Monday, June 28, 2010

Electric Cars

The electric cars became commercially available in mid 1990s. EV1, the first electric car available to consumers was produced by GM. But negative publicity from the oil companies and a not so conducive political environment resulted in the death of the electric cars which is properly addressed in the documentary "Who Killed the Electric Car".



But apart from those reasons, there are other reasons that made electric cars not that attractive. These reasons still exists which needs to be addressed to make it mainstream.

1) The battery technology has improved and the most recent, to be launched electric car Model S by Tesla Motors gives about 300 miles per charge and takes 45 min for charging the battery. This time taken to charge the battery is a bigger inconvenience than what the auto companies give credit to. The customers don't want to be stranded somewhere waiting for their batteries to be recharged.This is the reason why Toyota went for hybrid technology rather than a pure electric car.

2) The cost savings offered by the electric cars are still not more than the higher upfront cost of the electric car. Even if it makes environmental sense it still does not make economical sense for the consumers. This is one of the reasons why Tesla is aiming at the target customers of semi luxury segment. Tesla Roadster costs about 101k and Model S sedan costs about 50k.

3) The above two points are from the customer point of view. From the manufacturer point of view, the production is not cost efficient. Tesla has already lost about $250-$300 million and going for an IPO to be in business.