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Cable may have blown it, say electric carmakers |
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By Lee Wild
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Fri 09 Jul 2010
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LONDON (SHARECAST) - Electric cars have come a long way in the past decade. No longer the poor relation to their petrol driven cousins, they can travel hundreds of miles without recharging and do 0-60 in under 4 seconds.
This, and the success of Toyota’s Prius, beloved of Hollywood stars like Cameron Diaz and Leonardo di Caprio, makes them a much more viable and acceptable option than ever before.
A recent report from UK-based consultancy JD Power claimed that global sales of electric and alternative fuel vehicles will leap 28% to 940,000 this year and top 3m units by 2015.
Rising fuel costs and the oil slick in the Gulf of Mexico are turning even more petrol heads into reluctant environmentalists.
The omens are good then for a motor industry still recovering from the worst recession since World War Two. All the major manufacturers and many of the smaller ones have got the boffins working on new models, which will only improve performance and choice and bring down prices.
But there could be trouble in store. Business Secretary Vince Cable told the UK motor industry the other week it will no longer be able to rely on financial support from the new coalition government, a decision which critics warn could stall the electric revolution in his country before it’s really begun.
"Our starting point is very clear. We've moved on from the era of subsidies," Cable told those at a conference in London put together by the Society of Motor Manufacturers and Traders (SMMT). "We just have to be realistic about what's affordable. I don't see the future as one of large scale support for individual companies."
In an interview with The Telegraph he said “we can't fight – and we can't win – a subsidy war. But I want to make clear we support the industry. There is a difference between liberal and laissez-faire. I'm a liberal."
A promise made by the previous Labour government to provide subsidies of up to £5,000 to anyone who bought an electric car could end up in the bin, along with billions of pounds of other government projects, as the Lib-Con administration tries to balance the books.
All Cable would say about the scheme, which would cost £250m and had been due to start next year, is that it is “still actively under consideration”, though no date for a decision has been made.
Industry bigwigs are scathing and have even threatened to turn their backs on Britain.
Citroën, Mitsubishi, Nissan, Peugeot and Renault have written to Cable and transport secretary, Philip Hammond, warning that "without the incentives, the UK will become a significantly less attractive market".
"As businesses, we will target the markets that provide the best environment for selling our vehicles. The emergency budget made no specific reference to supporting low-carbon vehicle incentives and has therefore left our businesses uncertain of the government's position," they say.
All five of them have mass-market electric cars ready for launch in this country next year, and anything that damages the lure of green cars may put the chances of meeting climate change targets at risk.
But the Department for Transport could not be drawn. "We are committed to supporting new transport technologies to help make our transport system greener and more sustainable. Electric and plug-in hybrid vehicles are currently supported through the taxation system," it said.
It may not be helpful, but the subsidy issue is probably not crucial to the future of electric motoring.
Even BMW is getting in on the act. It’s been hosting journalists in Munich to demonstrate how serious it is about selling a battery-powered car in showrooms by 2013. The technology is now at a point where it “really makes sense to drive electric”, it says.
The company’s even building a new factory to make lightweight carbon fibre components for the car, offsetting the additional bulk of the heavy batteries.
Apart from the environmental argument, fans of green motoring love the normally quick acceleration, quiet fume-free drive and single gear system.
“Electric cars are fun to drive,” said BMW’s project director Ulrich Kranz.
They certainly are if you own one the supercars made by American company, Tesla Motors.
California-based Tesla recently raised $226m, almost $50m more than planned, as investors clamoured for stock in the first public listing of a carmaker in the States since Ford Motor arrived in 1956.
The Silicon Valley firm, run by PayPal founder Elon Musk, listed on Nasdaq following a placing at $17 a share. They were up 40% by the end of the first day, but have since fallen back below their issue price.
Tesla has sold over one thousand of its Roadsters, a $109,000 (£73,000) sports car capable of getting from 0-60mph in just 3.9 seconds and hitting a top speed of 125mph. It’ll run for 244 miles before it needs a recharge, which takes 3½ hours for maximum juice.
Analysts reckon the stock is high risk. Tesla isn’t making any money yet – it lost $29.5m in the first quarter of 2010 - and profits won’t come until it sells a stack of its second car - the Model S sedan – due to hit the road in 2012.
The company is already taking reservations for the 7-seater $50,000 (£33,000) motor, which will do 0-60 in 5.6 seconds and keep going for 300 miles at a cost of just $4 for a full charge.
It’s been handed a $465m federal loan facility to help develop the Model S, while Prius-maker Toyota recently pumped in $50m. Daimler also has an interest after it bought a 10% stake for a rumoured $50m last year, although it has since sold some of that to its largest shareholder, Abu Dhabi state-run firm Aabar Investments.
So, car companies have very little choice if they want to survive much past the end of the decade. It’s adapt or die, a point not lost on the guys at BMW. They reckon sales of petrol powered cars will start to fall off in 2020.
“The departure from fossil fuels is an irreversible trend.”
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