3 Reasons Why You're Not Buying an Electric Car

×
TelsaThe electric car has arrived, but odds are that there isn't one in your driveway.

Several factors have gotten in the way of the eco-friendly automotive revolution, but at least now we can ask conspiracy theorists -- the ones arguing that oil companies and the government are blocking plug-in electric cars from the road -- to leave the room and take their tinfoil hats with them.

The electric car is here. Drivers simply have other plans.

What's wrong with electric cars?

Tesla Motors (TSLA) reported revenue of $39 million in its latest quarter, 9% ahead of where it was last year. It may be an impressive figure from the California-based maker of electric cars, but we're essentially talking about the sale of 150 of Tesla's original Roadsters.

Tesla has sold 2,150 Roadsters since launching the model four years ago. The six-figure price tag has been a stumbling block, naturally. But Tesla has moved on: The remaining Roadsters will be sold outside of the United States as the company gears up for the July rollout of the more affordable Model S sedan. Tesla also has deals in place with Toyota (TM) and Mercedes-Benz.

The 2006 documentary Who Killed the Electric Car? explored the short-lived EV1, General Motors' (GM) fuel-efficient vehicle that hit the market in the 1990s. Was it Chevron's (CVX) purchase of patents for cost-effective NiMH batteries in electric vehicles that forced the industry into more expensive lithium-ion battery cells? Did oil-producing countries in the Middle East have some serious sway over the EV1's demise?

Again, the cars are here now. Why aren't they driving off the lot?

There are at least three good reasons for the slow-moving sales of gas-free vehicles.

1. Electric cars are too expensive

When Tesla introduced its third model earlier this month, the Model X turned heads. Between the comfortable seating for seven passengers in this crossover SUV and the rear passenger doors that open up like falcon wings, "Model X" was the third most searched query on Google the day after Tesla unveiled the new model to reporters.

A few days later, Tesla revealed that it received a record $40 million in reservations for the new car, which won't even hit streets until early 2014. Interested parties can pay a fully refundable $5,000 to reserve the car. It may be impressive to see $40 million in future sales potentially reserved in a single day but, here again, we're really only talking about a little more than 500 cars.

The "accessible" Model S and Model X cars start at a lofty $50,000 -- and the entry-level models won't get you very far. The $50,000 Model S runs on a 40 kWh battery that needs to be recharged every 160 miles. Drivers wanting to nearly double that range to 300 miles will need to pay $20,000 more for a larger battery.

Tesla is a premium brand. It's not supposed to be as cheap as traditional cars. However, even the few electric cars on the market aren't exactly bargains.
  • Nissan's Leaf starts at $35,200. Even with the maximum tax savings of $7,500 backed out, we're still looking at a very expensive car by Nissan's standards.
  • Ford's (F) Focus is coming out as an electric car this year with a starting MSRP of $39,200. That is more than double the starting price of the regular gas-powered Focus.
  • Even the Chevy Volt -- the plug-in hybrid that can fall back to gas between charges -- is priced too high ($39,145 MSRP) relative to the rest of Chevy's fleet of cars and trucks.
2. Range anxiety is real

When GM took out full-page ads last month to let consumers know that its Chevy Volt had remedied the embarrassing issue of engine fires after severe crashes, the carmaker took a shot at pure plug-in electric vehicles.

The ad plays up the "range anxiety" that plagues drivers of electric cars. They can't take extended road trips or run out on unforeseen errands because of a fear that they'll run out of juice with no charging station nearby.

It's a legitimate point.

There's a finite range that electric cars can travel on a charge, and there will always be some degree of uncertainty about the availability of a charging station on the other end.

More and more places are beginning to set up charging stations. Restaurants, hotels, and (ironically) gas stations are coming around. This will take some time, though.

3. Fear of service
If a traditional car breaks down, you see a mechanic. Where do you take your electric car when it doesn't want to play along?

Tesla has just 20 stores and galleries. It plans to open another eight to 10 locations -- and 10-15 service centers -- but the chances of having a Tesla service center nearby when you need it are slim. Thankfully, there's the Tesla Ranger program that provides house calls. It's not cheap, but it is a solution.

Moving on

The climate will get kinder for electric cars.

A prolonged spike in oil prices may send consumers scrambling toward electric. Wider adoption rates should result in lower battery and car prices down the line.

We're just not there yet.

Longtime Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article, except for Ford. The Motley Fool owns shares of Ford Motor. Motley Fool newsletter services have recommended buying shares of General Motors, Chevron, Tesla Motors, and Ford Motor. Motley Fool newsletter services have recommended creating a synthetic long position in Ford Motor.


Increase your money and finance knowledge from home

Intro to different retirement accounts

What does it mean to have a 401(k)? IRA?

View Course »

Goal Setting

Want to succeed? Then you need goals!

View Course »

Add a Comment

*0 / 3000 Character Maximum

91 Comments

Filter by:
Still Waiting!

The ONLY reason I don't have an electric vehicle in my driveway right now is because I can't get one. The manufacturers are creating the illusion that Americans don't want electric cars by not building them fast enough. And then they create mass anxiety by telling the media that the public doesn't want them. If I could build my own electric car I would, so I am stuck waiting around for the car companies to drag their gas powered feet until we finally insist that they sell electric cars. I am already looking forward....my company sells EV charging stations. Anyone want to buy a charging station?

March 01 2012 at 10:12 PM Report abuse rate up rate down Reply
Still Waiting!

The ONLY reason I don't have an electric vehicle in my driveway right now is because I can't get one. The manufacturers are creating the illusion that Americans don't want electric cars by not building them fast enough. And then they create mass anxiety by telling the media that the public doesn't want them. If I could build my own electric car I would, so I am stuck waiting around for the car companies to drag their gas powered feet until we finally insist that they sell electric cars. I am already looking forward....my company sells EV charging stations. Anyone want to buy a charging station?

March 01 2012 at 6:35 PM Report abuse rate up rate down Reply
David Morgan Harding

electric is great but new tech at this point but will grow if the curent battery tech lasts in the used market however only electric gas asisit like the volt will be for those who have one car but it is a great option for those who have 2 cars.

March 01 2012 at 6:06 PM Report abuse rate up rate down Reply
David Morgan Harding

electric is great but new tech at this point but will grow if the curent battery tech lasts in the used market however only electric gas asisit like the volt will be for those who have one car but it is a great option for those who have 2 cars

March 01 2012 at 6:06 PM Report abuse rate up rate down Reply
PR

Why isn't there a Tesla in everyone's driveways? Well, when it comes to the Model S, it's because your neighbors all bought out the ENTIRE 2012 half year of production with $5,000 to $40,000 deposits back in 2011. You can't even buy a 2012 Model S if you wanted to.

So the reason why you don't own a Model S isn't range, or price, or anything else. It's that the Model S has sold way too well for you to even get a chance to own one. I'm sorry you got left behind....

February 26 2012 at 5:11 PM Report abuse +1 rate up rate down Reply
Electric Examiner

"Range Anxiety" was a GM PR stunt when the company realized it was far behind, it reverted to what it could easily do, slow EV adoption as much as possible by overplaying the concept until it could catch up. The numbers point to price being the 1 and only hurdle. GM has range anxiety. 80% of the US daily commute is below 40 miles, something almost any EV can achieve, period.

When manufacturers agree on a single battery chemistry, prices will go down. Last I checked, Bank of America has a special loan for people buying Tesla Roadsters, it stands to reason they might do the same with the Models S and X, hopefully others also.

Stop talking about "range anxiety". It's a self fulfilling, made up anxiety consumers didn't have to start with. Instead, educate consumers to understand that EVs are operated differently than a gas car. One does not drive an EV until the battery pack is depleted, as much as one should not drive a car on an empty tank of gas. Education feeds people, scare tactics slow down economies.

February 23 2012 at 11:14 AM Report abuse rate up rate down Reply
Ben S.

The range anxiety is very much overblown. Ok, if you're a family of 4 and can only afford 1 car, then the Nissan Leaf is a bad idea. If you're like most families (at least here on the west coast) you probably have 2 cars, which means one of them can be electric because 95% of all trips are < 80 miles!

February 23 2012 at 10:26 AM Report abuse rate up rate down Reply
Ben S.

The range anxiety is very much overblown. Ok, if you're a family of 4 and can only afford 1 car, then the Nissan Leaf is a bad idea. If you're like most families (at least here on the west coast) you probably have 2 cars, which means one of them can be electric because 95% of all trips are < 80 miles!

February 23 2012 at 10:25 AM Report abuse rate up rate down Reply
Ben S.

The range anxiety is very much overblown. Ok, if you're a family of 4 and can only afford 1 car, then the Nissan Leaf is a bad idea. If you're like most families (at least here on the west coast) you probably have 2 cars, which means one of them can be electric because 95% of all trips are < 80 miles!

February 23 2012 at 9:30 AM Report abuse rate up rate down Reply
jneal11254

Reason number one: You load up your family for vacation, you get 100 miles and you have to stop and spend the night. Even a 300 mile range will only keep you going for 4 1/2 hours, and then you have no "fuel" left for sight seeing. I don't think it is realistic to think electric cars will ever take over unless manufacturers find a way to constantly charge them.....and my father in law the physics professor says that is impossible. In other words, I am for being green, but for most Americans, electric is never going to be the way. One possible exception...we build a real public transportation system so long distance driving is less necessary. And that will never happy because the road builders and car manucturers would be so against it. I live in Knoxville, Tennessee. I would gladly take the train when I travel but guess what? There is no train service for 200 miles in every direction from Knoxville.

February 22 2012 at 7:56 PM Report abuse rate up rate down Reply
1 reply to jneal11254's comment
PR

jneal --

Take your gas car or hybrid or PHEV on vacation, and leave the EV at home. It will be years and years before enough pure electric cars can be built to replace even one car in all the 2+ car households in the US. If it won't work for you, fine. But pretending they won't work for 10's of millions of households just because it won't work for you is just silly. There are so many potential buyers for EV's where your "family vacation" scenario is easily solved by taking the other family car, that your "family vacation" scenario really has nothing to do with sales.

February 26 2012 at 7:32 PM Report abuse rate up rate down Reply