MONEY Autos

So About That Goal of 1 Million Electric Cars by 2015 …

A Tesla Motors Inc. Model S connected to a charger at the Short Hills Mall in Short Hills, New Jersey
A Tesla Motors Inc. Model S connected to a charger at the Short Hills Mall in Short Hills, New Jersey Emile Wamsteker—Bloomberg via Getty Images

In the 2011 State of the Union, President Obama called for 1 million electric plug-in cars to be on American roads by 2015. Well, it's 2015, and we're less than one-third of the way there. What happened?

In Tuesday night’s State of the Union Address, President Obama discussed how “America is number one in oil and gas,” and said that “thanks to lower gas prices and higher fuel standards, the typical family this year should save $750 at the pump.” There was no mention, however, of an automobile-related goal set in the SOTU four years ago, when the president pushed for 1 million electric plug-in vehicles to be purchased by consumers by 2015.

The likely reason for leaving electric cars out of the president’s recent speech is obvious: America is nowhere near reaching that 1 million EV goal. As the Detroit News noted earlier this week, “sales [of electric cars] have been far slower than expected — about 280,000, including 120,000 in 2014,” and that “even with dramatic increases it could take at least four more years to hit the mark.”

It wasn’t supposed to turn out this way. A 2011 Department of Energy report declared the 1 million EV goal “ambitious” and yet “achievable” by 2015, with the help of some conditions:

While it appears that the goal is within reach in terms of production capacity, initial costs and lack of familiarity with the technology could be barriers. For that reason, President Obama has proposed steps to accelerate America’s leadership in electric vehicle deployment, including improvements to existing consumer tax credits, programs to help cities prepare for growing demand for electric vehicles and strong support for research and development.

The report estimated that starting in 2012, GM would be selling 120,000 Chevy Volts annually, and that by 2014, Nissan would be churning out 100,000 plug-in Leafs per year. Even though 2014 was seen as a decent year for the EV market, and quite a good year for the category-leading Leaf, only about 30,000 Leafs sold last year. That was an all-time high, but far short of the goal set a few years beforehand. Meanwhile, consumers bought only 1,490 gas-electric Chevy Volts in December 2014, and fewer than 20,000 in the year as a whole. The fact that Chevy was expected to debut a new Volt in early 2015 is only part of why sales have been anemic.

It’s no sudden surprise that America is coming up way short on the 2015 EV goal. By 2013, Obama and the Energy Department admitted that it wouldn’t happen, even as federal policies promoting EV adoption will run $7.9 billion through 2019, including but not limited to a $7,500 tax credit with each EV purchase.

Among the reasons often cited for lower-than-wished-for EV sales are their limited driving range in between charges and their still high initial costs even after tax credits, as well as vastly improved fuel efficiency in gas-powered cars (even SUVs) and, in recent months, exceptionally cheap gas prices. “The need to transition to electric cars is urgent,” Tesla CEO and EV visionary Elon Musk said in Detroit last week. Based on several years’ worth of sales data, however, consumers apparently aren’t feeling much sense of urgency on the matter.

The 2011 Energy Department report noted that “automobile consumers tend to be risk-averse, preferring well-proven technology,” and that “the performance and cost effectiveness of the early EVs in the market will be a major but unknowable factor in how many EVs are on the road by 2015.” Here we are in 2015, and it sure looks like, by and large, consumers haven’t bought into the cost-effectiveness pitch for EVs, either because they deem the vehicles too pricey, too impractical, or both.

This doesn’t mean that EVs won’t enjoy mainstream success down the road. Gas prices surely aren’t going to stay cheap forever. One former oil industry executive told USA Today that he sees $5 per gallon on the horizon in the near future. At the same time, EVs will keep getting cheaper and more practical for consumers, with the recent introduction of the $30K, 200-mile Chevy Bolt plug-in as a potential game changer in a couple of years. All of which changes the math on the potential purchase of an EV, and makes the prospect of owning one much more cost-effective.

So we’ll get to that 1 million EV goal at some point. It’s just a matter of when—and how much we’ll have to spend to get there.

MONEY Autos

Auto Show’s Most Talked-About Car Is One You Can’t Buy This Year

The Chevrolet Bolt EV concept vehicle
The Chevrolet Bolt EV concept vehicle makes its global debut Monday, January 12, 2015 at the Auto Show in Detroit, Michigan. Jose Juarez—Chevrolet

Probably the most-discussed vehicle at the Detroit Auto Show was the Chevy Bolt, an electric car that can be driven 200 miles on a charge and costs only $30,000. You can't buy one this year, though, or next year either.

The Auto Show kicked off this week with GM’s unveiling of the Chevrolet Bolt, which, despite its “concept car” label is expected to be a reality in the near future—on the market in 2017, most likely. The concept vehicle captured the imagination of many by (theoretically) solving the two big issues that have thus far stopped electric plug-in vehicles from being embraced by the mass market. Today’s plug-ins are either too impractical (driving ranges under 100 miles before the battery needs a charge) or too expensive ($70,000 and up for a Tesla Model S) for the typical household. With a 200-mile range and an asking price anticipated to be around $30,000 (after credits and incentives are factored in), the Bolt has been heralded as a potential mass-market breakthrough.

Here’s what people have been saying about the Bolt:

It’s a game-changer, likely to be a mainstream hit.
“The Bolt EV concept is a game-changing electric vehicle designed for attainability, not exclusivity,” GM CEO Mary Barra said during the model’s unveiling in Detroit this week. “For most people, [the Bolt] can be their everyday drive.”

Some less-biased, non-GM folk seemed to agree that the combination of affordability and expanded driving range before requiring a charge will make the Bolt appealing to the mainstream. “Getting to the 200-mile mark is when you start to see potentially a much wider base of mainstream consumers who aren’t just making short commutes, and don’t just want to be ‘green,'” Kelley Blue Book senior analyst Akshay Anand summed up to the Los Angeles Times. “You are looking at annual sales of 100,000 vehicles,” chimed in John Krafcik of TrueCar.com, a big leap up from the still-niche Nissan Leaf, which at 30,000 units sold in 2014 was America’s best-selling plug-in EV.

Others are more skeptical.
“You have to wonder what the market will be for super-efficient vehicles at a time when oil is around $50 a barrel,” auto industry consultant Jeremy Anwyl said to the Los Angeles Times. The assessment of Wall Street Journal columnist Holman W. Jenkins, Jr., was much rougher, writing that the Bolt is largely the product of automakers being forced by the government to meet fuel-economy mandates down the road, with the result being “cars the public doesn’t want and that can only be sold at a giant loss.”

It’s not very cool looking.
The $70K Tesla Model S became a favorite among auto enthusiasts not because it saves on gas—not only anyway—but because it’s a hot, stylish, high-performance car that’s incredibly fun to drive and show off. The cheaper and more practical Bolt, on the other hand, is expected to drive more like a golf cart, with looks to match. The Associated Press described the bubble-shaped Bolt as looking “like a cross between a Volkswagen Golf and BMW’s electric i3.” “There wasn’t much about it that was fanciful-looking in terms of features and styling,” a Motley Fool post noted.

Tesla doesn’t sound remotely concerned.
Despite headlines presenting the idea that the Bolt would be a “rival” and perhaps “upstage” Elon Musk’s hi-tech plug-in auto brand or even prove to be a “Tesla killer,” Tesla isn’t exactly shaking in its boots. In a released statement that’s the equivalent of a pat on the head of a cute, unthreatening puppy, Musk’s company announced, “Tesla is always supportive of other manufacturers who bring compelling electric vehicles to market … We applaud Chevrolet for introducing the Bolt and are excited to learn more about the product.”

Later, in an Auto Show press conference, Musk said flatly, “I don’t see it as a competitive threat.” The “it” in question is the Bolt, of course. “I’m pleased to see [GM CEO Mary Barra] and GM do it. It seems that [GM] will do something significant with the Bolt, and that’s great.”

Oh, and the name is terrible and might be changed.
Green Car Reports proclaimed that Bolt is a “really terrible name” for Chevy’s new EV. As evidence of the name’s terribleness, the site pointed to quips on social media noting that the name brings to mind the phrase “bucket of bolts,” the unloved old Dodge Colt, and even the 2008 cartoon movie dog named Bolt (voiced by John Travolta). The real problem, however, is that because the letters B and V sound alike when spoken aloud, “Bolt” will be easily confused with its gas-hybrid sister Chevy. “To say that there will be a great deal of confusion at dealerships between the Chevy Bolt and the Chevy Volt would be a gross understatement,” Green Car Reports explained.

The Detroit News reported that while GM likes the idea of linking the electrified Bolt and Volt with names that are alike, the automaker is not committed to keeping it. “The name by itself is very good, but when you put it with Volt you know — is it too confusing for someone? — we’ll find out,” said GM product chief Mark Reuss. “It’s a concept name. End of story.”

MONEY cars

GM Tries to Prove Electric Cars Are Worth the Cost

General Motors hopes the new, all-electric Chevy Bolt will boost electric car sales, which are on the rise but still minimal.

MONEY Autos

Why This Might Be the Beginning of the End for the Toyota Prius

Toyota Prius
Toyota Prius Toyota

A decade ago, the Prius was the industry darling, viewed as the hip, smart choice among green celebrities and budget-conscious commuters alike. Yet in 2014, Prius sales plummeted—and cheap gas is only part of the reason why.

When Toyota released its December 2014 results this week, the automaker highlighted how—like most of the industry—sales have been booming. Toyota sales in the U.S. jumped 12.7% compared with the previous December, and they were up 6.2% for the year as a whole. The announcement also played up the fact that Lexus had its best sales month ever in December; that sales for trucks, SUVs, and the Sienna minivan were all soaring; and that the Camry held bragging rights as America’s best-selling car, a title it’s owned for 13 years running.

What’s just as interesting about the announcement is the car model that’s notably absent: Toyota Prius. The world’s best-selling and best-known hybrid vehicle, the pioneering Prius, is not mentioned in one Toyota 2014 sales press release and is downplayed in another, with only a quick line stating “we sold more than 200,000 Prius for the third consecutive year.”

Understandably, Toyota is trying to accentuate the positive in 2014 sales, so let’s turn to the auto resource site WardsAuto, which states explicitly that the Prius’s 207,372 units sold represents a 11.5% decrease from 2013. USA Today recently called on another sales data source to report that through the first 11 months of 2014, Prius sales were down nearly 16% compared with the prior year. What’s more, according to the Detroit Free Press, overall sales of gas-electric hybrids like the Prius were on pace to fall 9% for the year.

In 2013, gas-electric hybrids accounted for 3.2% of all light vehicle sales in the U.S. Last year, that figure dipped to just 2.8%. This isn’t remotely the trajectory most experts anticipated. A J.D. Power forecast made in 2008, when hybrids were 2.2% of U.S. car sales, predicted that the category would constitute 7% of the market by 2015.

What happened? The short answer is: cheap gas prices. Oil prices have plunged since summer and have just kept on falling. The consensus says that the result will be inexpensive prices at the pump for the indefinite future. According to AAA, the national average for a gallon of regular was $2.20 as of Monday, roughly $1.10 cheaper than one year ago.

The plummeting price of gasoline has surely played a big role in hot sales for SUVs and luxury cars on the one hand (Rolls-Royce had record-high sales), and the struggles of the Prius and hybrids on the other. In December, a Businessweek article argued that with $2 gas being commonplace, the Prius is only viewed as a smart financial choice by drivers “who stink at math.” Researchers factored in the upfront costs of the Prius and a similarly equipped gas-powered Chevy Cruze, and then did the math on how long it would take for the pricier Prius to pay off via savings on fuel. The answer was that with $2 gas prices, you’d have to own the Prius for 28 years to break even compared with the overall costs of the Cruze.

But cheap gas is only part of the reason why Prius sales are on the decline. Karl Brauer, senior director of insights for Kelley Blue Book, explained that “the Prius had a good thing going for several years as the ‘official’ vehicle of the environmentally conscious,” a reputation that was solidified during the 2003 Academy Awards, when dozens of celebrities arrived in chauffeur-driven Priuses. The cachet of the Prius has dissipated in the years since because, among other reasons, its fuel efficiency advantage over the competition has shrunk substantially, and Tesla has emerged as the green car of choice that’s not only environmentally friendly, but stylish and a rip-roaring hoot to drive as well.

“A lot of vehicles today get 40+ miles per gallon and you don’t have to make the sacrifices you do with the Prius,” said Brauer, pointing to the fun-to-drive Volkswagen Golf and the surprisingly spacious and practical Honda Fit as appealing, fuel-efficient alternatives to the Prius. “And the Tesla has hurt the Prius as much as anything else.”

What’s especially interesting is that while low gas prices appear to be a factor in declining sales of the Prius and other hybrids, cheap fuel doesn’t seem to be cutting into sales of some purely electric-powered cars, like the Tesla Model S and the Nissan Leaf.

A recent study conducted on the behalf of NACS, a convenience store and retail fuel association, estimates that each 10¢ drop in gas prices correlates to a 1% decrease in consumers who would consider alternative-fuel vehicles. As of November, for instance, 34% of Americans polled said they would be interested in an all-electric vehicle such as the Nissan Leaf, compared with 55% in April, when gas prices were roughly 90¢ per gallon more expensive.

And yet, curiously, while sales of the Prius and other hybrids have suffered hand in hand with falling gas prices, the Nissan Leaf has had a record year. Nissan sold 3,102 Leafs in December and 30,200 Leafs for all of 2014, up from 2,529 and 22,610, respectively, the year before. Likewise, even though the Model S wasn’t new in 2014 and had a high starting price of around $70,000, Tesla sold about as many of the models last year as it did in 2013 when it was the absolute darling of the industry.

One explanation for why sales of pure electric vehicles haven’t slumped like hybrids is that in certain circles EVs are viewed as superior in terms of environmental friendliness and just plain coolness. Then again, it must be pointed out that even as Prius sales decline, it still outsells the Nissan Leaf by a factor of nearly seven.

A 2016 model year Prius is expected to hit the market this year, and Brauer said that, in light of EVs holding the edge in terms of being the green choice, and vastly improved fuel-efficient mainstream vehicles being the smarter economic option in an era of cheap gas, Toyota faces real challenges getting sales back on the upswing. “They have to make the Prius appealing beyond the green car claims,” he said. “The ‘green’ has to be gravy on top of what’s a fun car to own and drive.”

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MONEY The Economy

$3 Gas Makes Driving Cheaper, but Not Flying

A big drop in fuel prices — sparked by an oversupply of oil — means Americans have been enjoying the prices at the pump.

MONEY Autos

The Price of Hybrid and Electric Cars Is Plummeting. Here’s Why

2012 Toyota Prius
Toyota Prius David Dewhurst

Among the trickle-down effects of cheaper gas prices are lower sales totals for alternative-fuel cars—which in turn have forced automakers to slash prices on these vehicles.

USA Today just reported that Ford is cutting the sticker price of the fully battery-powered plug-in Focus Electric by a flat $6,000. That’s on top of a $4,000 price reduction on the same vehicle a year ago. The new sticker price is $29,995 including shipping—but not including federal tax credits of up to $7,500 and state incentives that might effectively knock another $2,500 off the amount buyers pay.

Obviously, Ford wouldn’t be instituting such dramatic price cuts if the Focus Electric was selling well, and part of the reason sales have been poor is that the model doesn’t stand out in an increasingly crowded field of midlevel-priced plug-ins where the Nissan Leaf, the pioneer in the category, remains the indisputable leader. Another reason for underwhelming sales of the Focus Electric—and for many alternative-fuel cars in general, for that matter—is simply that gas prices have been getting cheaper and cheaper.

According to the AAA Fuel Gauge Report, the national average for a gallon of regular was just under $3.10 on Tuesday, compared with $3.35 a year ago and around $3.70 this past spring. Gas prices for the year as a whole are down slightly compared with 2013, and projections call for continued lower prices in 2015. All of which hurts automakers’ efforts to convince buyers that it’s a savvy move to pay a premium over a standard gas-powered vehicle for a hybrid or electric car right now, with the anticipation that they’d more than make up the difference later on in the form of savings on gas.

To help sales, automakers have been trying mightily to make the difference in price between alternative-fuel cars and their traditional car counterparts disappear. Nissan slashed the price of the Leaf in early 2013, effectively bringing the takeaway price of the vehicle under the $20,000 mark. Leaf sales have been strong throughout 2014, up 23% year over year thus far. Ford Focus Electric sales are up in the U.S. as well, with September units sold up 60% compared with the same month last year. Even so, we’re talking about extremely small numbers: 176 Focus Electrics sold last month, versus only 110 for September 2013.

What’s especially noteworthy is that the combination of lower gas prices and increasingly fuel-efficient internal-combustion engine cars appears to be putting the squeeze in particular on hybrid cars like the Toyota Prius. According to Toyota data, 14,277 Priuses were sold in the U.S. last month, compared with 15,890 for September 2013. For the year thus far, Prius sales are down 11.4% compared with the same period a year ago—and mind you, this slump took place a time when Toyota sales overall are up 5.7%. By far the worst-performing Prius has been the plug-in PHV; only 353 sold in September, a decline of 71% versus the same month a year ago (1,152). As for hybrid sales overall, a total of 31,385 units sold in the U.S. in September 2014, a decrease of 35% from the previous month, and a decline of 6.5% from the same month in 2013.

Bear in mind that the hybrid sales slump has occurred while automakers have gotten more aggressive with discounts. As Automotive News lately noted about the struggles of alternative-fuel cars:

Data from KBB.com show that Toyota boosted Prius incentives to $2,300 per vehicle in September from $1,400 a year ago while Ford ramped up C-Max spiffs to $4,900 from $2,650 per vehicle in the same period; neither move helped sales.

So cheaper gas prices benefit drivers not only in terms of the obvious—cheaper gas prices—but also because they’re forcing automakers to slash prices on hybrids and electric cars that boast savings on gas as a primary sales pitch.

MONEY Autos

The Tesla Model S Won’t Be Out of Your Price Range for Long

Tesla Model S
courtesy of Tesla

The ability to buy a used car is hardly hot news. But we're talking about Tesla here, and how the automaker will soon be selling certified pre-owned versions of the prized Model S for a fraction of the sticker price.

Last week, Tesla CEO Elon Musk tweeted that the company would be making a big announcement on October 9. “About time to unveil the D and something else,” Musk said cryptically. No one is sure about what “the D” is, let alone “something else,” though some have speculated that the former could be a faster all-wheel drive version of the Model S, or perhaps even a Model S with self-driving features.

It’s also unclear if some or all of Musk’s “something else” has anything to do with the company’s forthcoming certified pre-owned (CPO) program, word of which was broken on Monday by Automotive News. Virtually every automaker sells CPO vehicles, which are basically just used cars with the warranty extended beyond the norm by the manufacturer, giving the buyer extra peace of mind compared to the purchase of any old jalopy on a used car lot.

CPO programs are hardly sexy. Yet for Tesla, which roared to success last year with strong sales of the Model S, even as the brand has been out of the question for the vast majority of drivers because the cars can cost in the neighborhood of $100,000, this is pretty big news.

Starting in the spring of 2016, many Model S’s will be three years old, a point at which Musk had guaranteed customers he would buy vehicles back at or near 50% of their original price, should the customer be interested. The expectation is that many early Model S buyers will take Tesla up on its trade-in option (presumably to buy a new Tesla, the automaker hopes). Tesla will service these used vehicles and then resell them at prices probably in the range of $35,000 to $50,000—pricey by used-car standards, but a deal compared to the sticker price of a new Model S, which starts at around $70K.

Anyone buying a CPO Tesla also benefits because it’s being sold directly by the automaker. Though the particulars of the program remain unknown, Tesla will presumably make the purchase less worrisome by including certain warranties. One would hope that includes a guarantee on the strength of the battery, which is essential for an electric car to remain a practical vehicle that can be driven long distances without needing a recharge.

What’s interesting is that by the time Tesla is ready to start selling three-year-old Model S’s for maybe $40,000, it will probably simultaneously be gearing up to sell a brand new model expected to be priced at around $40,000. This past summer, Musk said that the next generation of Teslas, due to be available for sale by around 2017, will sell for around half the price of a current Model S—and could start for as little as $35,000.

MONEY Autos

Why Hybrid and Electric Cars Have Lost Their Spark

2015 Nissan LEAF
To entice buyers to purchase a Leaf, Nissan launched a free charging promotion this past spring, promising new owners access to public charging stations at no cost for two years. Nissan—Wieck

The Nissan Leaf, Chevy Volt, Toyota Prius, BMW i3, and other electrified cars were projected to take over an ever-increasing chunk of the auto market. Only sales have gone flat in 2014. What happened?

At first glance, the electric car market appears to be pretty darn electrified. Tesla just chose Nevada as the site for its $5 billion “gigafactory” to produce batteries needed for EVs, and Tesla shares hit an all-time high this week after the company was praised by analysts. What’s more, Nissan reported that August was the best ever month for sales of its plug-in Leaf, with 3,186 units sold. Sales of BMW’s new plug-in, the i3 were also strong in August—1,025 sold, which just about matches the total of the previous three months combined.

At the same time, however, the overall electrified car market appears to be flat, even in a bit of a slump. Auto sales are booming in general through 2014, and last month reached the highest sales pace since before the Great Recession. Yet hybrids and fully electrified plug-ins haven’t kept pace with the rest of the field. “The whole automobile market has grown,” Edmunds.com analyst Jessica Caldwell explained to the Los Angeles Times. “We’re not seeing electric vehicles as part of that growth.”

According to Edmunds data, through August 2014 hybrids and electric vehicles captured 3.6% of all auto sales this year. For the same period a year ago, hybrid and EV sales represented 3.7% of the overall market. That wouldn’t seem like a big deal except for the fact that for years analysts have been forecasting that hybrid and EV sales would rise steadily, more or less indefinitely—reaching 7% of global auto sales by around 2020.

How can all of this be explained? First off, the increase in sales of the Nissan Leaf is mostly an anomaly. Nissan launched a free charging promotion this past spring, promising new buyers access to public charging stations at no cost for two years as an incentive for the purchase of a Leaf. Local subsidies in states such as Georgia, which provides a $4,000 tax credit for EV purchases and boasts inexpensive electricity to boot, have helped juice sales. (Federal tax credits for plug-in purchases amounting to up to $7,500 off are still around as well.)

Even in Atlanta, however, which has become the #2 urban market for electric cars (after San Francisco), EVs account for only 2.15% of new car registrations. Nationally, EVs constitute only 0.38% of new car registrations. Hybrid vehicles, which are more practical because they run on gas as well as battery power, have regularly sold in far higher numbers than pure electric-powered plug-ins. And sales of many hybrids and non-Leaf EVs aren’t faring well in 2014. MarketWatch reported that through August, sales of the Chevy Volt, Toyota’s plug-in and hybrid Prius, and Honda’s lineup of hybrids and plug-ins were all down at least 10% compared to the same period in 2013. Tesla doesn’t provide sales data, but according to estimates from InsideEVs.com, sales of the Model S totaled approximately 500 and 600 in July and August, respectively, after hitting 1,000 or more monthly from February to June.

What’s been holding sales of hybrid and electric cars back? Reasonably flat, reasonably inexpensive gas prices have certainly played a role. A survey from a couple of years ago indicated that the majority of Americans wouldn’t alter their lifestyles until gas hit $5 per gallon. Not only are we still far off the $5 mark, but prices at the pump have actually been on the decline, recently dipping to the lowest Labor Day gas prices in years.

Edmunds.com’s Caldwell also told MarketWatch that sales of EVs and hybrids may be down because they’re no longer new and novel in the marketplace, and the fascination with owning one is quickly diminishing. “Stable gas prices have a lot to do with it, but there’s also a possibility that the prestige of owning an electric vehicle or hybrid has died down,” she said. “This year may not be able to top last year, which is kind of sad given how well the overall market is performing.”

With the novelty of owning an electrified vehicle disappearing, consumers are left considering the issue as a purer matter of dollars and cents. Hybrids and EVs generally have higher sticker prices than their gas-powered counterparts, so the hurdle electrified cars must clear is convincing drivers that they’re worth the extra money. Lower gas prices obviously mean lower potential cost savings from owning a car that runs on electricity, so the state of gas prices is a strike against EV sales. Traditional gas-powered vehicles have made great strides increasing their fuel economy, which again hurts the argument for opting for an electric-powered car for the purpose of saving money.

Even the improvement in the economy seems to be hurting sales of EVs and hybrids. As the Associated Press noted, consumer demand for SUVs and crossovers has been particularly strong, at least partly because buyers have felt comfortable enough financially to afford larger, pricier vehicles. (The rise in subprime car loans is surely a factor too.) Because so many drivers are interested in SUVs, automakers and car dealerships have felt forced to offer larger-than-usual discounts and incentives on compact and midsize vehicles to convince customers to bite.

And when a gas-powered compact with excellent mileage and no need to ever worry about running out of battery power or finding a recharging station is available at an especially cheap walk-away price, that’s one more reason that many consumer are finding that the math isn’t adding up for the purchase of an electric car.

TIME energy

Electric Cars Will Change the Way You Power Your Home

An electric charging cable is seen connected to the updated Nissan Leaf vehicle during a news conference in Japan, Tokyo, on Tuesday, Nov. 20, 2012.
An electric charging cable is seen connected to the updated Nissan Leaf vehicle during a news conference in Japan, Tokyo, on Tuesday, Nov. 20, 2012. Kiyoshi Ota—Bloomberg/Getty Images

How the homes of the future will generate and store their own electricity, turning your house into a mini-power plant

Electric vehicles are our fastest-growing alternative to oil-derived gasoline. Solar panels are our fastest-growing alternative to coal-powered electricity. They’re both getting less expensive and more effective, driving our clean-energy revolution. And there’s new evidence that these two great tastes can taste particularly great together, transforming how we consume and produce power in ways that will accelerate that green revolution.

The evidence comes from Opower, a firm that uses software and behavioral science to help utilities promote energy conservation — and has amassed the world’s largest storehouse of household energy data along the way. Opower studied the power-consumption habits of about 2,000 plug-in electric-vehicle owners enrolled in “time-of-use” pricing programs. That means they got discounted electricity rates from midnight to 7 a.m., when demand is typically low, but paid a surcharge during peak daytime hours, when demand tends to spike.

Grid managers have to balance supply and demand every second, so big gaps between peak and off-peak demand can create big inefficiencies by forcing them to turn power plants on and off to adjust supply. In theory, the combination of electric vehicles (which can be charged anytime) and time-of-use pricing (which encourages charging after midnight) could help reduce those gaps. It could also help prevent electric vehicles (which alleviate the problem of carbon emissions) from exacerbating the problem of overloaded daytime grids. And that’s basically what the data showed — with a twist.

Opower found that EV owners did respond to the incentives to charge during off-peak hours, using three times as much power as the typical household between midnight and 7 a.m. It’s notoriously tough to get consumers to adjust their behavior, even when it’s in their financial interest, so that’s good news. At first glance, the data from the rest of the day looks like bad news: from 7 a.m. until midnight, EV owners still used 21% more power than the typical household. But this was mainly because they’re richer than the typical household; their houses were bigger and more likely to have a swimming pool. They clearly did the bulk of their vehicle charging after midnight when power was cheap.

The most striking data was from EV owners who also had solar panels. From 7 a.m. to midnight, they used about one-fourth as much power from the grid as the typical household, because they were getting power from their rooftops and often selling power back to the grid. In other words, they took very little from the grid when demand was high — at times even helping to increase supply — and took much more from the grid when demand was low. They helped smooth out demand.

That’s very good news, not only because smoothing out demand is a kind of holy grail for utilities, but because EV owners were 6.6 times more likely to have solar panels than the typical household. Nancy Pfund, a venture capitalist who invested early in Tesla Motors, the hottest EV firm, and Solar City, the leading solar installer, calls EVs “the gateway drug to solar.” Once you stop using hydrocarbons to fuel your car, she says, you want to stop using hydrocarbons, period. “Together, they can be a huge tool for managing our energy load,” Pfund says. “And they’re both taking off.”

Before 2009, when President Obama poured $90 billion into clean energy through his stimulus bill, the U.S. had no EV or solar industry to speak of. It now has nearly 250,000 EVs and nearly 500,000 solar rooftops, and both industries are still growing exponentially; Tesla and Solar City, both Elon Musk ventures, have both enjoyed soaring stock prices since going public. EV battery prices are not yet truly competitive with gasoline, although they’ve dropped 50% in five years, but retail solar prices, which have plunged 80%, are now competitive with fossil fuels in half the country. And the more they’re deployed, the cheaper they’ll get.

EVs are still less than 1% of the U.S. auto fleet, and solar still provides less than 1% of U.S. electricity. In terms of reducing emissions, they are still less significant than hybrid vehicles or wind power or energy-efficient appliances. But they are what the Silicon Valley types like to call “disruptive.” When you put a solar panel on your roof, your home becomes a mini-power plant. When you buy an electric vehicle, you suddenly control an automobile-shaped energy-storage device. It won’t be long before homeowners with both can be mini-utilities, buying power from the grid when it’s cheap and selling power to the grid when it’s expensive. Willett Kempton, a University of Delaware professor, has created electric vehicles that communicate and interact with the grid in real time; they earn about $150 per car per month by storing excess power when the grid gets temporarily overloaded.

That would make the economics of EVs more attractive, accelerating the route to mass adoption. “Net metering” will be similarly important for solar, allowing homeowners to sell power to the grid at attractive prices; as the Opower study demonstrated, time-of-use pricing can also help shape electricity demand. All of this will help create a more flexible, less centralized energy system, incorporating more renewable power without sacrificing reliability when the sun isn’t shining or the wind isn’t blowing, adapting instantaneously to changes in demand and supply with the help of modern information technology and Opower-style Big Data. Our cars (as well as other smart appliances) will optimize their power needs with our utilities, and we can intervene at any time over our iPhones.

You could imagine a future where solar panels and EVs (perhaps with additional backup storage, like the wall-mounted batteries Solar City and Tesla recently launched) help Americans declare independence from the grid, the way mobile phones have set us free from landlines. More likely, though, the clean-energy revolution will just change our relationship to the grid. Our utilities will be as dependent on us as we are dependent on them. And we’ll have power over our power.

TIME

Tesla Opens Its Patents to Everyone

Now any company can use Tesla's technology "in good faith"

Tesla wants to share its secret sauce with everyone.

Telsa CEO Elon Musk said in a blog post Thursday the automaker will not initiate patent lawsuits against anyone using the company’s technology “in good faith.”

Musk said in the post that while Tesla never wanted patents, he originally felt they were necessary to protect Tesla’s technology from misuse by rival car companies. But he’s now come around, and says this theory is wrong.

“The unfortunate reality is the opposite: electric car programs (or programs for any vehicle that doesn’t burn hydrocarbons) at the major manufacturers are small to non-existent, constituting an average of far less than 1% of their total vehicle sales,” he said.

Musk framed the new open source policy as an attempt to speed up efforts to address climate change.

“Given that annual new vehicle production is approaching 100 million per year and the global fleet is approximately 2 billion cars, it is impossible for Tesla to build electric cars fast enough to address the carbon crisis,” Musk said.

He believes that Tesla allowing others to use its technology will increase innovation, and that “the world would all benefit from a common, rapidly-evolving technology platform.” This could also benefit Tesla itself if other companies build charging stations or other products that support Tesla vehicles.

Tesla’s patent policy reversal comes as a surprise, as Tesla has been developing its $5 billion battery factory in recent months and many have thought the company would make much of its money on its battery technology intellectual property.

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