Electric vehicles (EVs) are struggling to gain traction - at least metaphorically. On the road, things are different because battery-powered vehicles impressively zip away from the lights as maximum torque is generated before the electric motor even starts to turn. Tesla’s sporty Model S, for example, boasts a 0-to-100km/hr time of 4.4 seconds and a top speed of 209 km/hr. Contrast this to the ‘oh-so-nineteenth-century’ internal combustion engine that has to revved hard to produce peak torque.
But good performance alone isn’t enough for the public to open their wallets and embrace EVs. General Motors’ (GM) Volt – marketed in Australia as the Holden Volt – is the world’s largest car-maker’s (or second largest depending on how sales are added up) attempt to entice the man in the street to buy electric. Launched with much fanfare last year, Electronics News reports this week that sales of the vehicle have been so poor that GM is planning to put the manufacturing plant on “idle” to scale back production such that it meets sluggish demand.
The Volt, despite its name, isn’t a pure EV, rather it’s a hybrid. The car’s wheels are driven by electric motors, but it has a small petrol engine that’s used to boost the battery voltage when the charge starts to dwindle. According to the manufacturer, on electric power alone, drivers can expect a range of around 90km. By employing the 1.4l petrol engine as a generator, range is extended up to 600km. This is intended to overcome the “range anxiety” that haunts potential buyers of EVs.
That seems to have impressed one motoring journalist. The West Australian’s Stephen Williams talked-up the Volt’s range extending petrol generator, saying it “provides the flexibility we car-wedded Australians like. Even the Nullarbor would be doable”. (Not that crossing that arid plain features too highly on the list of most Australians’ regular drives.)
But despite Williams’ upbeat comments, it seems that it’s not just worry about running out of juice far from home that puts off consumers. Significant U.S. state and federal incentives such as rebates and allowing single occupancy EVs to use “high occupancy vehicle” lanes on California’s highways have failed to energise sales of the Volt which remain (very) disappointing. GM planned to shift 45,000 Volts in the U.S. and a further 15,000 worldwide in 2012; so far sales have reached just 10,666 in the first eight months of the year.
The Holden version of the Volt isn’t on sale here yet, but according to carsguide.com.au, take-up is likely to be slow if the struggling sales of other manufacturers’ EVs are anything to go by. Battery-powered cars are finding it tough to make headway, posting pathetic sales figures. The website says that only 18 EVs had sold privately so far this year with a further 45 sold to government and business. (No, your correspondent hasn’t omitted any zeroes from the end of those numbers.)
The Saint can’t decide if he’s saddened or gladdened by the figures as he has a love/hate relationship with EVs. On the one hand, the Saint believes that further innovation and legislation - such as the U.S. fuel-efficiency program, which mandates that cars built after 2025 must average 54.5mpg (U.S. gallon) (23.2km/l) - will drive development of the internal combustion engine. Future vehicles will run for kilometres on a whiff of hydrocarbon and with, well, just a whiff of so-called greenhouse gases emitted from the exhaust pipe - negating virtually all the green advantages of EVs.
On the other, the Saint can clearly see the sense in saving our remaining oil for uses such as plastics, fertilisers and other useful chemicals rather than just burning it in engines and sending the waste products into the atmosphere to allegedly increase the temperature of the planet. (Assuming, of course, that the electricity to recharge the nation’s fleet of EVs doesn’t come from fossil fuel-fired power stations.) Another potential plus is that building hybrids may be a way to breathe life into for Australia’s ailing car industry because of their higher technical content.
But what does it need for car buyers to switch from conventional vehicles to EVs? Electronics News explored this question in some depth back in August 2011 and concluded that, along with lack of recharging infrastructure, purchase price and the cost of replacing battery packs feature highly on the list of objections. And cost does seem to have short-circuited the Volt. In the U.S. the hybrid retails for a hefty $39,000. But things will be worse in Australia; when the Holden-badged version arrives in the last quarter of this year expect to pay the thick-end of $62,000 for the privilege of ownership. By comparison, the Holden Cruze – a similarly-sized conventional vehicle – retails for a third of the cost of a Volt. A recent survey suggested that buyers would only be prepared to pay an extra $3500 on top of the cost of a conventional vehicle for the electric version so perhaps it should be little surprise that current prices are proving prohibitive.
EV supporters argue that the only way to get the cars onto our road is via government subsidies. And it’s true that Australia is one of the few countries in the world that doesn’t offer buyers any incentives. There are currently no plans to change that policy. Perhaps stick instead of carrot might work, but it’s unlikely the pollies would want to commit political suicide by doubling or even trebling fuel duty so soon after forcing through the carbon tax.
So it looks like unless the Iranians hold good on their promise to block the Strait of Hormuz (the narrow body of water the separates the United Arab Emirates (UAE) and Iran and through which some 20 percent of the world’s oil flows) then sales of EVs will continue to be limited to radical greenies and Hollywood superstars.
Foxconn’s woes a warning sign for Australia
News this week that Foxconn International Holdings (FIH) – part of the giant Chinese contract manufacturer which assembles ‘iEverythings’ on behalf of Apple and many other brands of handsets to boot (although FIH itself doesn’t directly assemble the ubiquitous iPhone) – is looking for cheaper labour in the wake of its worst-ever first-half result brought a wry smile to the Saint’s face.
Cheap labour in China has been responsible for ripping the heart out of manufacturing in much of the developed world, including Australia. But now it seems that Chinese workers want a bigger slice of the pie that their collective efforts have earned. That’s pushing up wages and eroding the already wafer-thin margins of Chinese firms like FIH.
FIH’s response is to investigate shipping jobs to northern China (where, presumably, the country-based population hasn’t been exposed to the materialism of the big cities and so is likely to be satisfied with a smaller wage packet) or Vietnam.
China has faced criticism for manipulating the value of its currency, the Yuan, against the U.S. dollar in an attempt to keep its value down and hence make exports cheaper. Although the country has let the value of its currency rise gradually, experts argue it is still considerably undervalued.
The Saint postulates that increased cost and financial pressures on an immature banking system are going to bear heavily on an economy that, while still growing healthily, is showing signs of slowing.
But there’s no room for schadenfreude because China is too important for Australia’s continued economic growth. The European debt crisis and a still-moribund U.S. economy means the demand for our raw material from those continents will remain poor. With our economy now reliant on exporting stuff ripped from the ground - as manufacturing withers to just 8.2 percent of GDP - we need a strong China to buy our commodities and continue to insulate Australia from the chill winds nipping at the rest of the global economy. So pray that FIH’s struggles aren’t a sign of things to come.