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January 20, 2016

Obama 1m EVs target missed by 60%

President Obama's lofty goal of getting 1m plug-in electric cars on US roads by 2015, set back in 2008, with petrol prices averaging nearly US$4 a gallon, has been missed by about 600,000 units, a media report said.

President Obama's lofty goal of getting 1m plug-in electric cars on US roads by 2015, set back in 2008, with petrol prices averaging nearly US$4 a gallon, has been missed by about 600,000 units, a media report said.

Despite billions of dollars in EV subsidies for consumers and the industry, but with petrol prices now near $2 a gallon, only about 400,000 electric cars have been sold, Reuters reported. Last year, sales fell 6% over the previous year, to about 115,000, despite the industry offering about 30 plug-in models, often at deep discounts.

Ford CEO Mark Fields said last week EVs "are a difficult sell at $2 a gallon", the report noted.

Plug-in vehicles accounted for fewer than 1% of the 17.4m cars and trucks sold in the US last year, according to data from HybridCars.com and Baum & Associates, a Michigan-based market research firm.

That doesn't include sales of more mainstream petrol-electric hybrids such as the Toyota Prius. But hybrid sales also fell last year – by 15%, to 384,000 – and now comprise just 2.2% of all vehicle sales.

Reuters noted that, in his State of the Union Address last week, Obama didn't specifically address electric vehicles but said: "We've got to accelerate the transition away from old, dirtier energy sources."

The newly launched Chevy Bolt promises a breakthrough on high costs and short range with a 200-mile range and a price starting at about $30,000 – after government incentives. But that is still steep compared to increasingly efficient petrol-powered economy cars that can sell for less than $20,000.

"If gasoline was $8 a gallon, consumers would amortise the costs of an electric vehicle pretty quickly," former GM vice chairman Bob Lutz, who headed up the development of the original Chevy Volt, a pioneering plug-in hybrid, told Reuters. "But at $1.50 a gallon, who is going to be willing to pay an $8,000 or $10,000 premium?"

Nonetheless, the US industry is moving ahead with EV development for a number of reasons. Many states, led by California, have imposed zero-emission vehicle mandates. California has set an ambitious goal to have 1.5m such vehicles on its roads by 2025. The state accounts for about 40% of all electric car sales, but only about 120,000 of the 31m automobiles on California roads as of a year ago were zero-emission vehicles.

Many automakers worry that consumers will perceive them as technologically backward if they don't build electric cars – even if they can't yet sell them in large numbers. The industry is also responding to an influx of state and federal cash and related mandates.

Consumers can get a federal tax credit of up to $7,500 for buying electric vehicles and plug-in hybrids. The Obama administration has repeatedly proposed boosting the credit to $10,000.

Carlos Ghosn, CEO of Nissan – which saw sales of its electric Leaf fall by 43% in 2015 – told Reuters at the Detroit show automakers are ramping up EV offerings because of increasingly strict government mandates.

"Everybody came to the conclusion that there's no way we can meet the emission regulation in the future" without selling zero-emission vehicles, he said. "This is not going to be an easy shift."

Volkswagen has touted plans to introduce 20 more plug-in vehicles by 2020.

GM chairman and CEO Mary Barra has said she is convinced that customers want EVs and that gas prices won't stay low forever.

"Long-term electrification is part of the solution," she said at the show.

Lutz, the former GM executive, says automakers have no choice but to build them. Because of government mandates, he said, "Electric vehicles are going to have to be crammed in the market at way below what it costs to make them."

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