The Electrical Car’s Same Old Problem
One unwritten rule of product design says that if you’ve given your customer a popular feature, don’t dare take it away.
Therein lies the problem with the mainstream electrified car. Today’s cay buyers have been spoiled. They assume that they should be able to take their cars on vacations, on weekend trips, or on treks to drop the kids off at college. Thanks, gasoline.
Electrical car enthusiasts don’t like that argument. And to some degree, they’re right. On average, driving is mostly about brief trips – to work, to the gym, to the grocery store. Unluckily, modern consumers don’t buy cars based on their average needs. They buy for their exceptional needs.
Gasoline has trained them that. For all its faults, gasoline is still an amazing fuel. While battery makers burn the midnight oil attempting to figure out how to reach a specific energy of four hundred fifty Wh/kg, gasoline already offers 12,000 Wh/kg. Even if you account for efficiency differences, the contrast is still enormous.
It doesn’t matter if consumers understand the concept of specific energy. They’ve absorbed the lesson as a matter of car-buying utility. One car offers them long, plain trips. The other car … well, it’s getting there.
That’s why the latest hand-wringing about the possible loss of tax credits for electrified cars is unsurprising. The ordinary truth is that electrified car manufacturers are still scuffling around, attempting to figure out how to make money off puny, mainstream EVs. They need those tax credits because they’re losing cash on every electrified car they sell.
Auto executives don’t like talking about financial losses, of course, but if you listen hard enough you can lightly get the gist of their electrical car practices. Volkswagen, which is doing penance by loudly proclaiming its commitment to electrified cars, admitted to The Wall Street Journal recently that “small battery-driven vehicles won’t be cheaper than their diesel equivalents until 2030.” And GM exec Mark Reuss told reporters that his company wants to be the very first to produce “electric cars that people can afford at a profit.” Implied was the fact that GM and its competitors aren’t making a profit on EVs today.
Even Tesla, Inc. – which sells big, expensive EVs – is still fighting with the bottom line. Recently released numbers demonstrated that Tesla lost $330 million in the very first quarter of 2017. Those losses were 17% more than the very first quarter of last year.
Tesla, Inc. lost $330 million in the very first quarter of 2017. (Source: Tesla, Inc.)
No one was ever more forthright about this matter than Sergio Marchionne, the refreshingly fair chief executive of Fiat Chrysler Automobiles. Talking about his company’s all-electric Fiat 500e in 2014, he said , “I hope you don’t buy it because every time I sell one it costs me $14,000.”
Evidently, not much has switched since 2014. The numbers, maybe. But the principle lives on.
The electrified car cognoscenti would, of course, correctly point out that EVs have a excellent deal to suggest. They’re efficient; they treat well; their acceleration is amazing; and they’re beautiful, in some cases.