Would A Tesla Meltdown Destroy The Electric Vehicle Brand?

(CARLSBAD) – The Aptera Typ–1 was designed from the ground up as an electric vehicle, and later as an extened range electric. Aptera is a motorcycle manufacturer registered with DOT and Ca DMV. PHOTOGRAPHED FRIDAY DECEMBER 14, 2007 (Photo by Don Kelsen/Los Angeles Times via Getty Images)

Again and again, stories laud the amazing new designs for electric vehicles, including the Aptera, the Solectrica, the Fisker, and the Tesla, and their potential to revolutionize the automobile industry.  Note that three of the four no longer exist, although their failure did not hurt the overall outlook for electric vehicles, especially if you have rose-colored glasses.  But I am reminded of a quote from a Keith Crain, publisher of Automotive News, over two decades ago:  “When I arrived on the automotive scene more than a couple of decades ago, people told me that the electric car was about five years away from production and sale….Today, the electric car is about five years away from production and sale….When I die, the electric car may be five years away from production and sale.”  (Neil Winton, “Carmakers Struggle to Bridge Clean Power Gap,” Reuters, March 6, 1996.)

Well, Keith is still alive and kicking and the electric car seems to finally become produced and sold and in real (not hobbyist) numbers.  Without a doubt, the past failures has not helped the ‘brand’ of electric vehicles, but consumers—at least first adopters—appear to be overlooking them.  And while boosters like RethinkX are suggesting a huge shift to BEVs in the next few years, the uncertainty about their potential remains huge.  Optimistic projections are based on aggressive assumptions about battery (and vehicle) cost trends, and consumer acceptance of an inferior product.

The big questions involve, first, at what point are electric vehicles cheap enough and batteries good enough that consumers will buy them in large numbers without significant financial support from governments, and second, what support can governments be expected to provide over the long term.

There is a very dark scenario (from the point of view of BEV manufacturers), which could be called “Son of the Diesel Oldsmobile”.  The history is telling:

When the diesel-powered GMs made their debut for the 1978 model year, the public was blown away: Here were American full-size sedans that could achieve 30 miles per gallon. The memories of waiting hours in line for fuel were still fresh, and no one seemed to mind that the power figures were pitiful (120 hp, 220 lb-ft), or that the cars were mind-numbingly slow (a typical 0-to-60 time was 16.5 seconds), or that they sounded like they were grinding their own internals to bits.

The diesel Oldsmobile was a one-trick pony:  more fuel efficient, but otherwise seriously flawed.  It was underpowered, hard to start in the cold, and lacking a water-separator, the engines tended to degrade.  By the time the model was cancelled, it had not only become a running joke, but “the diesel's reputation of ‘smoky, smelly and slow’ had been secured.”  While diesel cars thrived in Europe (where diesel was taxed at much lower rates than gasoline), U.S. consumers—and automakers—shied away from it.  Of course, recent revelations about manufacturers cheating on emission tests for diesel cars could destroy the market in Europe as well; just as rain falls on the just and the unjust, so scorn will fall on the clean diesels and the dirty ones.

The failure of the diesel powered passenger vehicle to succeed in the U.S. of course owes much to the fact that taxes on gasoline and diesel are relatively similar here, unlike Europe, where the former is much more heavily taxed.  But there is no doubt that among consumers—and manufacturers—the diesel brand had become negative due to the Oldsmobile’s failure.  Could something similar happen to electric vehicles if, say, Tesla flames out?

Again and again, stories laud the amazing new designs for electric vehicles, including the Aptera, the Solectrica, the Fisker, and the Tesla, and their potential to revolutionize the automobile industry. Note that three of the four no longer exist, although their failure did not hurt the overall outlook for electric vehicles, especially if you have rose-colored glasses. But I am reminded of a quote from a Keith Crain, publisher of Automotive News, over two decades ago: “When I arrived on the automotive scene more than a couple of decades ago, people told me that the electric car was about five years away from production and sale….Today, the electric car is about five years away from production and sale….When I die, the electric car may be five years away from production and sale.” (Neil Winton, “Carmakers Struggle to Bridge Clean Power Gap,” Reuters, March 6, 1996.)

Well, Keith is still alive and kicking and the electric car seems to finally become produced and sold and in real (not hobbyist) numbers. Without a doubt, the past failures has not helped the ‘brand’ of electric vehicles, but consumers—at least first adopters—appear to be overlooking them. And while boosters like RethinkX are suggesting a huge shift to BEVs in the next few years, the uncertainty about their potential remains huge. Optimistic projections are based on aggressive assumptions about battery (and vehicle) cost trends, and consumer acceptance of an inferior product.

There is a very dark scenario (from the point of view of BEV manufacturers), which could be called “Son of the Diesel Oldsmobile”. The history is telling:

The diesel Oldsmobile was a one-trick pony: more fuel efficient, but otherwise seriously flawed. It was underpowered, hard to start in the cold, and lacking a water-separator, the engines tended to degrade. By the time the model was cancelled, it had not only become a running joke, but “the diesel's reputation of ‘smoky, smelly and slow’ had been secured.” While diesel cars thrived in Europe (where diesel was taxed at much lower rates than gasoline), U.S. consumers—and automakers—shied away from it. Of course, recent revelations about manufacturers cheating on emission tests for diesel cars could destroy the market in Europe as well; just as rain falls on the just and the unjust, so scorn will fall on the clean diesels and the dirty ones.

The failure of the diesel powered passenger vehicle to succeed in the U.S. of course owes much to the fact that taxes on gasoline and diesel are relatively similar here, unlike Europe, where the former is much more heavily taxed. But there is no doubt that among consumers—and manufacturers—the diesel brand had become negative due to the Oldsmobile’s failure. Could something similar happen to electric vehicles if, say, Tesla flames out?

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