[Auto] Are Electric Cars The Biggest Auto Hype Since The Edsel?

[_Happy boy]

The electric car industry is about to become the greatest thing since sliced bread… or so a lot of people would have you believe.

The truth is something different.

As automakers and tech start-ups fall over themselves on the incredible future of electric powered vehicles, the hype needs to be unplugged to truly understand what’s going on. Vehicles powered by electricity, rather than gasoline, may eventually come to rule to business but it’s unlikely to be anytime soon.

Two august national newspapers, The New York Times NYT -1.1% NYT -1.1% and the Wall Street Journal, both ran large articles in the past few days pointing to the oncoming traffic in electric vehicles. “Electric Cars Are Gaining Ground,” the Times wrote while the Journal had a full page story on “The New Electric Vehicles Hitting the Road.” Both went on to report on how the future of these forms of transportation was now here and all we had to do was head to our local dealership to trade in our old gas guzzlers for the latest, greatest thing on four wheels. But if you read on, you saw a somewhat different portrayal of the state of the electric vehicle market.

• Electric vehicle sales in the U.S. actually fell last year, dropping by about 10% the Journal said. True, the overall car industry had a tough year but one would think sales would still be rising if the hype were really true.

• While every automaker and all kinds of techy start-ups are entering the market, the fact is that 80% of all electrics sold in the U.S. carry the Tesla TSLA +0.5% TSLA +0.5% brand. Its head start in the field is the four-wheeled equivalent of Amazon’s AMZN +0.5% AMZN +0.5% early domination of e-commerce while traditional retailers stood back and watched. Now competitors like Walmart WMT +0.3% WMT +0.3%, Targ TGT +0.5%et TGT +0.5% and others are in a mad dash to try to catch up, the same position most legacy auto makers now find themselves in.

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• General Motors GM +0.2% has said it will convert its entire range of vehicles to electric power by 2035. That’s 14 model years away which is a while but right now GM’s GM +0.2% offerings border on the pathetic. This is especially ironic as GM tested an electric car called the EV1 that was in limited production in the late 1990s…25 years ago. Right now, its electric vehicles, the Chevy Bolt and Volt, have been sales embarrassments, each selling less than 5,000 units in their last full years of production. And its next electrics are probably not going to move that voltmeter much either: the Hummer SUV won’t debut until the 2022 model year and will retail for just over $110,000. The Cadillac Lyriq will show up probably the year after and be priced at about $60,000 according to reports, but the brand’s lackluster sales over the past decade aren’t hopeful for big numbers of this new model.

• On the other side of the Detroit area, Ford has said it too will go electric but again its current offerings consist largely of the new Mustang Mach-E, an SUV bearing the iconic sportscar’s brand. While it is more reasonably priced — starting at around $43,000 — it is a lonely entry on the company’s model line-up that is dominated by gas-powered or hybrid pickup trucks and vans.

• Other global automotive powerhouses are just barely getting into the electrics sector. Korea’s Hyundai is only launching its first EV sub-brand, Ioniq, this year even though it said it expects to sell one million electrics by 2025. Volkswagen said it is spending $42 billion on electrics over the next five years yet it too will only bring its first battery-powered SUV to the U.S. market this year. Nissan, one of the earlier makers to enter the EV market with the Leaf introduced in 2010, has pretty much dropped the ball ever since and is now counting on its new Ariya to try and pick up the slack.

• Tech start-ups like Rivian and Lucid are getting lots of attention for their upcoming debuts but at $75,000 and $169,000, respectively, for their first models sales will be modest to say the least.

• Big luxury brands like Audi and Mercedes Benz have new models on their way as well but they will also be in the six-figure range…for their starting prices.

• Even Tesla’s newest vehicle, a pick-up called the Cybertruck, is expected to start at around $40,000 but a long-range version will be closer to $70,000 and the company has historically been loose on its pricing forecasting.

The cold hard facts are that the average price of a car or light truck in the U.S. was around $38,000 last year according to Kelly Blue Book and while any new technology generally comes in at the premium end of the pricing spectrum and then gradually works its way down to more moderate levels, it is a process that takes many years. While Tesla did indeed sell nearly half a million vehicles last year, that came 11 years after it sold its first one. Meaning that these forecasts for the explosion of the EV market — the Journal calls it a “battery-powered boom” — may be overly optimistic.

Electric powered vehicles do appear to be the vehicles of tomorrow. But it’s still today.