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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 TomZ on 12/4/2008 4:04:58 PM , Rating: 2
quote:
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?


"What would I do? I'd shut it down and give the money back to the shareholders." -- Michael Dell, after being asked what to do with Apple Computer in 1997














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