About 11 million cars are sold in the U.S. each year. The first two practical and moderately priced plug-in electric cars -- the Chevrolet Volt and Nissan Leaf -- are about to be delivered to the first customers in December. Over the next 12 months (calendar year 2011), Nissan (NSANY) will deliver 20,000 Leafs and Chevrolet about 15,000 units in the U.S. market.
The total of 35,000 cars is less than one-third of one percent of the U.S. car market.
Leaving aside the important distinction that the Chevrolet Volt, made by General Motors (GM), is close to a "no compromise" solution with a back-up gasoline engine that picks up after the first 25 to 50 miles, who will be buying plug-in electric cars out of these 11 million annual U.S. buyers? The debate seems focused, almost subconsciously, on single-car households, and the argument goes that almost all U.S. households won't tolerate the familiar "range anxiety" phenomenon.
Let's for a moment assume the debate is right about single-car households: If you are a one-car household, you will simply not buy an all-electric car. This is where the analysis these days typically stops.But what about multi-car households? In most multi-car households, the second car is driven shorter distances -- to school, shopping, soccer practice and local errands. It is often asserted that a majority of cars are driven less than 60 miles a day. Rarely is the question asked: How many second or third household cars are driven less than 60 miles a day? I would venture to guess close to 99%. In other words, most households only need one car that can go 60 or 100 or more miles a day, while the second car almost never doesn't. This means that as long as all-electric cars can be price-competitive, the demand in the U.S. alone could be 5 million electric cars a year if one assumes that almost half all cars sold in the U.S. are for multi-car households. You only need one car that can handle a longer road trip; the second car is almost always used only locally. Are all-electric cars price-competitive? Thanks to the generosity of your tax-paying neighbors, the Nissan Leaf sees its $33,500 sticker price reduced by $12,500 ($7,500 federal tax credit, plus $5,000 in some states) to $21,000. At that price, it appeals to a majority of second-car buyers.
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