Related tickers: Tesla Motors Inc (NASDAQ:TSLA)
Last Friday’s news that Fisker Automotive would lay off 75% of its staff after failing to find a buyer was yet another blow to the Obama administration’s efforts to foster an electrified automotive future.
Fisker received $193 million in U.S. government money, and produced some 2,500 cars – but it never came close to turning a profit, and its short history was marked by a long series of missteps.
Electric cars haven’t exactly taken the market by storm. President Obama’s onetime goal of having 1 million electric cars on U.S. roads by 2015 now looks like a pipe dream. Was this whole idea misguided from the start?
Fisker wasn’t even building proper electric cars
In a way, Fisker’s failure isn’t a fair test. Despite receiving millions from a Department of Energy loan program, Fisker’s car, a luxury sedan called the Karma, wasn’t even a true electric car, or BEV (for “battery electric vehicle”). Instead, it was a plug-in hybrid, a term that means a conventional gas-electric hybrid that can be plugged in to charge the batteries.
Plug-in hybrids can typically go a short distance without using any gas at all. That was a cutting-edge idea when the Karma was first shown way back in 2008. But nowadays, plug-in hybrids are pretty mainstream: Toyota Motor Corporation (ADR) (NYSE:TM)‘s popular Prius comes in a plug-in version, as do the hybrid versions of Ford Motor Company (NYSE:F)‘s Fusion and C-Max and a number of other cars.
Several of the mass-market automakers also offer (or plan to offer) pure electric BEVs. Nissan (OTCBB:NSANY)‘s LEAF is probably the best-known, but there are a few others. Ford Motor Company (NYSE:F) offers an electric version of its Focus compact, and General Motors Company (NYSE:GM) will roll out an electric version of its tiny Chevy Spark in a few markets later this year.
The problem with electric cars
The LEAF and those other BEVs were introduced with much fanfare over the last few years. But the LEAF has missed its sales goals, and the Focus Electric has sold just over a thousand examples in its year-plus on the market – next to none, in other words, in the grand scheme of things.
There are several problems with electric cars – a lack of recharging stations is one – but a big obstacle is that the batteries are still too expensive. By mass-market standards, that means that electric cars that have enough batteries to give a decent range are too expensive for what they are. Or put another way, why pay almost $40,000 for an electric Focus when you can get a more useable gas-powered version for half of that?
That’s something that the government hasn’t yet figured out how to fix. But the only company that seems to be succeeding with electric cars so far, Tesla Motors Inc (NASDAQ:TSLA) , has figured out how to work around it.
Does Tesla’s success show that electric cars are only for the rich?
As far as pure electric cars go, Tesla Motors Inc (NASDAQ:TSLA)’s Model S is as good as it gets right now. It’s a big, luxurious, powerful sedan that just happens to be electric. And it’s priced like a big luxurious sedan: The Model S starts at $62,400 (after a $7,500 Federal tax credit). Fully loaded, the price can exceed $100,000.