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 Since then, his administration has backed billions of dollars in
EV subsidies for consumers and the industry.
Yet today – with gas prices near $2 a gallon - only about 400,000
electric cars have been sold. Last year, sales fell 6 percent over
the previous year, to about 115,000, despite the industry offering
about 30 plug-in models, often at deep discounts.
Such challenges are part of the backdrop for Obama’s Wednesday visit
to Detroit, where he’s expected to discuss the state of the auto
industry.
Despite slow plug-in sales, the industry continues to roll out new
models in response to government mandates and its own desire to
create brands known for environmental innovation.
At the Detroit Auto Show last week, General Motors Co<GM.N> showed
off its new electric Bolt EV; Ford Motor Co<F.N> unveiled a new
plug-in version of its Ford Fusion; and Fiat Chrysler Automobiles
NV<FCHA.MI> unveiled its first plug-in hybrid, a version of its new
Pacifica minivan.
 Ford CEO Mark Fields said last week that EVs "are a difficult sell
at $2 a gallon.”
Plug-in vehicles accounted for fewer than 1 percent of the 17.4
million cars and trucks sold last year, according to data from
HybridCars.com and Baum & Associates, a Michigan-based market
research firm.
That doesn’t include sales of more mainstream gas-electric hybrids
such as the Toyota Prius. But hybrid sales also fell last year - by
15 percent, to 384,000 - and now comprise just 2.2 percent of all
vehicle sales.
In his State of the Union Address last week, Obama didn’t
specifically address electric vehicles but said: "We’ve got to
accelerate the transition away from old, dirtier energy sources."
The main obstacles for electric vehicles are their high cost and
short driving range. The Chevy Bolt promises a breakthrough on both
fronts, with a 200-mile range and a price starting at about $30,000
- after government incentives.
Still, that’s a steep buy-in compared to increasingly efficient
gasoline-powered economy cars that can sell for less than $20,000.
“If gasoline was $8 a gallon, consumers would amortize the costs of
an electric vehicle pretty quickly,” said former GM vice chairman
Bob Lutz, who headed up the development of the original Chevy Volt,
a pioneering plug-in hybrid. “But at $1.50 a gallon, who is going to
be willing to pay an $8,000 or $10,000 premium?”
Palo-Alto electric car maker Tesla Motors<TSLA.O> has garnered
praise for making high-performance, long-range sport sedans -
typically selling for about $100,000 and traveling about 250 miles
between charges. But other automakers have struggled to produce a
more affordable car with a range longer than 100 miles.
Green car advocates say EVs are a crucial part of the effort to
reduce greenhouse gas emissions and will help wean the United States
off imported oil. In the long term, they argue, oil prices are
almost certain to rise again, making electric cars more viable.
The industry is moving ahead with EV development for a number of
reasons.
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Many states, led by California, have imposed zero-emission vehicle
mandates. California has set an ambitious goal to have 1.5 million
such vehicles on its roads by 2025.
The state accounts for about 40 percent of all electric car sales,
but only about 120,000 of the 31 million automobiles on California
roads as of a year ago were zero-emission vehicles.
Many automakers worry that consumers will perceive them as
technologically backward if they don't build electric cars – even if
they can’t yet sell them in large numbers.
The industry is also responding to an influx of state and federal
cash and related mandates.
The U.S. Energy Department awarded hundreds of millions of dollars
in low-cost loans to spur electric vehicle manufacturing by
companies such Nissan Motor Co<7201.T> and Tesla. In 2009, the
administration dedicated $2.4 billion of the $787 billion stimulus
bill to promote battery and EV production.
Consumers can get a federal tax credit of up to $7,500 for buying
electric vehicles and plug-in hybrids. The Obama administration has
repeatedly proposed boosting the credit to $10,000.
Carlos Ghosn, CEO of Nissan - which saw sales of its electric Leaf
fall by 43 percent in 2015 - told reporters at the show that
automakers are ramping up EV offerings because of increasingly
strict government mandates.
"Everybody came to the conclusion that there’s no way we can meet
the emission regulation in the future” without selling zero-emission
vehicles, he said. "This is not going to be an easy shift.”
Volkswagen AG<VOWG_p.DE>, still reeling from its diesel emissions
crisis, has touted plans to introduce 20 more plug-in vehicles by
2020.
GM chairman and CEO Mary Barra said she is convinced that customers
want EVs and that gas prices won't stay low forever.
"Long-term electrification is part of the solution," she said at the
show.
Lutz, the former GM executive, says automakers have no choice but to
build them. Because of government mandates, he said, “Electric
vehicles are going to have to be crammed in the market at way below
what it costs to make them."
(Reporting by David Shepardson; editing by Joseph White and Brian
Thevenot)
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