Long Road to Recovery for Volkswagen

The 133,000 plug-in electric vehicles purchased in the United States and Canada in 2014 are less than 1 percent of today's market. But that share is expected to grow to about 5 percent by 2024 — somewhere between 860,000 and 1.2 million a year, the consulting firm Navigant Research reported over the summer. Government policy is the biggest driver right now, but Navigant research analyst Scott Shepard said consumers are becoming more willing to buy electric cars as they learn more about them.

"It's significantly cheaper to drive on electricity than gasoline," Shepard said. "It's also easier to maintain an electric vehicle, given that it's got so few moving parts, as opposed to an internal combustion engine. You don't have to put oil in it. You don't have to have an emissions test. It's far less likely to have a major breakdown."

Charging stations are appearing in more and more places, with some able to replenish a battery in as little as half an hour. And models like the high-end Tesla are increasingly appealing to performance-minded drivers.

"I think Tesla's done a real good job of showing that an electric vehicle doesn't have to be a golf cart," Shepard said.

There have been snags along the way. Most recently, Consumer Reports warned in October that Tesla's Model S sedan — which earned the product-rating firm's highest road-test rating ever —had worse problems than the average vehicle. Company founder Elon Musk responded that the reliability survey included a lot of older models in which problems had already been fixed, and that 97 percent of owners say they expect to buy another Tesla.

Though the new Volt has a longer range and a more powerful battery pack, Chevy doesn't offer the kind of quick-charging capability that has helped make the Leaf and Model S so popular, said Cohen, who's on his second Volt himself.

Related: The Georgia Legislature Just Pulled the Plug on Electric Cars

At least one has backed away from its own electric vehicle subsidy. Cash-strapped Georgia lawmakers have cut off a $5,000 state tax credit that had made Atlanta the No. 1 market for the Nissan Leaf, and early reports indicate EV sales there have dropped sharply since then, Cohen said.

Opposition to the Georgia tax credit was partly driven by the perception that it was a giveaway to affluent consumers — an issue that has been echoed elsewhere. In July, economists at the University of California-Berkeley wrote that 90 percent of EV tax credits are going to buyers in the top 20 percent of the US income scale, and that gasoline-electric hybrid vehicles like the Toyota Prius have seen sales increase even after a similar tax credit was phased out in 2010. They recommended taxing carbon emissions instead of subsidizing green technology, arguing that tax would fall more heavily on high-income households.

In addition, cheap gasoline makes buyers more willing to reconsider gas-guzzling sport-utility vehicles.

"They buy SUVs and pickups when gas prices are low and they buy subcompacts when gas prices are high," he said. EV sales are expected to be flat in 2015, "But I do think we're going to see a better year next year with new products coming."

New automakers are jumping into the market, including Fiat, BMW and Audi, and smaller, more powerful batteries are being developed. And the government's fuel-economy standards penalize manufacturers for falling short of mileage targets, meaning automakers have an incentive to build more electric vehicles while improving gas-powered models. So Shepard said the market may be nearing the point where technology improvements will allow subsidies to be scaled back and the EV sector can take off by itself.

"Battery prices have been falling significantly over the past few years," Shepard said. "In 2018, the first vehicles that will be aimed at the mass market at around a 200-mile range, fully electric, are coming out from GM and Tesla. Nissan should have an updated version of the Leaf that's competitive with that ... maybe two years after that, in the 2020 time period, the market will be able to stand on its own." 

Follow Matt Smith on Twitter: @mattsmithatl

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