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U.S. is trailing the rest of the world on EVs

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As oil prices have tumbled, one thing has become clear: Electric vehicles are making much greater headway in the rest of the world than they are in the United States.

U.S. sales have remained flat over the past year after increasing steadily over the last decade. But sales have actually accelerated in some European countries, and several now have a larger percentage of their fleet in EVs than America does.

The website InsideEVs estimated that 160,670 EVs were sold around the world through the month of May, 34 percent ahead of last year during the same period. But U.S. global market share is declining: Domestic sales totaled 43,973 through May, a fraction ahead of last year’s pace. But when the June numbers came out, the U.S. had sold only 10,365, off 16.2 percent from the same month in 2014.

Norway is emerging as the world leader in making the transition from gasoline to electric vehicles. An incredible 33 percent of new-car registrations in the first quarter of 2015 were for EVs. Volkswagen’s e-Golf, the electric model, now sells 71 percent of its cars worldwide in Norway, giving it 40 percent of the Norwegian market. Tesla is not far behind with 16 percent of the market. Oddly, the Toyota Prius, the pioneer in the hybrid field, is seeing almost no sales now. People are beginning to opt for all-electric rather than the halfway point of gas-electric hybrids.

The Norwegian government has given EVs a raft of advantages over traditional gasoline-powered engines. Here’s a brief list:

• EVs get access to bus lanes
• The government has provided free charging stations
• EVs get free access to all toll roads
• EVs get free rides on ferries
• EVs get free parking in municipal parking spaces
• EVs carry a low annual road fee
• EV buyers pay no tax on purchase

Some of these advantages will eventually have to be cut back as the number of EVs on the road grows. But for now the incentives are huge and are not costing the government a great deal of money.

Other European countries have also been successful in promoting the purchase of electric vehicles. EVs now make up 5.7 percent of new car registrations in the Netherlands and 1.2 percent in the United Kingdom. The U.S. counts only 0.8 percent of new registrants as EVs, a figure that is matched by France. Germany and Japan counted only 0.6 percent of new registrations during the first quarter.

The reason EVs are doing so well in Europe is easy to identify: Europe imports nearly all its oil, and gasoline prices are much higher, mainly because of the imposition of heavy taxes. Gasoline sells for $8 a gallon in much of Europe, while prices are generally below $3 per gallon in this country. But air pollution is also playing a role. Pollution in some European cities has gotten as bad as it is in China and other parts of Asia. Paris shut down all auto traffic for three days last year when air pollution reached the same levels of Beijing and Shanghai. Sales of the Nissan Leaf – now the best-selling electric vehicle in the world – skyrocketed during this period. It’s expected that if emergencies like the one in Paris become commonplace, electric vehicles will be exempted from the ban.

Meanwhile, it appears that electric vehicles are finally taking off in China, which is now the world’s largest auto market. Back in the early 2000s, the Chinese government promised it would have 500,000 EVs on the road by 2011. Officials publicly announced they would be challenging the American industry by then. But as late as 2014, China was selling only 600 EVs a month, at the same time the U.S. was selling 6,000.
All that has reversed over the past year. In December, China sold 27,000 electric vehicles, almost 30 times the number as the previous January, and surpassed the U.S. in monthly sales for the first time. In 2015 China will probably become the world’s largest buyer of EVs.

All this has happened while Tesla was failing in its attempt to break into the Chinese market. The reason is plain: Tesla is marketing a luxury vehicle, something that few Chinese can afford. Meanwhile, the Chinese manufacturers, BYD, Kandi, Chery Zotye and BAIC, are selling no-frills vehicles that can only reach about 35 miles per hour. But such utilitarian vehicles are perfect for Chinese families to buzz around their cities for shopping and short commutes. There is even speculation that the Chinese manufacturers may start marketing their vehicles in the United States, where they would compete with entries such as the Chevy Volt and the Ford Focus. There is even talk that such vehicles may be able to feed off the rise of Uber for short-term ride-sharing in an urban setting.

Tesla’s moment of truth will come with the expected 2017 release of its Model 3, the $35,000 version of its EV, aimed at the average car-buyer. Then we will see if Tesla can really meet its deadlines, and if it can sell its highly stylized car on the mid-market. If it can, Tesla will probably have oodles of customers in both Europe and America, giving it a shot at the 500,000 sales Elon Musk has declared as his 2020 goal.

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Toyota, California go for hydrogen

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California, the home of Elon Musk and his Tesla venture, is about to embark on another technological initiative as well — a car driven entirely by hydrogen.

In late February Toyota began producing and selling the Mirai (the name means “future”), a hydrogen-powered vehicle that will be available in Tokyo this year and go on sale in the U.S. in December. Always conscious of its history and ready to make amends, Toyota made the announcement five years to the day after it testified before Congress about a sudden accelerator problem that caused the company a great deal of embarrassment and led to a recall. “Every Feb. 24, we at Toyota take the opportunity to reflect on the recall crisis, doing everything we can to ensure its lessons do not fade from memory,” company CEO Akio Toyoda said. “For us, that date marks a new start.”

To say that Toyota is being cautious in entering the hydrogen car market would be an understatement. The Mirai won’t even be mass-produced but is being hand-crafted by Japanese workers who are turning out three cars per day. The model will sell for $57,000 in Tokyo and is not designed to take off like a rocket. The company only plans to sell 2,000 individual models in Japan this year. “The Mirai program, especially once all the research and development costs are factored in, is clearly unprofitable at this point, and even selling a few thousand units at $57,500 each is not going to turn the tide,” the Motley Fool’s Alexander MacLennan wrote. “But the Mirai is not about short-term profits; it’s about long-term market advantage through brand acceptance and technological development resulting in better vehicles.” Even Japanese Prime Minister Shinzo Abe got into the act, saying we are headed into a “hydrogen era.”

Right now Toyota’s main rival as an alternative to gasoline will be Elon Musk’s all-electric Tesla Model 3. Musk is not taking the challenge lightly. He has called the hydrogen car “an extremely silly idea” and mocked its fuel cells as “fool cells.”

But Musk might have reason to worry. The Mirai will offer drivers a range of 300 miles and take only three minutes to fill its tank. Tesla’s Model 3, due out in 2017, will offer only a 265-mile range and consume 40 minutes to offer an 80 percent recharge of its batteries. (Ideally, EVs should be recharged overnight.) Of course, the big test will be the availability of refueling stations, and here electric vehicles have a big head start. Tesla already has 393 Supercharging stations nationwide and is building them out as fast as possible.

There are only a dozen hydrogen stations now, all of them in California, as a result of Gov. Arnold Schwarzenegger’s “hydrogen highway” initiative of 2004. But California has seized the gauntlet again and is promising to spend another $20 million in building out the Hydrogen Highway with 28 new stations in the next few years. The Mirai will be initially aimed exclusively at California and its requirements for zero-pollution vehicles, then try to expand to the East Coast as well. Hyundai’s hydrogen-powered Tucson is already being sold in California.

Where Toyota and Tesla have found agreement is in opening up their patents to rivals to try to promote the technology. Musk famously made his EV patents available last year, and now Toyota is doing the same with its hydrogen research. The obvious aim is to get other manufacturers involved in order to increase the demand for fuel outlets. “We think this is a different way to look at the market and collaborate and hopefully with this get a lot more people coming into the game,” Nihar Patel, Toyota’s vice president of North American business strategy, told Forbes.

Still, the switch to hydrogen vehicles has some challenges ahead. Musk’s main criticism — echoed by many others — is that hydrogen fuel is too difficult to handle and transport. Hydrogen is, after all, the smallest molecule and leaks through everything. One of its biggest critics is Joseph Romm, who worked in the Clinton administration promoting the technology and finally became so disillusioned that he wrote a book critical of the technology called The Hype About Hydrogen. Romm is now a senior fellow at the left-leaning Center for American Progress and heads the Climate Progress blog. Another problem with hydrogen, of course, is that it is not available as a free resource but must be manufactured from other resources, principally natural gas. This, of course, requires costs and energy.

Still, hydrogen vehicles have the advantage of producing no air pollution (its exhaust is water vapor) and will be able to reduce the release of carbon into the atmosphere, since the CO2 is easily captured in the reforming process. Overall, hydrogen is likely to be a big plus for the environment.

It also offers car buyers what may be the most important factor in reducing our foreign oil dependence — free choice. It hardly matters if electric vehicles prove to be more popular than hydrogen vehicles or vice versa. The important thing is that they will both be available as alternatives to gasoline-powered cars. They could also open up the door to other alternative fuels: compressed natural gas, E85, and the dark horse of them all, methanol manufactured from natural gas. All these alternatives cannot help but make a dent in our current dependence on foreign oil.