Nissan Leaf EV – Click above for high-res image gallery
Writing on the AltEnergyStocks site, John Peterson tries to make the case that plug-in vehicles are a bad investment for automakers and are unlikely to be profitable anytime in the foreseeable future, certainly not before they are obsolete. Considering the issue purely from a business case perspective, Peterson is very likely correct, at least for the first generation or two. Cars like the Nissan Leaf and Chevrolet Volt will almost certainly be money losers for the lifecycle of the first-generation models (for its part, Nissan says they will make a profit off of the Leaf, though it isn't going into details). However, without the creation of money-losing first-generation models, it would be hard to get to subsequent iterations with improved technology, lower manufacturing costs and higher volumes, thus bringing the costs down.
Peterson also argues that battery makers are overvalued and at "nosebleed" levels, and specifically mentions A123 Systems and Ener1. While both companies may well be overvalued based on their current stock prices – $13.67 for A123 and $4.40 for Ener1 – from where we sit, these hardly qualify as nosebleed and are well below their peaks of the past year. Both of those companies also have new battery plants opening this year, not 2012 and beyond as Peterson says in his article.
In general, it's certainly hard to make a viable economic case for first-generation plug-in vehicles based on fuel savings and cost of the vehicles, but if batteries are ever going to progress, this is a step that needs to be taken. It may well turn out that plug-in vehicles never turn out to be the best solution, but if no one tries, it won't ever be known.