Doldrums in U.S. electric car sales could linger indefinitely

DETROIT Wed Jun 12, 2013 5:27pm EDT

DETROIT (Reuters) - A 'green' showroom, free charging stations and several acres of solar panels are all part of the pitch by Galpin Ford dealership to environmentally minded car buyers in southern California.

So how many plug-in hybrid and electric vehicles has the Los Angeles dealership actually sold?

"Very, very few," said Beau Boeckmann, whose family owns Galpin Ford, the automaker's largest U.S. dealership. Only 2 percent of the vehicles Galpin sold last month were plug-ins.

Dealers and analysts don't envision a huge leap in sales of plug-ins any time soon despite still-high gasoline prices, a raft of price cuts and cheap lease deals on EVs. Other enticements include a steady stream of new green-car entries and hefty federal and state incentives.

"Between now and 2020, I don't see (EVs) getting too far beyond a couple of percentage points" of market share, said Matthew Stover, an industry analyst with Guggenheim Capital Markets.

Obstacles to EV sales include getting shoppers just to try an electric or hybrid car, easing their qualms about such things as having enough charging stations and, for the salesman, the extra time and effort it takes to close a deal.

HybridCars.com, which tracks sales, says demand for plug-in vehicles is beginning to pick up. But total plug-in volume remains relatively modest - only 32,705 sales through May, representing a modest 0.5 percent of total industry sales.

CADILLAC AND BMW EVS

With even more new EVs and hybrids on the way later this year, including the BMW i3 and the Cadillac ELR, manufacturers are stepping up discounts on their green cars.

General Motors Co (GM.N) is the latest company to offer aggressive pricing. GM on Monday announced incentives of up to $5,000 on the Chevrolet Volt, whose U.S. sales through May were relatively flat at 7,157. GM in late May also launched the new Chevrolet Spark EV with a lower-than-expected starting price of $27,495 and is offering discounted lease rates on both the Volt and the Spark EV. [ID:nL2N0E31RA]

A similar strategy is being pursued by other plug-in manufacturers, notably Nissan Motor Co (7201.T). A price cut in January of more than $6,000 boosted sales of its Leaf EV to 7,614 through May.

Somewhat unexpectedly, both the Leaf and the Volt have been outsold this year by the Tesla Model S, a battery-powered luxury sedan that is more than twice the price of the Leaf and nearly double that of the Volt. Sales of the Model S through May were 8,850, making it the best-selling plug-in car in the United States despite a starting price of $70,890.

Tesla has been more successful than older, more established automakers in selling EVs, in part, because it appeals to a niche group of tech-savvy, status-conscious buyers, said Stover.

"This is the same set that will buy a Ferrari," he said.

Tesla also has been able to alleviate such buyer concerns about EVs as short driving range, long charging times and lack of charging stations.

Car dealers for other brands that sell plug-in vehicles face a "chicken and egg" scenario, said Detroit-area auto analyst Alan Baum. Consumers eventually will become more comfortable with the inherent limitations of many EVs once they spend more time in the vehicles, but dealers are still struggling to get drivers into the cars, he said.

Retail salespeople also are reluctant to spend the extra time it takes to educate buyers about the benefits of electric cars and how they differ from conventional models.

"Dealers are going to take the path of least resistance to sell," Baum said.

It is "more intensive" to sell EVs, said Edward Tonkin, vice president of 16 Tonkin dealerships in Oregon, even though buyers in the Portland area tend to be more tuned in to environmental issues.

"That resonates here, but it might not in the Midwest," he added.

(Reporting By Joseph Lichterman; Editing by Kenneth Barry)

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Comments (3)
zotdoc wrote:
I need a truck.

Jun 12, 2013 6:12pm EDT  --  Report as abuse
JackB125 wrote:
“Obstacles to EV sales include getting shoppers just to try an electric or hybrid car, easing their qualms about such things as having enough charging stations and, for the salesman, the extra time and effort it takes to close a deal.”

“Retail salespeople also are reluctant to spend the extra time it takes to educate buyers about the benefits of electric cars and how they differ from conventional models.”

“Dealers are going to take the path of least resistance to sell,” Baum said.”

“It is “more intensive” to sell EVs, said Edward Tonkin, vice president of 16 Tonkin dealerships in Oregon, even though buyers in the Portland area tend to be more tuned in to environmental issues.”

Interesting… These are the EXACT same arguments that Tesla Motors is making to justify their direct sales business model. If they are forced to use the anti-competitive, rent-seeking, inventory-intensive, inefficient dealership model with a naive customer base, that sales model WILL FAIL.

For the next few years, they MUST be allowed to use their direct sales model. The state franchise laws are a malicious, economically idiotic barrier to Tesla Motors at this time. They are as damaging as a pure monopoly. They MUST be overturned in order to create a fair playing field for this company.

Jun 13, 2013 8:30am EDT  --  Report as abuse
brotherkenny4 wrote:
Actually EV sales are quite good if you have a realistic perspective. Compared to the initial uptake of hybrid vehicles, the year over year growth rate for EV is outstanding. Just because the numbers are small at this moment means nothing. The average consumer is just that, average and a consumer of whatever is popular, which is usually what is most profitable for the wealthy. Most people are just mindless followers.

In reality the EV technology is only economic for a small portion of commuters. You need to simultaneously use the batteries in these vehicles enough and not too much, and so only certain driver have the right commute. Although, that somewhat limited market should be adequate to make the car companies and the battery companies profitable on the technology and thus should provide incentive for further cost reductions and technology improvement. It really is just like most new technologies, and to make a big deal about sales at this point suggest a need for sensationalism to either be disparaging toward the tech or just simply to tweak the interest of the haters of green, or Obama, or whatever they need to hate, with the intent of selling advertisements.

There it is. All truth must be stifled such that the morons are interested. The morons being those susceptible to advertisements. Our media outlets revolve around these pathetic twerps.

Jun 17, 2013 10:03am EDT  --  Report as abuse
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