Are electric vehicles over-hyped?
Three weeks ago the press was full of stories about how Tesla had caught all other car companies napping. The company had just announced the Model 3: a cutting electric vehicle (EV) with a range of more than 200 miles, the ability to drive itself, and a list price of $35,000. Since then nearly 400,000 people have put down deposits for one, despite the vast majority never having seen the car in the flesh. But is it reasonable to think that all other car companies should copy Tesla, or are the manufacturers of internal combustion engine vehicles (ICEs) right to be more cautious about investing in EVs?
The number of deposits for the Model 3 is impressive - indeed it appears to have surprised even Tesla - but these won’t necessarily translate into purchases. The Model 3 won’t be available to the first customers until late 2017, and all deposits are refundable up until the point that customers are asked to confirm the specifications of their car. Furthermore, Tesla failed to ramp up production of its Model X SUV as planned in Q1 2016, blaming “hubris in adding far too much new technology… [and] insufficient supplier capability validation”.
Clearly Tesla is an exception when it comes to making cars - and it’s difficult to make comparisons between their existing (expensive) products and the ICEs that other car companies mass-produce by the million. So we shouldn’t expect ICE manufacturers to bet their future on EVs if their only point of reference is Tesla.
So who should these companies turn to when deciding whether and how much to invest in EVs? What about their customers?
On April 20th AutoExpress announced the results of their Driver Power survey, a survey of nearly 50,000 UK car owners. Cars were given scores out of 100 across ten customer satisfaction categories, including build quality, reliability, performance, running costs and practicality. 147 ICEs feature in the survey alongside 3 EVs: the Renault Zoe, Nissan Leaf and Tesla Model S. And the EVs came out on top:
- The Zoe scored higher than the ten Renault ICE vehicles (by 4.5%) and came top out of 37 cars in the supermini segment.
- The Leaf scored higher than the three Nissan ICE vehicles (by 5.4%) and came second out of 28 cars in the compact family segment.
- The Model S scored higher than any other car, coming top in seven out of the ten categories.
A more detailed look at the results is enlightening, and suggests that the car industry is about to be disrupted - not by Tesla, but as a result of its own customers’ preferences. Three insights capture these preferences:
- EVs are simpler to drive. The category on which the three EVs outscored comparable ICEs by the biggest margin was ease of driving.
- EVs are cheaper luxury cars. They scored consistently highly across the three categories that have traditionally been considered trade-offs in vehicle design: performance, running costs and ride quality.
- EVs appeal to our love of smart technology. That they outscored their ICE competitors on in-car technology should not really be a surprise; the technology that we’ve become accustomed to in our daily lives sits at the heart of every EV.
Just to be clear, according to the people who use them on a daily basis EVs are simpler, cheaper and smarter than comparable ICE vehicles.
In any market, a new product or service that is simpler, cheaper and smarter than the alternatives will take significant market share from the incumbents. I’ve watched OVO achieve this in energy supply over the last three years, and the evidence suggests that the same effect is now emerging in the car industry.
In November 2015, former Daimler chairman Edzard Reuter dismissed Tesla as "a joke that can't be taken seriously compared to the great car companies of Germany". Only time will tell whether this is true; Tesla is still a relatively young company. But Daimler and the other ICE manufacturers can’t afford to dismiss the opinions of their customers when it comes to EVs as a whole. Customers who have made the switch from ICEs enjoy their EVs much more. It’s time for all car companies to recognise this and start investing in the products that their customers really want.
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6yWhy are Electric cars so expensive. A small, light simple car would have a greater range (and performance?) and be more use in cities, where surely EV's belong. We can make electric motors cheaply for other purposes (Admittedly of a different type) and smaller batteries would do for smaller cars without compromising performance. Why doesn't Ford get involved?
Hydrogen fuel and electric cars will evolve to take the place of fossil fuel cars, the only question is how soon this will happen. My guess is within five years the trend will be clear and within ten years the costs of battery technology compared with safe hydrogen storage costs and their respective life spans will enable everyone to see the future more clearly.
Passionate about people, the environment and business
8yAre diesel vehicles over-hyped?
Senior Software Engineer
8yThere is quite a bit of rationalization among EV enthusiasts which should not get in the way of addressing the drawbacks of pure electric cars. The Chevrolet Volt is a good example of a transitional vehicle that allows incremental improvements. Think of how PCs used to have both floppy and CD drives before CD-RW. Then we had CD-RW and USB ports while now many computers have dropped optical drives altogether.