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Why Electric Cars Are Selling in California: They're Free

Stocks in this article: GM GOOG NSANY TSLA



It should be pointed out that in my example above, I used the Chevy Spark.  I could have used a Nissan Leaf, where the base price is close to $28,000, and dealers typically offer a discount.  You could also buy a more expensive car -- a $75,000 Tesla, for example -- and pay the difference.

I recently spent four days at the Detroit Auto Show, held in America's car capital.  While driving in and around Motor City for four days, I saw a grand total of one (1) electric car, except for those belonging to the big local auto makers such as GM and Ford.

Compared to Silicon Valley, it was like rewinding the clock by six years.

Over the same four days in Silicon Valley, you would see so many thousands of plug-in electric cars that you would never be able to count them.  It's like visiting a completely different country. 

I'm not saying that one is better or worse than the other; just that the difference couldn't be more stark: Total electric car dominance, vs. essentially none at all.

Yes, I know there are other reasons that sales of electric cars are higher in California in general, and Silicon Valley in particular.

  1. Tesla is located in Silicon Valley.  Many people simply buy the locally engineered and manufactured car.  This is highly understandable.

  2. The weather is mild and ideal for electric cars.  With "range anxiety" still an issue for most electric cars, the ability to squeeze an extra 25 miles out of your electric car is a huge deal.

  3. The California government mandates sales of them!  There's nothing like forcing a product upon the people.

  4. Lots of greenie-weenies.  However irrational, there are millions of Californians who are brainwashed into believing that they are saving the trees or something by buying an electric car.  Hey, the one thing we know for sure is that they cure noise pollution.

  5. Love of new technology!  Without a doubt, electric cars are a fantastic new technology in terms of offering a superior driving experience.  Just like SSDs replaced HDDs in computers (and subsequently in tablets and smartphones to the tune of 100%), buying a car that's silent and has 95% fewer moving parts is extremely attractive, particularly to tech enthusiasts.

However, when all is said and done, getting a free car, with free fuel, is likely the strongest reason why sales of electric cars in California are through the roof -- unlike in almost all of the rest of the country and the world. 

Follow the money!

At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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