For a realistic view of the challenges that electric vehicles still face in the marketplace, consider two recent developments.
Item Number 1: Paper-product manufacturer Cascades Inc., based in Kingsey Falls, Que., is offering $2,000 to employees who buy EVs.
Item Number 2: General Motors CEO Mary Barra told a conference that GM expects to sell one million EVs per year — profitably — by 2026. Barra said GM will reach black ink by cutting costs by 30 per cent. In particular, she said, GM will get battery cell costs below US$100 per kilowatt hour, compared to the current US$145 for the Chevrolet Bolt.
Both moves created some buzz for EVs. But if you look at what’s driving these moves, you see that today — not five or 10 years from now, but today — the battery electric vehicle is not a success in the marketplace.
That might seem overly negative; EVs are in the market, and they’re selling. And other automakers have made proclamations like GM’s, pledging to have a broad EV lineup in five or 10 years.
But in most markets, government subsidies are key to sales. It’s no coincidence that the three provinces that have rebates — Quebec, Ontario and British Columbia — are the EV sales leaders in this country. The need for perpetual incentives is not a hallmark of a genuinely successful product.
Certainly an unfamiliar technology and a lack of charging infrastructure contribute to the problem, but cost is central. Lithium-ion batteries boost the price of a car substantially, and, even with government subsidies, those high prices depress sales.
Consider two Nissan compacts that have wildly different price tags and sales results. The base model Nissan Sentra is priced at $17,498; buyers in Canada and the United States in 2016 took home 196,350 Sentras. By contrast, the Leaf EV has a base price of $35,988. Nissan sold 11,888 Leafs in the two countries in 2016. (Both prices include shipping costs but not incentives.)
This is not complicated math. EV prices are more important than bold announcements. If Nissan could get the Leaf price close to the Sentra — or, for that matter, if GM can get the price of its Bolt EV in the neighbourhood of the Cruze — you could begin to see a genuine marketplace pull for EVs. Until then, probably not.
Of course, consumer attitudes aren’t the only factor. Governmental pressure for cleaner air is growing, with the United Kingdom, France and India saying they will ban internal combustion. Carlos Ghosn, head of the Renault-Nissan-Mitsubishi alliance, has predicted that “Zero-emission cars will grow because restrictions on emissions are going to get tougher and tougher.” If that’s true, automakers — and auto buyers — will have little choice but to go electric.