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This Week in Clean Economy: Can Electric Cars Win Over Consumers in 2012?

The electric car industry begins 2012 with a bleak sales picture. Cellulosic ethanol has its own bad news, while the clean energy trade war spreads.

Jan 6, 2012
Pre-production of a Chevy Volt on an assembly line at the Detroit-Hamtramck manu

Electric vehicles failed to gain traction in the mainstream market last year, which saw lackluster sales for the industry's first arrivals, the Chevy Volt and the Nissan Leaf.

Will 2012 be any better? Depends who you ask, but the general consensus in the first week of this year is probably not.

In a survey of global auto executives released Thursday by KPMG LLP, an audit, tax and advisory firm, nearly two thirds of respondents said plug-in hybrids and all-electric cars won't make a dent in car sales until at least 2025. By then E.V.'s could rise to 15 percent of total car sales, according to the most optimistic projections.

The main reason for the pessimism is low consumer demand. In the United States consumer interest is actually declining, according to Pike Research, which surveyed more than 1,000 Americans for a report published Thursday. Forty percent of respondents were "extremely" or "very" interested in buying an electric car in 2011, down from 44 percent in 2010 and 48 percent the year before.

The biggest deterrent, respondents said, is cost. The gas-electric Chevy Volt sells for roughly $40,000 and the all-electric Nissan Leaf starts around $35,000. By contrast, a fuel-efficient gas-powered compact car, like the Chevy Cruze, can cost half that.

Not everyone is pessimistic though. New models of E.V.'s are hitting showrooms, and that could be a sales catalyst, Rob Bailer of Leaf Clean Energy, a renewable energy and sustainable technology investment firm, told InsideClimate News.  The all-electric Ford Focus rolled out in California, New York and New Jersey late last year, with 16 other states set to get the cars in the second quarter of 2012. Toyota's Prius Plug-in will be sold in 14 states in the first half of this year. California and Oregon residents will be able to buy the all-electric Honda Fit by summer.

"People are going to start to adopt more," Bailer predicted.

But the Chevy Volt and Nissan Leaf missed their 2011 sales goals, fueling speculation that the new releases won't fare much better.

Nissan, which set a 10,000-car target last year, almost hit its mark, selling 9,674 of its all-electric Leafs. General Motors fell short of its Chevy Volt  goal, selling just 7,671 plug-in hybrids of its 10,000-unit target.

Total E.V. sales reached around 20,000 in the United States, just two percent of the Obama administration's plan to put one million electric cars on the road by 2015.

Republican lawmakers who oppose Obama's clean vehicles agenda have pointed to disappointing sales as a reason to revoke tax credits for the carbon-free cars. The government offers first-time buyers a $7,500 subsidy. Last week, Rep. Mike Kelly (R-Pa.) introduced legislation to end the incentive, citing the Volt's missed sales target.

A Washington Post editorial this week agreed. Such tax credits "represent a deepening of the taxpayers' commitment to what looks increasingly like an industry not ready for prime time," the paper wrote.

In a response, Media Matters, a progressive media watchdog, said the editorial fails to recognize that "lawmakers supported electric cars because they are not already a well-established technology, not in spite of that fact."

EPA Dramatically Cuts Target for Cellulosic Ethanol, Again

America's cellulosic biofuels industry got off to a disheartening start to the New Year, when the U.S. Environmental Protection Agency slashed the target for the next-gen fuel source by 98 percent over what was required under federal law.

EPA announced last week that it expects just 8.65 million gallons of cellulosic ethanol to be blended into the nation's fuels in 2012, a tiny fraction of the 500 million gallons that was mandated by the 2007 Energy Independence and Security Act.

The energy act directs oil refiners to boost the amount of biofuels in their blends from 9 billion gallons in 2008 to 36 billion gallons by 2022. A massive 16 billion gallons must come from switchgrass, corncobs, husks and other inedible cellulosic plant parts. The idea was to prevent an overdependence on corn-based ethanol, which is heavily criticized for reducing food supplies.

To keep the industry on track to deliver the rapid expansion, EPA must set minimum requirements every year, known as the renewable fuel standard. For 2012 the goal is to add 18 billion gallons of total biofuel, just under 10 percent of the nation's motor fuel. More than half of that will come from corn; one-tenth of one percent will be cellulosic biofuel.

EPA has dramatically cut the cellulosic goal every year for the last three years, raising ire among renewable fuel advocates, who say the reduction in cellulosic numbers sends a chilling signal to financial markets, which depend on long-term clarity from the government. Ethanol plants can cost $100 million to construct and take several years to build.

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