Electric Puzzlement (Craig Douglass On Consumers)

Some time ago we brought you a prediction about an Apple car, a car whose functions would be managed essentially through an Apple operating system, powered by rechargeable electric battery packs. The Apple car has not yet appeared. But the rapid development and marketing of all-electric cars, accelerating in the wake of a plethora of plug-in hybrids, is changing consumer acceptance of the future-is-now concept. It is reality.

We’d still predict that we will one day see an Apple car, and we’re looking forward to it. We predict further that consumer adoption of all-electric vehicles will thrive under this well-known worldwide brand.

The first electric car, using a non-rechargeable battery, was built in Scotland in 1837. And in 1859 France, the rechargeable battery was invented and put to use. When the internal combustion engine came along, it easily replaced electrics because of the much longer range and refueling ease associated with liquid hydrocarbons through refined gasoline.

The story of the 1970s, the oil embargo and exploding gas prices in the United States, with long lines at the pump, spurred a renewed look at domestic renewable power, alternative fuels and experimental electric cars. The eventual settling of gas prices slowed progress.

One would think that today, because oil prices are low and look to remain low for some time, equaling pump affordability, ongoing development of electric vehicles would be effectively stifled. Not so. There are now more than 30 all-electric or plug-in hybrids on the market and more coming on line in the next two years.

Why the seeming incongruity of supply and demand? Consumer research indicates the Great Recession, which began in December 2007 and officially ended in June 2009, instilled in the American consumer a lasting frugality. That prudent approach to essentials began with consumer purchasing choices, which evolved into a mindset reinforced by repetitive cost-saving shopping. The action created the attitude, and the attitude created the pattern. The attitude persists. This notion has been fortified by the abundance of domestic oil supplies, pointing toward hoped-for energy independence. Consumer experience at the pump has created the perception that America can provide for itself, and so to ensure the feeling of self-sufficiency, we all seem to be perpetuating the saving mentality rather than falling back into old spending habits. Thus electric cars are continuing to find an ever-growing place in the inventory of motor vehicles.

Back to consumer choice.

Oil consumption is up a bit the past two years, because prices are low. However, overall consumption in the next five years may well decline precipitously and ahead of projections. The reason is improved efficiencies of traditional vehicles and the aforementioned 30-plus models of electric cars and plug-in hybrids now on the market.

The range of styles, performance and prices is eye-popping. At the practical end, it includes the Chevy Bolt (not Volt), which gets 200 MPGe (miles per gallon gasoline equivalent) and lists for $37,500, the Nissan Leaf at 107 MPGe and $29,000, and the Chevy Volt plug-in hybrid, getting 53 miles per combination of electric and gas and listing at $34,000. And it moves up to the impractical Porsche 918 Spyder for $845,000, odographing at 12 miles per combination power.

But one statistic is a standout: On March 31, Tesla started accepting reservations for its Tesla Model 3 all-electric sedan, which has a 215-mile range on one charge. There have now been more than 373,000 would-be Tesla owners who have paid a $1,000 reservation fee to have the opportunity at the end of 2017 to buy a new $35,000 Model 3.

So if production can keep up with demand — to be determined — by 2018 there will be more than a third of a million electric Teslas beginning to join other alternative-fueled vehicles on the American byways, including bus and truck fleets converting to natural gas.

If you think our highways, roads, streets and bridges (the construction and maintenance of which are funded primarily by gas taxes) are fair to poor now, just wait until gas consumption falls even dramatically lower. Advancing technology will exacerbate the current highway-funding crisis. Change as a good thing? Probably. But how we maintain the important energy economy, which primarily funds infrastructure needs, becomes a real puzzlement.

Craig Douglass of Little Rock is an advertising agency owner and marketing and research consultant. He also is executive director of the Arkansas Good Roads Foundation. Email him at Craig@CraigDouglass.com.