Forecast For The Future of Small Plug-In Car Companies: Bleak

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Last month was was a pretty great one for mainstream automakers planning to deliver plug-in vehicles. Publicity a-plenty, state and Federal grants announced, pricing revealed.

The message from Detroit and Japan is clear: If you like it then you shoulda put a plug on it ...

But with so many of the big guns launching plug-in vehicles, what hope do small EV and PHEV companies have in future months?

2011 Chevrolet Volt

2011 Chevrolet Volt

2012 Nissan Leaf, Electric Avenue, 2010 Detroit Auto Show

2012 Nissan Leaf, Electric Avenue, 2010 Detroit Auto Show

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Mitsubishi i-MiEV electric car - side - December 2008

Mitsubishi i-MiEV electric car - side - December 2008

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2010 Toyota Prius Plug-In Hybrid, 2009 Los Angeles Auto Show

2010 Toyota Prius Plug-In Hybrid, 2009 Los Angeles Auto Show

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Within a year, we'll be able to choose among some really impressive plug-in vehicles. Within five years, expect most major manufacturers to be offering some form of plug-in--all with excellent service standard, local garages with fully trained personnel, impressive warranties and perhaps even specialized emergency roadside assistance.

What can the likes of Think, Aptera, Zap!, Reva--and any number of smaller startups eager for a piece of the plug-in pie--do to compete against the big boys who want to rule the kingdom?

In all honesty, not much.

There may be a few exceptions. Tesla Motors have shown themselves to be more than capable thus far, with extensive Venture Capitalist funding, an impressive customer list, and recent wins at the Monte Carlo Alternative Energy Rally.

With significant funding from the U.S. Department of Energy, continuation of the Tesla Roadster through 2012, and the Tesla Model S confirmed, the company should be set for a few years to come.

Fisker appears to be not so much a shoo-in as a squeeze-in. If the company gets their act together--quickly--they stand a chance of getting to the party before all the drinks are gone. But another delay beyond the estimated launch date of September 2010, and all bets could be off.

Smaller companies don't have the prestige of Tesla or Fisker. They've struggled over the past four years to stay on target and on price. We've seen delays, re-specifications and price-hikes from Think, Aptera, Zap!, and Reva, to name just four. Many other smaller companies have ceased to exist altogether.

For those who remain, the pressure is mounting to come up with an affordable vehicle capable of performing as well--if not better--than those offered by Nissan, Mitsubishi, Ford, General Motors, and Toyota.

On paper, no one can realistically expect to compete with companies to whom $750 million or more for development of a single vehicle--the estimated cost to GM of developing the 2011 Chevrolet Volt--is acceptable.

Smaller plug-in vehicle manufacturers can't compete on development funds, and they certainly can't compete on price--unless other factors slip. That might mean sacrifices in speed, safety and, ultimately, desirability.

Worse still, some companies could choose wacky designs that undoubtedly reduce cost or weight, but impact mass-market desirability and practicability.

Of course, there's a reason why so many plug-ins seem to have three wheels. They can be classed as motorcycles in the U.S., which have less stringent safety requirements. Many vehicles from small-scale EV makers are three-wheeled solely to circumvent tough NHSTA safety standards.

It's simple, really: It is no longer economically viable for most smaller plug-in vehicle companies to exist, let alone produce reliable, affordable vehicles that can compete with EVs from the big boys.

Expect those smaller companies to be relegated to the history books, or perhaps the gated communities with private roads that earned some companies (such as Zap!) their first thousand dollars.

Who is killing the small-scale EV companies? The big boys are.

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Comments (17)
  1. Negative negative negative... why even bother writing such a defeatist post? Pathetic!

  2. @Pa
    I don't think it's defeatist to state the obvious. I think it's more pathetic to stick your head in the sand than it is to simply read the writing on the wall.
    Besides, what are you so upset about? Ultimately this is better for the consumer and means there will be more actual EVs out there. That's a big positive, right Pa??
    The main thing the small guys had going for them was the market window before the large players got going. That window is closing fast. The Leaf pricing showed that Nissan is serious about EVs and not just dipping their toes in the water (as BMW is with the Mini E). If a small company targeting the "low end" like Coda Automotive, for example, can't offer a car that competes with the Leaf on price, quality, or availability, what chance do they have left? Add to that the brand familiarity and established dealer/support network that Nissan offers, and the choice of the sensible consumer is obvious.
    Tesla and Fisker may have to adjust strategy as well by staying focused on up-scale market. Though, they too are feeling pressure and may have a hard time if GM decided to move forward with the Converj or if Nissan offers an Infiniti EV.

  3. I seriously doubt this analysis. How many of our biggest companies of the last 10, 20, or 30 years are on top now? Remember when IBM and ATT were the top blue chips?
    Electric cars are basically very simple. Almost any shade tree mechanic could build one if he had access to a decent battery. My guess is that in the future, cars will go the way of computers, assembled from standardized parts produced by competing manufacturers. None of the top computer makers today make their own parts, they just assemble them - you can do it yourself. Moreover with electric cars, except for tires and brakes, there is virtually no maintenance and repair needed based on the experience of electric cars now on the road. There is no need for big companies to manufacture them.

  4. @Pa - İ always get a laugh from comments like yours - it does not fit your desires so you scoff at the article as negative! This is one of the more stupid green positions people who have no idea what they are talking about take.
    İ am positive that the little guys will be gone with the wind. Virtually none of them has a business plan beyond 'Lets collect some cash and build a car' - that is the easy part - then comes sales, service, dealer network, guarantee work.

  5. The truth is it doesn't take 750 million dollars to develop an electric vehicle. GM spent that much because they want to build a car that "proves" the old way of designing and building cars is still viable. Tesla proved you don't have to spend that much. While all the crash testing requirements these days adds hundreds of millions of dollars to the development of any car, the actual design and production doesn't have to be anywhere near that. But along the same path Tesla also showed that $250 million barely gets you into production. So any car startup in American probably needs at least $350 million to start up a full production vehicle. So as long as you make it a 3-wheeler, you don't have to spend all that money on crash testing. Making a production car is not a cheap proposition no matter how you try to do it.

  6. @Desertstraw. It's a very interesting thought you have there. Yes, anyone can convert a car to electric with a fairly simple set of tools. And yes, anyone could theoretically build one. But do you really expect anyone putting together a car from scratch with decent safety measures? Converting an existing car is one thing - starting from scratch something altogether far more complex.
    I can see people modifying electric cars in the future, but certainly not making them themselves.

  7. @Pa - No. This isn't a negative post for negativity's sake. It's an honest pondering on the state of the EV industry. I'm an EV advocate - and I'd love to see these smaller companies make it work. But it's nigh-on-impossible to get a small EV company to beat a major automaker. Five years ago, when they major automakers weren't bothered about EVs - it was easy. But now it's the big thing? They haven't got a chance unless they hold patents or techniques the big boys don't have. Economies of scale see that the big car companies will always win on the Price/quality scale.
    Brand loyalty is a big issue. As is safety concerns. While many on the bleeding edge may be happy with lesser safety features of a three-wheeled "motorbike" - what of the average consumer? For them, they want something with a good pedigree, something with low depreciation, good service and rated safety. Not one of the smaller companies out there can compete with the likes of Nissan, Mitsubishi, Ford or GM on these. It's sad, but a fact.
    In all honesty, I think the smaller EV firms will survive if they are so good at what they do that the larger auto firms either take them over, or buy technology from them on licence. That's happened before...

  8. It all boils down to Safety and the cost of safety. Yes, anyone can assemble a car (like a computer) however you don’t have to worry about your computer being T boned by a SUV. My wife will let me drive around our little ones in a Nissan Leaf because of Nissan’s proven track record and high investment in safety. Crash tests, six airbags etc…and at a price we can afford.
    I would never even think about putting them into the back of a car that was not held to the same stringent safety requirements….

  9. I would lump GEM into the same group. I think these vehicles will still serve a purpose. As for Coda and the others, Nikki is probably right. The only one I will miss is Aptera. On the other hand, I would not spend my own $30,000 on an Aptera if I could buy a LEAF.
    Perhaps other people have learned, what I have learned over the last few years looking at EVs. It is very difficult to get an affordable car on the market. This is a very capital intensive business.

  10. I agree. They're toast. Next case.

  11. I disagree with the analysis. The major players will continue to drag their feet until and unless bev's become a wild success story. And if they do, by that point venture capital ought to be flowing once again.
    (And if they don't become wildy successful it's all moot, in'it?)

  12. It is only a big deal if you're gonna miss one of these smaller players in the all-electric getup. And I won't miss any of them that much.
    Pass the almond mocha ice cream.

  13. It goes without saying that the small EV startups dont have the resources that say, GM has. The current auto-cartel is a taxpayer subsidized job creation program that has been running for about a century now. GM's deep pockets come courtesy of N. American taxpayers, not from any technical or financial ability on GM's part. Anyone of us here could produce dirty over-engineered cludgy ICE vehicles if we had an unlimited tap on public funds and N.A. politicians in our hip pockets. The start-ups im sure realized how stacked the system is against newcomeers, but I think they deserve credit(where due) for trying anyhow. A lot of people here seem to have forgotten the very companies they are cheerleading for now have suppressed EV;s for decades, built dangerous,cars wreck the enviroment and have (mostly) done it on the taxpayers dime to boot. Gm, toyota and all the other innovation-hindering corporations are the one that should be put out to pasture...

  14. Let me go even further. What are the chances of a 40 thousand dollar hybrid when government yanks the 7500 incentive? Nil. But take the 32K leaf and remove the cost of the battery, making it a battary-swap vehicle and a 20K car, then you'll see them flying off the lots.

  15. Two points--first, I'm sitting within two miles of a major auto plant that just got shut down that's got city, state and federal dollars behind getting someone to buy the property and do something with it. (Not a unique situation, surely.) It's an investor's market.
    Second--how difficult is it to change a hybrid (which all the majors have) into a phev or a pure bev? Oh sorry, forgot we need some "unobtainium." Time to get blue!

  16. Look at history - the only successful new startups in the auto industry in the last 15 years are supercar makers (Spyker, Koenigsegg, etc.), TESLA (will hopefully stay viable thru Model S launch and become established niche player), and the Chinese OEM's. Even the Indian OEM's have been around awhile (Tata, Mahindra, etc.). Not only is product development VERY capital intensive, but the thing most of these GreenDreamers forget about (and which is probably MOST important to the Customer) is the Distribution Network. History is littered with great, innovative products created by genius inventors who could not launch a company to build & sell the product, so either it dies, is copied, or is bought out by a big, established competitor. WHO was the last automaker to enter the USA and build a distribution channel from scratch? (Yugo, Hyundai/Kia, Subaru, Mazda) It's not easy, costs money and takes a lot of time plus very aggressive, deep pocketed entrepreneurs (aka car dealers) to make it successful. Electric car market is not nearly lucrative enough to support all the players... survival of the fittest would indicate the big automakers will crush the little guys fairly quickly.....

  17. Let me go even further. What are the chances of a 40 thousand dollar hybrid when government yanks the 7500 incentive? Nil.

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