Electric Cars 2012

Jeff Siegel

Written By Jeff Siegel

Posted December 31, 2012

“Don’t write checks your mouth can’t cash.”

That’s what my father used to tell me when I got a little too cocky as a kid. And while I despised it when he would tower over me and say that to me, as an adult I’ve repeated those words on a number of occasions…

Particularly when doing company visits and meeting with overzealous CEOs trying to pull a fast one (which, by the way, happens more than you might imagine).

In any event, a few weeks ago I told you about the reported fuel economy shortcomings in Ford’s new C-Max hybrid.

The Detroit automaker claims the crossover SUV delivers 47 mpg, but tests conducted by Consumer Reports only found the vehicle delivering 37 mpg. And a number of other auto analysts have reported similar fuel economy shortcomings as well.

Although I’m a fan of the vehicle’s design and think 37 mpg isn’t completely horrible for such a car, the bold 47 mpg claim is definitely going to come back to bite Ford on the ass.

Bottom line: Management wrote a check its mouth couldn’t cash.

The Damage is Done

Last week we learned Richard Pitkin of Roseville, California, filed a lawsuit that claims the new C-Max hybrid has not delivered promised fuel economy claims. Pitkin is demanding the automaker reimburse him and other owners the purchase price — and rescind sales of vehicles purchased in California.

Although a Ford spokesman said he could not discuss pending litigation, I can assure you, Ford is going to pay big time for this.

Of course, some folks believe that if Ford can replicate its fuel economy claims for the EPA, then the fallout may not be so bad, but I don’t buy it…

Even if the company can replicate those fuel economy claims, the damage has already been done. And quite frankly, in “real world” driving, I suspect most folks aren’t going to get close to 47 mpg. If it’s a few miles off, no big deal. But if it’s closer to what Consumer Reports indicated, Ford is going to have to adjust its marketing tactics on this one — fast.

In the meantime, it looks like Toyota’s Prius V, the comparable crossover-style station wagon, could move back into the limelight for fuel-conscious car buyers…

There has been little in the way of fuel economy backlash on the vehicle’s 40/44 mpg fuel economy.

When Reality Strikes

While hybrid and electric car enthusiasts have taken to message boards and blog posts to share their thoughts on Ford’s fuel economy fallout, Bob Lutz, former General Motors VP, recently took to the pages of Forbes to sound off about the future of electric cars.

His post is probably one of the most rational pieces I’ve read on electric vehicles all year — and it’s sure to enrage both overzealous electric car supporters and muleheaded electric car naysayers…

We should, I guess, have seen it coming. After years of breathless hype surrounding the imminent triumph of electric vehicles, (wherein all participants, be they battery companies, the federal government or EV startups, got roundly drunk on their own wine), we now see all the revelers waking up to a colossal hangover.

Reality, that pernicious thing that keeps nastily intruding into dreams and theories, has struck once again.

Fond near-term visions of millions of EVs plying the nation’s highways while sales of “antiquated” gasoline cars languish have been replaced by the facts of low fuel prices, abundant oil supply, high EV prices, dire straits for EV startups like Fisker and Coda, and even outright Chapter 11 for A123, the U.S. government’s high-tech battery company and showcase for the Department of Energy’s efforts in the “clean fuels” arena.

So, what happened? Where and when did the wheels come off? The answer is… nothing! And the wheels aren’t off, they’re just turning slowly. The electric vehicle market is moving exactly as I have consistently predicted.

I have always maintained that pure EVs will have a limited future until there are cars selling for $30,000 with a reliable 300-mile range. Extended-range EVs (EREVs), like the Chevrolet Volt, overcome the range problem, but at a steep price premium. (The only segment where I see fast adoption of extended-range EVs is in full-size pickups, sports utilities and vans because their gasoline counterparts use so much fuel that the owner of an EREV version will actually save money almost from day one.)

I have steadfastly maintained that, by 2020, EVs, EREVs and strong hybrids might account for 10% of the U.S. market, or about 1.5 million units. We’re a long way from that now.

Ultimately, of course, the world will be populated by EVs only, and I make that prediction frequently. Trouble is, nobody quite seems to hear “ultimately,” or can’t or won’t understand it.

There are amazing similarities between the “dot-com bubble” of the nineties and the “EV bubble” of today. In both cases, mindless, even dogmatic enthusiasm was rewarded by harsh financial penalties.

We never seem to learn! (And the media always seem to play their role in keeping us stupid.)

What a great way to sum up a year in EVs!

To a new way of life and a new generation of wealth…

Jeff Siegel Signature

Jeff Siegel
for Energy and Capital

P.S. You can see the original version of the Forbes post here.

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