Just in time for Earth Day, U.S. based consumer advice site Edmunds.com released a shocking report: despite continuing enthusiasm in specific buyer groups, overall sales of alternative fuel vehicles are declining!



The study reports that sales of alternative vehicles account for just 2.7% of total U.S. car sales, down from 3.3% last year. Interestingly, sales of battery-electric vehicles within this group continue to grow slightly in absolute numbers while those of hybrids are declining. News from Germany are equally depressing where the government just axed its goal to put a million electric vehicles on the road by 2020 – last year there were only 19,000 battery-electric and 108,000 plug-in hybrid cars in circulation. Only China, where market dynamics are unique, is seeing sustained growth.

Edmunds’ research concludes that the decline is a result of low fuel prices, citing that at the same time, sales of SUVs had increased by 18%. Even alternative fuel vehicle owners are opting to go back to gasoline in increasing numbers with just 45% of customers buying another one. At current gas prices, the return on investment on, for example, a Toyota Camry hybrid is more than 10 years compared to its conventionally powered sibling.

Other issues, however, seem to matter as well:

Battery electric vehicles fail to compel a broader group of consumers due to their single purpose design: short range (usually 80 – 100 miles per charge in suitable weather), the inconvenience of recharging in urban or public areas, battery drain when parked (1% per day) and often small size. This applies mostly to the non-Tesla crowd, of course, where economics and practicality matter. About 75% of electric vehicles sold in the USA are from brands other than Tesla. These reasons apparently outweigh the fact that special lease offers and low electricity prices do in fact make pure electric vehicles a less expensive choice.

Hybrids carry two engines plus a battery pack which amounts to significant additional weight. Additional gas-saving features such as kinetic energy recovery systems (KERS), low rolling resistance tires, special aerodynamics and a consumption-conscious driving style are needed to see the desired results.

An increased range of 200 miles is eyed by several EV manufacturers but the overall issues will remain for quite some time. Hydrogen-electric vehicles which are just entering the market these days will be free from the latter two issues. However, competition with gasoline powered cars will remain a crucial point. “For better or worse, it looks like many hybrid and EV owners are driven more by financial motives rather than a responsibility to the environment”, said Jessica Caldwell, Edmunds.com director of industry analysis.

The current scenario will prolong the product life cycle of automotive catalysts, which still account for nearly half of the world’s consumption of platinum group metals (platinum, palladium and rhodium). It will decrease growth rates of lithium which are further hampered by just modest performance increases of 7-8% annually, making the 200 mile goal for electric vehicles harder to reach. It will, most of all, delay the transformation to hydrogen electric vehicles where the price of liquid hydrogen permits for a much more transparent comparison with conventional fuel (currently $4-5 compared to $ 2,30 for regular gas, compared on a range basis).

The lesson on Earth Day, then, is that we will continue to be attached to petrochemical products for a long time.

By Bodo Albrecht,

tminsider@eniqma.com