Why the Electric Car Failed

At the end of the day, marketing can't make consumers buy a car they don't want.

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2011 Chevy Volt

Michael Lynch is the president and director of global petroleum service at Strategic Energy & Economic Research.

On opposite pages of October 3's Wall Street Journal are two related yet opposing stories. The first noted that U.S. automakers are thriving, the other that the CEO and founder of an electric vehicle maker was ousted in the midst of poor performance.  He was described as having made overly aggressive "sales predictions and rollout timetables," all the while receiving glowing support from many in the media and politics.

I'm shocked, but in the way Claude Rains was shocked in Casablanca to discover that Rick's Café hosted gambling. Skeptics like myself have often found our voices drowned out by happy talk about satisfied customers, innovative entrepreneurs, and a revolution in transportation. But as in so many of the "new" energy technologies, these were usually long on hype and short on solid analysis. 

[See a collection of political cartoons on energy policy.]

Consider. An electric vehicle costs nearly $20,000 more than a similar conventional gas car, takes hours to recharge, and has a limited—and uncertain—range. All in return for lowering energy costs by about half and emissions by about one-third, making them a particularly expensive way to reduce pollution.

How do electric vehicle proponents respond? Well, money isn't everything, you don't need to have a car available all the time, and most people don't really drive that far very often. These evasions alone should be a huge red flag: Nobody ever promotes a product that is much more expensive and performs much poorer than existing products by arguing, effectively, that consumers don't care.

Rationalizing away problems does not work in the real world.  Electric car proponents often resort to claims of conspiracy or, more commonly, blame it on advertising, or the lack thereof. Consumers, the theory goes, are blinded by advertising to want silly things like comfort, availability, low costs, and good performance. If only GM had used gorgeous models to sell their first electric car, the Impact, it would have been successful, according to one talking head in Who Killed the Electric Car?

[Photo Gallery: Cars Unveiled at the New York Auto Show]

This kind of argument is common amongst activists of many types, but it often boils down to an effort to explain away differences in people's preferences from what the activists would choose for them. True, many beer commercials seem to be selling sexual attractiveness rather than taste, but given that beer apparently predates civilization, it is hard to attribute desire for beer to Madison Avenue's blandishments. 

Consumer preference is, to some extent, subjective but it is foolish to argue that it is "wrong," or swayed from the optimal product by advertising. A failure to recognize this is a major blind spot in many environmentalists arguments, covered up by relying on euphemisms, like "consumer surveys show 'interest' in electric vehicles," that are at best misleading.  I'm interested in Ferraris, but don't picture myself buying one any time soon. 

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