Why Obama is Backing Away From Electric Vehicles

One year ago, President Obama used his State of the Union address to set a bold goal of U.S. consumers buying 1 million electric cars by 2015. But consumers aren't biting, and the Department of Energy and the White House are backing away.

The only mention in this week's State of The Union of EVs was a vague proposal for an "Energy Security Trust" with funding from oil and gas drilling royalties and use the money for research on electric vehicles, natural-gas vehicles and biofuels.

The truth is that enthusiasm for an EV car revolution is waning as too few U.S. car-buyers see themselves adjusting their driving lifestyles to make an EV part of their family fleet.

The DOE said on January 31 that it would no longer tout Obama's million-car goal and will instead promote advanced-technology vehicles of every stripe. Cue the start of an "Energy Security Trust" that will support research for EVs, hybrids, natural-gas cars and fuel-cell powered vehicles.

Electric and plug-in electric hybrids got off to a tough start in January after a sluggish 2012.General Motors, Toyota Motor Corp. and Nissan Motor Co. all reported much lower sales of EVs and plug-in hybrids in January over December, citing lower inventory and the decision of many customers to buy before the end of the tax year. Chevy sold 1,140 Volts in January. Toyota sold 874 plug-in Priuses. Nissan sold 10,000 Leaf EVs in all of 2012. Ford is offering a $10,000 discount on the slow-selling Focus EV.

Those are paltry numbers. The lack of acceptance by consumers is creating a glut of batteries. LG Chem Michigan, a unit of the Korean conglomerate LG, for example, was awarded more than $150 million in funding by the U.S. Department of Energy under the 2009 Recovery Act to help construct a $304 million lithium-ion battery cell manufacturing plant in Michigan. It was supposed to create 440 jobs. But the company is still supplying batteries for the Chevy Volt from its Korean plant, and fewer than half the jobs in Michigan have been realized. Why? Lack of demand. LG Chem and the DOE have just been reprimanded by the DOE Inspector General for misusing tax-payer funds and not delivering on stated goals.

What's dampened the push for EVs? Part of the problem is the continued high cost of lithium-ion batteries critical to EVs, and negative publicity around fires related to such batteries in a few cars, as well as the new Boeing Dreamliner airplane (though the batteries are sufficiently different that the aircraft company's problems are not thought to be related to the car batteries.)

The dollars and cents

Here are some of the financials on the EVs and extended range electric vehicles consumers can buy today. The 2013 Nissan Leaf S, with about a 73-mile range in between re-charges, starts at $28,800. But after federal and state tax credits in California, dips the price to $18,800 in that state. It's $21,300 with just the federal credit.

The Chevy Volt, which is an extended-range EV, meaning it gets 35 miles on a charge but has a gas-powered motor that continues to power the battery until the next charge-up, starts at $39,145, and $31,645 after the federal credit. But you can lease a Volt now for $328 per month with no money down for 39 months. That's not as good as the low-price leases of last September--just above $200 a month with $1,000 down, but it is still a nice deal for a car packed with so much technology and that can take a driver 70 miles a day with no gasoline used and no worry of running out of battery charge because of the back–up gas motor.

A consumer who wants to drive electric and reduce their dependence on gasoline prices can, in fact, make a business case for buying an EV. I can put a charger in my garage for very little money after credits from the government and my utility company. I already have a charger at work. I could conceivably drive a Volt back and forth to my office, a round-trip of 100 miles a day, for two weeks on one tank of gas as I would, in fact, kick over to gasoline at the 35 mile mark. That's roughly 1,000 miles on one tank of gas. But people who commute fewer than 70 miles a day – the vast majority of Americans – could drive months without going to a gas station.

Electricity does cost, but recharging at night at home is extremely cheap when electric rates at their lowest. And many work-places with chargers will let you charge up for free or for peanuts.

But here is the real problem for all but those who embrace new technology, especially green technology. If it's new, and creates a big change in the way we think, or live our daily lives, a lot of us just think ... "Nah. I'm comfortable with what I do now."

Change is hard

I now have some sympathy for this. After years of using an iPhone, I added a second phone to my life: a Samsung Galaxy. I did this so that I could have two phones to interface with the cars I test. Not every car's telematics system matches up with Apple's operating platform. Most, for example, will not allow you to execute commands via a Bluetooth connection by voice command. But I hate this phone. It gets rave reviews from others. But what I hate about is that it's very different from my iPhone, and I hate fumbling around with something new and unfamiliar that is as critical to my daily life as my smartphone. I really like the familiarity of my iPhone.

I love the Volt, more than the Leaf. And I feel the same way about the new Ford C-max and Toyota Prius extended-range EV. The extended-range EV system fits my lifestyle perfectly. But, yes, it does require hooking up a car to a charger about as often as I do my phone. That's new and different. But unlike my hatred of my new Android phone, I don't mind it all. And I love driving using so little gas.

When I hear people dis the Volt and EVs, I get frustrated. It's often people who haven't seriously looked at them, or considered just how easy they are to use if you have access to chargers. They are especially useful as second cars in a family, but can certainly be used as primary cars.

But my frustration with such car shoppers is on the wane. When I hear the objections, I think of my new Samsung and how much I dislike it because of how unfamiliar it is.

We can be creatures of habit and simply resistant to changing what works for us, no matter how many tax credits we are offered to take a different road.