TIME Companies

How Google Almost Bought Tesla

Tesla Model S vehicles parked outside a car dealership in Shanghai on March 17, 2015.
Johannes Eisele—AFP/Getty Images Tesla Model S vehicles parked outside a car dealership in Shanghai on March 17, 2015.

Tesla was almost acquired as it approached bankruptcy

Tesla Motors is flying high these days, with a backlog of orders for its Model S electric car and a stock price above $200. But two years ago, the company was reportedly in such dire straits that it was nearly sold to Google.

An excerpt of an upcoming biography of Tesla CEO Elon Musk published by Bloomberg explains that Musk was on the verge of selling his unprofitable electric car company to Google early in 2013. Musk and Google CEO Larry Page are old friends, and Musk was able to work out some very favorable terms for the deal—Tesla would sell for $6 billion, Google would bankroll an extra $5 billion in capital expenditures for factory expansions and Musk would remain at the helm of Tesla for as long as eight years.

According to Bloomberg, the deal would have ensured that Tesla remained an independent brand until it produced an electric car that appealed to the mainstream market.

Spokespeople for Google and Tesla did not immediately respond to a request for comment.

When the two companies were close to inking the deal, Model S sales finally began to take off, and Tesla squeaked out an $11 million profit in the first quarter of 2013. No longer fearing bankruptcy, Musk called off the deal with Google.

The two tech firms may soon be adversaries as Google expands its own ambitions in the world of driverless electric cars.

TIME Autos

How Silicon Valley Suddenly Fell in Love With Cars

Tesla Model S.
Tesla Tesla's battery makes it cleaner than gas-guzzling alternatives—but think about what else it's made of.

The last great remaining American preoccupation tech hasn't yet tackled is the automobile. That's about to change

“The American really loves nothing but his automobile,” Gavin Stevens says in Faulkner’s Intruder in the Dust. “Because the automobile has become our national sex symbol.” Given that longtime infatuation, you’d think Silicon Valley’s tech companies would have been eager to get into the auto industry before now. Instead, many are surprised that it’s happening at all.

Ever since the personal computer became mainstream, Silicon Valley has been inventing or reinventing new gadgets: the music player, the phone, the computer itself, first as a portable, now as a tablet. Amazon remade the shopping mall and put it on a screen. Netflix and YouTube subverted the TV set, and now Google’s Nest is going after other household appliances. This year, Apple is reworking the wristwatch, casting tech as jewelry.

The last great remaining American preoccupation that tech hasn’t yet tackled is the automobile. Much of this has to do with logistics–selling phones or music players is child’s play next to the expensive, highly regulated business of manufacturing cars–but there’s also a historical mindset at work. Detroit, with its combustion engines and metallic gears, was the epitome of an analog era that Silicon Valley displaced. The car was an anachronism, however beloved.

No longer. Google has been working on self-driving cars for a number of years. Uber has started looking into them as well. Now, according to the ever-churning Apple rumor mill, the Cupertino giant is working on a stealth car project. For tech companies, the automobile has gone from a super-sized docket to park a smartphone while you drive to a gadget that can be reimagined from the ground up with digital technology.

The sudden shift is happening for a few reasons. First, with PCs, tablets and smartphone markets close to saturation, tech giants are looking for new markets to invade with their innovations. Second, the car market seems ripe for a makeover. American automakers like GM may be reviving post-financial crisis, but the U.S. looks to have reached “peak driving:” Annual miles driven per person is down 9% from 1995, and even more among young drivers.

But the biggest single reason tech suddenly loves the car is Tesla. The company founded by Elon Musk in 2003 to make electric cars has become much more: It has fused the automaker with the tech company, and not only built a cultural bridge between Detroit and Silicon Valley but showed that both were converging toward each other.

Tesla was a wake-up call to automakers that had grown complacent about innovation. It showed that technology was a powerful way to differentiate a particular model from the herd, and that if automakers wanted to reach out to younger consumers, they should embrace the kinds of technology they enjoy. Soon, you began to hear auto executives talk about “smarter cars” and roadways as “connected networks” structured like the Internet (15 years ago, that simile ran mostly in the opposite direction).

Read more: How Apple Is Invading Our Bodies

Google CEO Larry Page has said his interest in driverless cars stems from the inefficiency of roadways, which not only cost lives but waste worker time in traffic jams. (It doesn’t hurt, either, that driverless cars could offer commuters more opportunity to look at Google ads.) Uber is also researching self-driving cars to lower costs for its passenger service as well as a planned delivery service.

The loudest buzz surrounds Project Titan, a rumored Apple car that in reality could be pretty much anything: an electric vehicle, a leased minivan, a driverless car, a ploy to acquire Tesla, a bluff to pressure automakers into putting its CarPlay software in their vehicles, or a clever Apple hoax trolling Apple rumor-mongers. Wall Street analysts, though, think an Apple car is the likely bet, and if so the marriage of Detroit and Silicon Valley is a matter of time.

If nothing else, Apple’s rumored entry into automobiles seems to have turned up the heat. Last week, Musk said Tesla would start offering “autopilot” technology in its cars this summer. Google said its more ambitious driverless-car system would be ready for broad consumption in five years.

But the dark-horse in this new race may be Samsung, which according to Thomson Reuters has “has the largest and broadest collection of patents in the automotive field including a very large interest in batteries and fuel cells for next generation vehicles.” If automobile technology boils down to a patent race, Samsung may end up having an edge. Samsung even has some history in car manufacturing.

The end goal of these tech aspirations in the automotive industry may well be partnerships with established manufacturers. After all, what company is dying to break into a low-margin heavy industry? Many auto executives scoff at the idea that jumping from smartphones to cars is good idea. They may be surprised. Cars are just another form of technology, albeit one in need of an upgrade. And who is better positioned to upgrade them Apple or Google?

TIME Innovation

Tesla’s New Software Will Help Drivers Avoid Running Out of Juice

Preview Day Two At The 2014 Paris Motor Show
Simon Dawson—Bloomberg / Getty Images The driver's electronic dashboard sits illuminated inside a Tesla Model S automobile, produced by Tesla Motors Inc., at the Paris Motor Show on the final preview day in Paris, France, on Friday, Oct. 3, 2014.

The 'range assurance app' will keep track of cars' distance from charging stations

Tesla CEO Elon Musk unveiled a new app Thursday for the company’s all-electric cars that will help drivers keep their vehicles charged.

The new range assurance software will use maps and sensors to warn drivers before their car gets too far from a charging station to arrive using its current energy reserves. Every 30 seconds, the car will check energy usage against the amount of energy needed to get to the nearest charging station.

“This makes it effectively impossible for the driver of the model S to run out of range unintentionally,” said Musk at a press conference. “The car will actually double check. You’ll have to say, ‘Yes, I’m sure,’ twice, before you actually run out of range.”

The app will be released as an “over-the-air” software update for all Tesla Model S vehicles. The update will also include a Trip Planner that will guide drivers to the most convenient charging stations, factoring in a range of energy-sapping variables, including wind speed and mountainous passes.

This new update comes after Tesla recently improved the acceleration time on the high-end Tesla Model S P85D through a similar software update. Musk said Thursday that Tesla will continue to improve its cars’ sensitivity to their surrounding environment through quarterly software updates.

“We’re kind of waking up the car, if you will, and increasing its capabilities over time,” he said.

Tesla shares slipped by roughly 1.6% following the announcement, deflating a brief speculative surge of buying in the days leading up to the press conference.

 

TIME Innovation

Five Best Ideas of the Day: March 12

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

1. Protecting whistleblowers protects national security.

By Mike German at the Brennan Center for Justice

2. Could we treat pain by switching off the region of the brain controlling that feeling?

By the University of Oxford

3. Small businesses are booming in China, and it might save their economy.

By Steven Butler and Ben Halder in Ozy

4. Not so fast: Apps using Apple’s new health technology could require FDA approval. That doesn’t come quick.

By Jonathan M. Gitlin in Ars Technica

5. We might feel better about driving electric cars, but they’re still not good for the environment.

By Bobby Magill in Quartz

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

TIME Ideas hosts the world's leading voices, providing commentary and expertise on the most compelling events in news, society, and culture. We welcome outside contributions. To submit a piece, email ideas@time.com.

MONEY Autos

For Electric Cars, High Gas Prices Can’t Come Back Quickly Enough

2015 NIssan LEAF
Nissan—Wieck 2015 NIssan LEAF

Gas prices have rebounded a bit, but they remain low enough to kill the cost-saving argument for buying a plug-in electric car like the Nissan Leaf or Chevy Volt.

Thanks to the dramatic decline in prices at the pump, the average American household is expected to spend $750 less on gas in 2015 than it did last year. We’ve already seen how some of this “saved” money is being spent, what with restaurants, casinos, hotels, and recreational activities all seeing a bump in business lately. Cheap gas seems to have affected big-ticket purchase decisions as well, exhibited most obviously by the spike in SUV and luxury car sales.

It’s an entirely different story, however, when it comes to the impact of cheap gas on electric cars such as the Nissan Leaf. Nissan just released its February numbers, and sales for the brand were up 1.1% compared with last year. Sales of the all-electric Leaf, however, were down 16%. That follows on the heels of a 15% decrease in January, the first such sales decline for the Leaf in two years. Overall Leaf sales dropped from 2,677 for the first two months of 2014 to 2,268 this year.

The recent sales performance of the Chevrolet Volt, the gas-electric pioneer that has been vying with the Leaf for the title of most popular plug-in among buyers, has been even worse. January was the worst month for the Volt since August 2011, with only 592 units sold, a decrease of 41% compared with January 2014. According to General Motors data, 693 Volts sold in February 2015, a drop of 43% compared with 1,210 the year before.

Surely, the prospect of new Chevy plug-in models has hurt Volt sales lately. The all-electric Chevy Bolt, expected to cost $30,000 and get 200 miles on a single charge, is planned to hit the market in 2017, while the 2016 Volt should be available for purchase during the second half of 2015. Many would-be Volt buyers are simply waiting for the newer model, which can be driven 50 miles on electric power, up from 38 miles for the current one.

That explains some—but not all—of the decline in Volt sales. Certainly, cheap gas prices have done damage to sales of the Volt as well as the Leaf, other plug-in vehicles, and even hybrids like the Toyota Prius to boot. After all, one of the big reasons to buy an electrified vehicle is that powering it is cheaper than filling up at the pump. Consequently, when the price of gas plummets, like it did month after month for nearly half a year recently, a prime argument for going the plug-in route is weakened.

It isn’t just new plug-in models that have taken a beating thanks to a combination of cheaper gas prices and emerging new tech that makes older models seem outdated in a hurry. According to the Wall Street Journal, the resale value of used electric cars has absolutely tanked:

In December and January, for instance, the average selling price of a 2012 Nissan Leaf at auction was about $10,000, nearly a quarter of the car’s original list price and down $4,700 from a year earlier, according to NADA’s guide. Three-year-old Volts, a plug-in car with a backup gasoline motor, were selling for an average $13,000 at auction in January, down from about $40,000 excluding the federal tax credit.

Nissan is coming off of the best-ever year for any plug-in, with Leaf sales in the U.S. topping 30,000 in 2014. The way things have started in 2015, it will be difficult for the automaker to beat last year, though Nissan has blamed bad weather for the Leaf’s recent struggles, and it expects a strong rebound in the spring. Meanwhile, at the start of 2014, Nissan CEO Carlos Ghosn said he anticipated selling an average of 3,000 Leafs monthly that year, and 4,000 Leaf purchases monthly sometime in the near future.

Recent sales notwithstanding, Nissan isn’t giving up on electric cars anytime soon. Neither are many other automakers. At the auto show in Geneva this week, BMW, Volkswagen, and Fiat Chrysler were among the car companies showing off high-tech battery-powered vehicles that demonstrate their commitment to electrified cars.

At some point, rising gas prices will likely steer more interest back to alternative-fuel cars too. But that hasn’t happened yet. “Gas prices inched back up this month, but it didn’t appear to have much impact on shoppers’ choices,” Edmunds.com senior analyst Jessica Caldwell said in a report focused on February sales. “We’re still seeing a strong market for trucks and SUVs—especially compact crossover SUVs, which continue to ride an impressive wave of popularity.”

At least if the Leaf and Volt are struggling, Nissan and GM can take solace in the fact that some of their larger, less fuel-efficient and less environmentally friendly siblings are faring quite well during this winter of cheap gas, cold temperatures, and lots of snow. Two Nissan SUVs, the Pathfinder and Rogue, had record sales months in February, while GM pickup sales were up 37% for the month.

 

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

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

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 Autos

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 Toyota Prius

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.

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