Who Killed the Electric Car?

I recently came across the documentary “Who Killed the Electric Car”, available for viewing on:

http://vimeo.com/19863733

If you have 90 minutes to spare it may be worth watching in full – I sat through the beginning and skimmed the rest largely on fast forward. The movie embraces the conspiracy theory proclaiming that GM had a viable electric car and decided to pull the plug on it (pun intended). This was supposedly because they had loads of money invested in the legacy (internal combustion) technology and did not want to take commercial risk by going electric. The oil companies lent a helping hand by pressuring the Californian politicians to revoke the Zero Emissions state laws obliging the car makers to sell a certain proportion of non-polluting vehicles and, as they say, the rest is history. RIP electric car.

Before getting overly excited by eco-activist rhetoric I always look at the numbers and a brief research into the issue has revealed some interesting facts. The movie is about the EV1 car developed by GM in 1990s. It was available for lease in limited numbers as part of a feasibility and marketing trial. If (according to the makers of the movie) the car was commercially viable, what was the financial side of the deal? According to Wiki EV1 cost somewhere between USD80,000 and USD250,000 to make. They were leased based on a nominal unit price of USD34,000. This is many times less than the real cost but only at this price point would normal punters consider leasing it. To put the artificially lowered lease price of USD34,000 in perspective in 1980s Yugo was available in the US for USD3,990 and USD10,000 bought a perfectly usable car like Honda Civic. At the beginning of the movie a young female engineer tearfully claims that the project was scrapped despite EV1’s being “reasonably priced”. In the context of the pricing structure implemented by GM she either has no clue what she is talking about or deliberately sets out to mislead. The lease fees covered only a small portion of the GM costs and were affordable only because the project was never expected to make money.

Ok – so what did one get for a monthly lease of USD300-550? A 2-seat coupe with a range of 100-250km depending on the battery pack. EV1 was easy and cheap to drive, had a great acceleration but due to a limited range could only be used around town. Most of the lease drivers in the movie are attractive young women – probably part of the PR effort aimed to make EV1 attractive to young, progressive, childless, eco-conscious professionals. I guess the low socio-economic crowd living in dodgy suburbs were condemned to driving Yugo or Honda Civic’s. The trial showed that the car was technically sound and likeable but way too expensive to be viable so GM killed the project.

Much is made in the movie of the fact the leased EV1’s had to be returned to GM when the trial ended. Well, GM had invested USD1b in the development of EV1 and they had commercial interest in not letting others get access to their technology. If they allowed people to keep ex-lease EV1’s the likes of Toyota and Hyundai would have bought them off the lease drivers for “technical evaluation”. I am pretty sure the lease drivers had to sign a confidentiality agreement with GM but with the change of vehicle ownership this agreement would have been null and void. So, GM had to re-possess the EV1’s and, having no further use for them, decided to scrap them. A few were given to museums on the proviso that they would never be driven again – for the reasons given above. Think about a manufacturing company making investment in a new production process which in the end turns out to be a dud. If the company allowed everyone to access the details of the scrapped project their competitors would get a commercial advantage by finding out (for free) what had been tried and found not to work. So the right way to go about it is to quietly kill the project and delete/embargo all operational info. This is exactly what GM did. The emotive arguments of the lease drivers and bogus EV1 funerals given prominence in the movie pay no regard to the commercial realities. GM made the EV1, owned them, made them available for lease on a term contract and then re-possessed them. That the lease drivers wanted to keep the cars is irrelevant – the EV1’s were not theirs to keep.

But the good news is that since EV1 was a viable car killed by a US corporate conspiracy then, surely, new players in the auto market will fill the niche. Have you heard about all the electric cars being prepared for mass production by Daewoo and Great Wall? Me neither. This, in my books, can only mean one thing. EV1 went the way of the dodo because it was a commercial flop and no one else wants to go down the path of losing money on another trial. GM Volt is aimed at a different market – wealthy professionals in search of an eco image. Nissan’s Leaf explores the carbon guilt trip of the trendy metro-sexuals who do not need to drive out of the city. The rest of Californians are stuck with their trusty petrol-engined wagons which will get them to Lake Tahoe without re-charging the batteries.

RIP electric car.

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