Tesla Motors TSLA disclosed that it needs to raise more capital because the launch of its new Model S luxury sedan is going slower than expected. A top Toyota Motor Corp executive said vehicles powered by hydrogen fuel cells are more likely to be viable by 2020 than battery electric cars. And the Congressional Budget Office said federal tax credits that subsidize plug-in car purchases up to $7,500 aren't an effective way to reduce gasoline consumption or cut greenhouse-gas emissions.
These setbacks come as big car makers are gearing up to push a significant number of new hybrids, plug-in hybrids and all-electric vehicles onto the U.S. market. The question is whether the latest group of electric vehicles will offer enough features and reliability and an attractive enough price to move electric cars beyond niche status.
By the end of next year, the number of battery electric cars on the market could double to 20, and the number of hybrid models could grow to about 73 from 42 now, says Brian Wynne, president of the Electric Drive Transportation Association, a Washington, D.C., group that represents the electric-vehicle industry.
Among the new entries: A gas-electric hybrid Volkswagen Jetta, the first hybrid sedan from the German auto maker; a plug-in hybrid Ford Fusion; electric luxury cars from BMW AG and Audi AG; and a Toyota Prius hybrid that can be recharged from the grid.
One reason for the product blitz is new federal rules mandating a near doubling of fleet average fuel economy by 2025. Another is the desire to connect with affluent consumers.
Today's electric car owners are highly educated, relatively young (50 years old, compared with 53 for the industry on average) and affluent, with incomes that average $148,346 a year, says Strategic Vision, a market-research firm in San Diego, Calif.
But all the electric cars and gas-electric-hybrid models currently for sale in the U.S. have captured just 3% of total sales through the first eight months of this year. The Toyota Prius line accounts for more than half of the hybrid sales. Electric cars such as the Leaf account for barely a 10th of the market. About 1 in 10 of today's new-vehicle owners say they will consider an electric the next time they buy a car, says Strategic Vision.
Battery costs—which translate to high car prices—are at the root of the challenge the industry faces in selling these cars. At an estimated $600 per kilowatt-hour, or about $10,000 to $12,000 for a fully electric car, lithium-ion car batteries cost too much, industry executives say. A recent McKinsey & Co. study predicted costs will fall to as little as a third of current levels by 2020. Skeptics say it isn't clear the required breakthroughs will occur.
I spent several days with two of the new all-electric models hitting the market, the Honda Fit EV, and the Ford Focus Electric. These cars illustrate the big obstacles that still stand in the way of a broad move to battery-powered motoring.
Ford Motor Co. says the Focus delivers energy consumption equivalent to 110 miles per gallon. The Fit EV is rated at a gasoline equivalent of 118 miles per gallon.
In real life, electric-car "mileage" isn't a relevant statistic. Range is. After an overnight charge, my test Focus had about 70 miles of driving range, according to the onboard computer.
Dashboard displays by the Focus's speedometer keep you informed on how quickly your driving style is depleting the lithium-ion battery pack installed in the rear cargo area. If you maintain steady speed and coast to stops so the brakes can recharge the battery, ghostly virtual butterflies fly joyfully around a screen.
Mashing the accelerator on freeway ramps and keeping up with traffic at 75 miles per hour? No butterflies for you. Come winter, running the heater will hurt an electric car's range, as will cold's tendency to degrade battery performance. In very cold weather, the chemical reactions that generate electricity slow down. Cars' heaters run down the battery, too. Companies say they are expanding the temperature range at which batteries deliver full performance.
The Fit offered more driving range, calculating my power consumption at 4.3 miles per kilowatt-hour over a 35-mile trip. At that rate, I could drive about 80 miles before recharging or calling a tow truck.
Or I could buy a gasoline Honda Fit that has more cargo room, gets 31 miles per gallon and starts at about $15,000, or less than half the $37,415 list price of the electric model.
Honda is leasing the Fit to customers in Oregon and California for $389 a month and plans to expand leasing to six East Coast markets early next year. The Focus Electric, priced at $39,995, was launched in California, New York and New Jersey earlier this year. Ford says it will be available nationwide by the end of the year.
Leasing is one way that electric-car makers can make the upfront price less of a hurdle. Nissan is offering discounted Leaf leases, with some dealers offering payments as low as $219 a month.
Gary Lieber, of San Jose, Calif., bought a Nissan Leaf electric car for a practical reason. "Our fuel bill has dropped from $60 a week to about $45 a month," he says. But Mr. Lieber, retired from a career that included stints at Apple Inc. and Microsoft Corp., says car makers will have to be patient. "You've gotten all the early adopters," he says.
Article from WSJ.Com