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Electric Cars at a dealership in Los Angeles  (Source: LA Times)
A bright star just months ago, electric car industry goes into dramatic reverse.

In what many will find a surprising turn of events, electric car sales have plummeted this year, plunging the fledgling industry into financial turmoil. Many manufacturers and dealers are cutting back operations; some have shut down entirely. Others are calling for government action to prevent the industry from wholesale collapse.

Many dealers understandably don't want to discuss declining sales. When asked how well their cars were selling, a spokesman for Electric Vehicles, Inc, in Tampa, tersely replied "no comment", and hung up. A dealer in Texas didn't answer the phone at all. Another in California had its number disconnected.

EPower, a retailer selling electric cars in Illinois, Iowa, and Missouri, has only sold two cars in the past three months. President Bruce Wood tells DailyTech that, "while there are a lot of tire kickers", few will actually commit to a purchase.

MCEV, the largest electric car dealer in the Pacific Northwest, has seen sales decline to 1-2 vehicles a month, down 80% from earlier this year. Buzz Duell, General Manager of MCEV, blames not only gas prices, but the economy as a whole. "No one wants to spend money right now", he says. Not only are individual buyers cutting back, but corporate and government sales -- which make up a large percentage of MCEV's revenue -- are also being impacted.

Duell expects a recovery in sales to take at least two years.

Tim Sankey, owner of an electric car distributor in Kansas concurs. "It will take time to build a customer base", he says, "but people haven't forgotten about high gas prices". Sankey hopes for a rebound next year.

Sales declines aren't limited to the U.S. In Britain, sales of electric cars have dropped a shocking 58 percent this year. For the first ten months of 2008, a total of only 156 vehicles were sold in the country -- nearly all of those confined to London itself. The announcement came just two days after the nation's Committee on Climate Change predicted electric car sales would increase substantially this year.

Tesla Motors, maker of the all-electric Tesla Roadster, announced a round job cuts last October, and said that plans for a mass-produced high-volume electric car would be "impacted" by the grim sales outlook.  Rumors suggested job cuts could be up to half the company's work force, a figure Tesla officially denied.

Larry Shriner, Chief Financial Officer of Zenn Motors, an electric car manufacturer based in Canada, says government "needs to get engaged to give the industry some momentum". Shriner doesn't necessarily favor gas price supports, but he says government needs to ensure "people stay focused" on the benefits of electric car technology.

Sales of traditional cars have also declined, but not as sharply. According to tracking company Autodata, sales are down 37 period from the same period last year.

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RE: Strong bet
By quiksilvr on 12/4/2008 3:05:11 PM , Rating: 5
GM, Ford and Chrysler DESERVED WHAT THEY GOT at DC. Their idiotic business tactics crumpled their companies and millions of employees suffered. It's the worst of both worlds: if they get the bailout it's a bastardization against free market. If they DON'T get the bailout, millions of people will be out of work. Blargh.

RE: Strong bet
By FITCamaro on 12/4/08, Rating: 0
RE: Strong bet
By TomZ on 12/4/2008 3:36:14 PM , Rating: 3
So they'll just give it cash without any kind of "why should we give it to you?".
Like they did for the banking and insurance questions asked, no trips to DC, etc.

I also think that people (not you personally FIT) are forgetting that the Big Three are asking for LOANS. The "bailout" word gets used a lot which makes people think that there is a handout going on. It is a LOAN, to be paid back with interest.

RE: Strong bet
By masher2 on 12/4/2008 3:41:39 PM , Rating: 5
Let's not mince words. It's a bailout, which may or may not be ever fully paid back...and even if it is, it will come at a substantial cost to the American taxpayer, due to the generous terms which will almost certainly be granted.

If the automakers could afford normal market rates and didn't appear to be enormous credit risks -- they'd simply get conventional loan financing from private financial markets.

RE: Strong bet
By UNCjigga on 12/4/2008 3:49:40 PM , Rating: 2
It worked when we bailed out Chrysler (the first time, with Iaccoca [sic]).

The problem is, this time around I don't see any Lee Iaccoca's at the Big 3. Especially not when they came to DC, begged for money, but forgot to present a plan. So they flew back on their private jets and had to come up with one...

RE: Strong bet
By masher2 on 12/4/2008 3:54:56 PM , Rating: 5
> "It worked when we bailed out Chrysler (the first time..."

How did it work? Chrysler wound up laying off nearly half its workers, and most of its creditors were forced to accept huge losses on its debts -- the exact same situation as if Chrysler had filed Chapter 11. The only thing the bailout did was save shareholders a bit of money-- and cost the American taxpayers a pretty penny.

Interestingly enough, Chrysler also cut its CEO and executive salaries to nearly nothing (just as the Big 3 are doing today). But after they received the bailout cash, they retroactively awarded executives much of the money they surrendered anyway.

RE: Strong bet
By UNCjigga on 12/5/2008 1:59:11 PM , Rating: 3
I was under the impression that Chrysler paid back the loan ahead of schedule in 1983, and avoiding the stigma was bankruptcy was critical to the K-car selling as well as it did. Am I wrong?

RE: Strong bet
By masher2 on 12/7/2008 12:58:17 PM , Rating: 4
Chrylser did pay the loan off, but they went through a bankruptcy in everything but name. The government forced their creditors to accept pennies on the dollar, and they laid off half their workforce.

One can claim that, by avoiding the word itself, Chrysler benefitted...but that seems far-fetched, given the publicity surrounding the bailout and Chrysler's problems generated far more public awareness than a true bankruptcy ever could have.

RE: Strong bet
By eye smite on 12/5/08, Rating: 0
RE: Strong bet
By thepalinator on 12/6/2008 12:34:59 AM , Rating: 3
Don't start with the stupid "we'd buy higher MPG cars if Detroit sold them" line again. Every time they offered a high mpg car, it sells like crap. Except for last year, their SUV sales were the biggest profit makers they had.

The problems at Ford and GM have nothing to do with SUVs. Nothing at all.

RE: Strong bet
By Spuke on 12/8/2008 4:58:08 PM , Rating: 4
Their problems started WELL before the SUV came online. And I STILL can't figure out how someone can be FORCED to buy something they don't want. I guess that's why trucks have been the number one seller for roughly 30 years. Cause no one wants them.

RE: Strong bet
By eye smite on 12/10/2008 12:54:01 AM , Rating: 2
You're absolutely right, SUV's aren't the problem, and I thought I made that clear in my opening sentence, but let me re-iterate for the reading comprehension challenged such as yourself. The problem is the idiots running the companies. Read that sentence 3 times to make sure you understand it ok.....

There's no reason they can't make large cars and trucks that get better gas mileage than they do today. If you tell me they can't, you've been brainwashed along with the rest of america. Pull your head out of your butt and do your own reserch back to the 80s and see how they've improved gas mileage overseas because of the price they had to pay for gas and the big 3 have done nothing. Or, keep being naive and brainwashed, your choice.

RE: Strong bet
By Suntan on 12/4/2008 3:51:40 PM , Rating: 1
So which financial company has the willingness to loan 34 billion dollars to any individual industry right now? Even if it were to go to top of the line AAA credit companies?

In case you haven’t noticed, banks aren’t lending money all that much right now. Which is one of the main problems.


RE: Strong bet
By masher2 on 12/4/2008 3:58:44 PM , Rating: 2
Actually, the reverse is true. For those corporations with stellar credit ratings, financing isn't a problem. With the stock market in free fall, investors are seeking any safe haven for their funds.

The problem is Ford and GM have credit ratings in the lowest junk level now -- and who wants to buy junk bonds in this economy?

RE: Strong bet
By Suntan on 12/4/2008 8:07:52 PM , Rating: 4
Once again, what lending agency is willing to commit 34 billion to any single industry, even if it is to companies with AAA ratings? What group of lending agencies even?

The idea that credit is easy for corporations to come by if they have good credit ratings is not true, lending is not going on, even to good credit risks. The only thing that is being bought right now are ultra-safe US treasuries.

GE, which has had an ironclad AAA rating forever, and are expected to have revenue of approx 20 billion this year, made news in that they were able to receive 3 billion from Burkshire and they had to give preferred stock with a special 10% dividend to get it. If that's what you call "not a problem," I'd hate for you to be my mortgage underwriter.


RE: Strong bet
By masher2 on 12/4/2008 8:38:46 PM , Rating: 4
> "The only thing that is being bought right now are ultra-safe US treasuries."

Eh? Look at a bond index sometime. Global volume on both corporate bonds and syndicated loans (loans made by consortiums of lenders to large corporations) is down about 50% due to the credit crunch, but volume still runs into the hundreds of billions of dollars per month. AAA-rated corporations have no problem raising money.

GM at junk-bond status now, though. Who will lend them money? Worse, GM has about 5 retired workers on their books for every one actually working. They have some $50B in health care commitments just for retired workers alone -- not to mention a cost structure for union members thats at least $25/hour higher than what Honda and Toyota pay US workers. They also have far too many brands, along with a bloated, ineffecient management structure.

Loaning GM money is just preserving a monument to poor business practices. The best thing for the nation would be a Chapter 11. GM can sell off some peripheral brands, negotiate a reasonable deal with the UAW, and trim the fat off its upper management.

Or they can get a handout, and continue the status quo.

RE: Strong bet
By Suntan on 12/5/2008 9:55:29 AM , Rating: 3
Didn’t think you would ever answer the question I posed, which you initially alluded to as a no-brainer.

My assertion had nothing to do with GM getting financing and everything to do with you saying it would be easy for a company to get that kind-a scratch if they were a good risk. Yet you have nothing to show about anyone (or any group), anywhere being willing to drop that kind of money on any industry right now.

As for your comments about GMs commitments, either you know they aren’t true and are completely happy to lie to your following to make your argument “look” better. Or you’re not as good with your google searches as you would have everyone believe.

Anyway, feel free to keep changing the subject by googling up random information from the net. Seems a lot of people around here are fully taken with the tactic.


RE: Strong bet
By masher2 on 12/5/2008 10:26:46 AM , Rating: 3
> "As for your comments about GMs commitments, either you know they aren’t true and are completely happy to lie "

Eh? It's not a lie. GM indeed has over $50B in health-care commitment costs, a fact well known by all industry observers. Just their cost to fund VEBA their 'independent' employee health care trust fund) is over $30B by itself.

> "you have nothing to show about anyone (or any group), anywhere being willing to drop that kind of money on any industry right now"

This is getting a little silly. Corporations besides GM are raising hundreds of billions of dollars in loans and bonds each and every month. GM's junk-bond status and the widespread knowledge that they're teetering on the edge of bankruptcy is the sole factor that prevents them from tapping into that massive market.

RE: Strong bet
By Suntan on 12/5/2008 1:46:48 PM , Rating: 1
This is getting a little silly.

Agreed. The notion of using sweeping generalities, with extremely tenuous relations to the argument you are actually trying to make is getting old. Too bad it’s the same one you keep going back to.

Anyway, I’m willing to let it die if you are. I guess the horribly general and non specific statement that “companies” are “raising hundreds of billions” will have to suffice for as close as you can get to backing up your claims.

Have a good weekend.


RE: Strong bet
By Ringold on 12/5/2008 4:28:48 PM , Rating: 3
Further up, you seemed to be talking about AAA companies.

If you look down at investment grade bonds, you'll note the lowered yield recently. That means people are buying, and given the vast size of these markets, it means a lot of buying. If people were really unwilling to hold investment grade companies bonds, the yields would be moving higher. Look at the 20 year A-rated bonds; 8.31 a month ago to 6.81 yesterday. There's also probably pensions and some other groups out there that believe in, or are required to, dollar cost average by buying diversified sets of investments every month. That by itself is billions that must be bought continually.

The real issue isn't that people don't want bonds from companies. It's that they don't want the bonds of companies that are not viable.

Also, head over the St. Louis Federal Reserve Bank's databases, pick your credit dataset of choice. Commercial credit continues to inch up.

Thats one example. Non-revolving commercial credit isn't falling; have to look at that, since revolving lines of credit are getting hammered as businesses draw on those lines to protect their bond investors.

RE: Strong bet
By grenableu on 12/5/2008 5:03:41 PM , Rating: 2
non specific statement that “companies” are “raising hundreds of billions” will have to suffice for as close as you can get to backing up your claims.
He told you to look at any of the bond indexes. That takes about 8 seconds on Google. What more do you need, a tattoo on your chest?

My own employer financed almost a billion in bonds this year, and we're a LOT smaller than GM.

RE: Strong bet
By TomZ on 12/4/2008 4:04:58 PM , Rating: 2
Let's not mince words. It's a bailout, which may or may not be ever fully paid back...and even if it is, it will come at a substantial cost to the American taxpayer, due to the generous terms which will almost certainly be granted.

As I understand it, the loans are being requested with the same interest rate as the US government is able to borrow at. So, assuming that the automakers are good for the loans, then it should cost taxpayers pretty close to zero.

I don't know how to estimate the probability of them defaulting on these loans, however.

RE: Strong bet
By Solandri on 12/4/2008 4:53:43 PM , Rating: 3
That's really the point though, isn't it? The Big Three can't get private financing because all the lenders big enough to lend out $billions believe there's a high probability they would default on the loans.

If it were a company with high exposure to mortgage risk (e.g. General Electric), then I could understand the banks being reluctant to loan to them in the current environment. But the Big Three have little exposure to mortgages. The unwillingness to loan to them is a vote of no confidence in their business model.

RE: Strong bet
By SilthDraeth on 12/4/2008 5:35:59 PM , Rating: 2
In defense of Ford, they where only asking for a 9 billion line of credit, "just in case" for financing auto loans etc, for interested purchasers. Ford is not in the same position as the other two.

Not to say Ford isn't having a rough time, and doesn't need to restructure.

RE: Strong bet
By grenableu on 12/4/2008 5:27:42 PM , Rating: 2
I don't think there's ever been a bailout in history that didn't wind up costing the government a pretty penny. But who knows, maybe this will be the one that breaks the mold?

RE: Strong bet
By UppityMatt on 12/4/2008 5:40:32 PM , Rating: 2
Maybe im mistaken, but i thought the federal government actually made like 350 million from loaning that money to Chrysler. And Chrysler paid the loans off early.

In 1983, Chrysler paid off the loans that had been guaranteed by US taxpayers. The Treasury was also $350 million richer.

RE: Strong bet
By masher2 on 12/4/2008 6:02:49 PM , Rating: 2
You're correct; most of that ($314M, to be exact) was due to stock warrants Chrysler granted (they later lobbied Congress to have those revoked, but dropped that bid under public pressure).

Still, the bailout cost money. The prime interest rate at the time was 20% ... and substantially higher if you were a severe credit risk, such as Chrysler was. A 4-year note for $1.2B at those rates would have generated far more than $350M in interest.

RE: Strong bet
By callmeroy on 12/8/2008 10:17:42 AM , Rating: 2
There are some misconceptions or misunderstandings to consider with many of the banks and the bailout....first let's start this discussion with one thing -- I think the banks were wrong in what they did and overall "stupid" as they contributed, not fully, but a large part to their collapse. Now that that's out of the way, what some folks don't realize is that by LAW a mortgage thrift, like the one I used to work for, subject to the approval of the OTS (Office of Theft Supervision)...when the bank is for lack of better terminology "crashing" they don't have a chance to have talks -- its under the will of the OTS. Once they hit a certain state, the OTS, again by law -- tells the bank essentially what they can and what they can't do. In the case of my former employer the board and CEO were essentially tossed aside and the FDIC was appointed by the OTS to run the place.

The second element of this story is what people can't believe is the speed at which some banks went from being well capitalized and folding. This bank failure wasn't normal folks, the the scope of this thing is rather rare. So its kind of hypocritcal to paint with a broad brush -- "see how fast they got bailed out" , I can tell you the bank i worked for was trying everything not to go the bailout route -- they took tons of measures (still I think they were stupid for what brought them there) , it happened so fast -- in about 2 months they went from EXCEEDING government guidelines for well capitialized to imploding on itself.

Not trying to make excuses, and ultimately I think the banks got what they deserved AND the bailout disgusts me though ultimately I don't see what option we had -- 3 car companies can file chapter 11 and maybe 3 - 4 million jobs are at risk, or you can have HUNDREDS of banks filing for chapter 11 and many times more people unemployed than that.

take your pick.

RE: Strong bet
By Samus on 12/6/2008 10:35:15 PM , Rating: 2
It's not the workers faults they work for these CEO's and administrations. To not bail these companies out would be a great injustice to the American manufacturing industry. They need some temporary help, a lot more than the friggin banks did.

RE: Strong bet
By robinthakur on 12/11/2008 7:32:41 AM , Rating: 2
Clearly you don't store your money and savings etc in a Bank then? Also actual Americans don't work at banks just robotic automatons? Just because poor americans in the car industry will be affected, it doesn't make it any more right than bailing out the banks. If the company cannot be run profitably in the free market, then it should fold, or be restructured, period. The Banks were victims of a big mistake in collateralization and paid the price in terms of their freedom to do as they please through semi-nationalisation.

Banks going down completely would negatively affect many more people than the auto industry folding, please keep a sense of perspective. Just look at the CDO market in the aftermath of Lehmans... If we were going to get arsy I could mention how America has virtually bankrupted most of the world through the export and collateralization of its toxic debts but most people know that already. That it happened on the watch of a Republican president who's 'administration' is about as useful as a chocolate teapot is purely the poisoned cherry on top of a festering turd-cake.

RE: Strong bet
By Beenthere on 12/4/08, Rating: -1
RE: Strong bet
By lukasbradley on 12/4/2008 5:10:15 PM , Rating: 4
First, anytime someone states "get the facts" when they are talking about matters of opinion, or worse, predicting future events, drastically undermines their position.

Second, these companies are not going to collapse overnight. They most certainly can go through restructuring and bankruptcy and emerge. The assertion (you'd probably call it a fact) that no American would buy a car from a company in bankruptcy is a ploy. I would buy one. Some are decent vehicles that will have worth even if the company goes away.

Third, even if these companies do literally evaporate in the next three weeks, and there are an additional 5M jobs lost, that would bring the current total of unemployed to 15.1M (Oct 2008 figures), or 9.7%. This is a high figure, but to infer it would be "an unprecedented depression like never seen in history" is preposterous. The unemployment rate during the Great Depression hit around 25%.

Lastly, in the interest of full disclosure, I purchased Ford stock recently.

RE: Strong bet
By grenableu on 12/4/2008 5:29:58 PM , Rating: 2
That "five million lost jobs" figure is total crap, based on the idea that everyone would stop buying, repairing, or servicing their cars entirely, just because some automakers filed bankruptcy.

RE: Strong bet
By Hiawa23 on 12/4/2008 5:42:33 PM , Rating: 5
First of all the U.S. auto industry did not create the economic meltdown.

LOL, they may not have caused it but Toyota & Honda are not about to go under as they faced the same economic conditions. You can make all the excuses you want, but the American companies have made decades of mistakes, especially the legacy costs, & the unions, the gas guzzlers. I don't want anyone to lose their jobs, & I work for Goodyear which supplies tires & various other parts for automobiles, but something has to be done for em. My thing is if you are going to just throw away money at the auto industry then how about give the American cosumer a tax break or something.

What happened to capitalism, or is it up to the government to decide who fails, cause I believe if you have a bad business model, & your company can't support itself as a result you should fail.

RE: Strong bet
By walk2k on 12/4/2008 6:16:34 PM , Rating: 5
Why aren't Toyota or Honda down on thier knees begging for a handout then?

Oh it's not a "bailout", it's just a free loan of billions of dollars with NO requirement for it to EVER be paid back (and most likely never will be).

As for the UAW workers - BOO F'ING HOO you made THAT bed, now you get to crap in it. Go get a job at Toyota or Honda which by the way build cars RIGHT HERE IN THE USA and yet aren't on the verge of total collapse.

Oh yeah sorry, you might have to work for a competitive wage without the ridiculous benefits - welcome to the real world.

RE: Strong bet
By cmdrdredd on 12/4/2008 10:54:33 PM , Rating: 2
Why people would not want to support U.S. jobs with proper bridge loans to the Big Three is incomprehensible. In no way, shape or form are government backed loans, socialism any more than you getting an auto or home loan, is socialism.

I don't support it because the union runs the show. End of discussion.

RE: Strong bet
By thepalinator on 12/6/2008 12:40:53 AM , Rating: 2
How many different threads are you going to past that identical set of non-facts in?

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