Will ethanol E85 catch on in the US? Will we Live Green and Go Yellow?

snakeweasel · June 2006

Clearly, the consumer doesn't agree with you, or else they'd be clamoring for these cars.

The consumer will not clamor for something that isn't there. Since the consumer doesn't have much of a choice in accepting it or rejecting it at this time you cannot say that they will not accept it if available.

socala4 · June 2006

The highlights are that his company is developing a battery that can power a 5 person sedan for 300 miles on a single charge and completely recharge in 6 minutes. This battery is supposed to have a lifespan of 15+ years. Sounds a lot more promising than growing 100's of millions of acres of corn.

Sounds great, but there has been so much hype for so long coming from the electric car contingent that they are going need to have some products that actually work as promised before gaining bragging rights. There has been talk for decades about this technology, but we have yet to reach a point where it actually makes sense.

The whole idea of distilling corn for ethanol seems like a leap back in time from a technological point of view.

And I'd say that herein lies a part of the problem. The solutions do not necessarily require some radical technological shift to be made to work. Again, no solution can work unless (a) consumers are willing to use it, (b) it can be priced appropriately, (c) the technology and accompanying fuel can be mass produced and (d) the technology and its fuel can be distributed.

Remember Betamax and VHS? Betamax was a better format, but because VHS gained much wider distribution (JVC licensed it to all comers, while Sony tried to maintain a monopoly over Betamax), it wiped the superior technology off the map. What killed Betamax was not the product, but that the video rental stores were consuming money and shelf space by offering both products, and preferred to settle on the format that had wider adoption, which gave the edge to the cheaper VHS machines. And since consumers were really buying the machines largely for the "software" (the tapes that they could rent), that killed off the product with lower penetration.

There are similar dynamics here. You need to think about how the fuel is going to be distributed, and who will bother trying to profit from it. The current infrastructure is built around distributing liquid fuels, not current, and you had better figure out a way to work with the current system or else go around it and find some competitors to replace it.

socala4 · June 2006

Since the consumer doesn't have much of a choice in accepting it or rejecting it at this time you cannot say that they will not accept it if available

Do you honestly believe that consumers are going to hate stopping for fuel every 8 days instead of 10, yet be thrilled to have a car that can only go 50 miles or so at a time before requiring several hours of charging? Sorry, but I can't see how one would loathe the former, while welcoming the latter.

snakeweasel · June 2006

Do you honestly believe that consumers are going to hate stopping for fuel every 8 days instead of 10, yet be thrilled to have a car that can only go 50 miles or so at a time before requiring several hours of charging?

Again, how much difficult is it to plug in a car when you park it in your garage. Doing that 4 to 7 times a week is far less time consuming and troublesome than stopping at a gas station and filling up once a week. Again you are comparing apples to oranges

socala4 · June 2006

Again, how much difficult is it to plug in a car when you park it in your garage. Doing that 4 to 7 times a week is far less time consuming and troublesome than stopping at a gas station and filling up once a week.

Consumers have that option now, and they aren't exercising it. Automakers would be pumping these things out by the boatload if people would be content with overnight charging as a refueling option, but the lack of demand tells you that something is missing from the current equation. And in this case, that missing ingredient is the need to confine one's driving to the very limited range and long charging time of these cars.

tpe · June 2006

I'm not sure why you keep throwing around this 50 mile limit when the EVs made by GM, Toyota, and Nissan all could go 100+ miles in 2000 on NiMH batteries. The EV1 got 225 miles on a single charge during the Tour de Sol of 2000.

but we have yet to reach a point where it actually makes sense.

Define making sense. Does it currently make sense to put ethanol in your tank? How much sense would it make without farm subsidies? If you are basing your current opinion on future potential then how far in the future are you looking? In 10 years we still won't be able to produce enough ethanol to satisfy 10% or our needs so you must be looking farther ahead than that. Given this time frame for something to "make sense", I'll bet on EVs.

Clearly you are not a big proponent of EVs much like I don't believe that ethanol is any part of a solution. I would just like for our government to spend an equal amount on both so that we end up with the best approach not the most politically attractive.

socala4 · June 2006

I'm not sure why you keep throwing around this 50 mile limit when the EVs made by GM, Toyota, and Nissan all could go 100+ miles in 2000 on NiMH batteries.

Because on a bad day, the range is that low. And unfortunately, you have to live with the car on both good and bad days.

Clearly you are not a big proponent of EVs much like I don't believe that ethanol is any part of a solution

I'm not hung up on any one given answer, and I'd welcome anything that works.

Based upon what exists today, it strikes me that electric cars are the furthest away from ever making headway. That being said, none of these technologies is optimal just yet, otherwise we'd be using them now. They all have some serious deficiencies, and none of them is ready to go.

tpe · June 2006

Automakers would be pumping these things out by the boatload if people would be content with overnight charging as a refueling option,

Why do you think that? If that was the case then why did GM and Toyota discontinue making EVs when they sold/leased every one that they produced and a 2+ year backlog of pre-orders?

tpe · June 2006

Because on a bad day, the range is that low.

I'm starting to think that you really don't know what you're talking about when it comes to EVs. What is a bad day? Stop and go driving? I don't think so, that is where an EV thrives due to its regenerative braking capabilities. Much like the current hybrids post mpg ratings that are roughly the same regardless of city or hwy miles.

socala4 · June 2006

If that was the case then why did GM and Toyota discontinue making EVs when they sold/leased every one that they produced and a 2+ year backlog of pre-orders?

GM leased 800 EV1's over a period of several years. Last year, GM sold 4.5 million vehicles in the US alone.

If the EV-1 had been a drop in the bucket, it would have been many, many times larger than it was. You can't possibly claim that these were popular cars.

socala4 · June 2006

According to Wikipedia, the range of the NiMH batteries was 75-150 miles and included a 6-8 hour recharge time. The first generation had a range of 55-95 miles and required 5.5-6 hours to recharge.

Does that sound like a compelling value proposition to the average US commuter and soccer mom? Obviously it isn't, otherwise people would be asking for these cars. Care to explain why they aren't?

gagrice · June 2006

otherwise people would be asking for these cars. Care to explain why they aren't?

People were begging GM to sell the EV-1. They were begging Toyota to sell the RAV4 EV. GM did not want the warranty responsibility of the EV-1. Toyota gave in and sold what they had made. Also they were only for the CA market where they were mandated. There we are again with the government screwing things up. If the Electric vehicles had progressed in a reasonable fashion they would not have had the trauma and rejection they are now suffering from. A car that can plug in over night and give 100+ miles per day service is more than adequate for 90% of the population. I would welcome them. You can say they are suffering from the same fate that the diesel cars suffer from. Too much government involvement in business. Current demand for the few diesel offerings is a good example of what they would sell like if we were all given the opportunity to buy them. Name me one gas car you can buy new and sell 13 months later for $2500 profit. That was the amount I made selling a 2005 Passat diesel Wagon. I could have sold a dozen at that price.

socala4 · June 2006

During the time that GM leased 800 EV-1's, it sold perhaps 16+ million vehicles in the US.

I'm sorry, but the EV-1's are numerous decimal points to the wrong side of 1% of total sales. They were not popular, not by a long shot.

A car that can plug in over night and give 100+ miles per day service is more than adequate for 90% of the population.

If that was true, then they'd be on your local sales lot. But they aren't, because manufacturers are generally going to avoid targeting a market that doesn't exist. They would have to create the market from scratch, and they clearly don't think it's worth it.

One reason that you can't plug a Prius into a wall socket is because Toyota did NOT want to have the Prius associated with electric cars. (It would have been a bad marketing move to associate its technology with a technology that consumers do not desire.) That alone should tell you something about the lack of demand.

That was the amount I made selling a 2005 Passat diesel Wagon. I could have sold a dozen at that price.

You should share your sales secrets with VW. Obviously, they can't sell more of them, otherwise they would producing more of them.

tpe · June 2006

Does that sound like a compelling value proposition to the average US commuter and soccer mom? Obviously it isn't, otherwise people would be asking for these cars. Care to explain why they aren't?

There are people asking for them. At least the informed people are. Over 90% of all trips are under 70 miles. The average person drives 38 miles per day. Most households have more than one vehicle for the rare occasion they need greater range. The average person's car is parked in his garage far more than 6 hours a night and probably also parked at his work for longer than that. So re-charge time isn't much of an issue. Battery technology has advanced in the last 5 years since GM stopped producing the EV1 so range would be greater.

GM sold or leased every EV1 that they produced with a long waiting list of people that wanted them. At the point the manufacturer is unwilling to meet demand you can no longer cite sales numbers as being reflective of demand. What if Honda decided to only build 1000 Accords next year. Now the next year they killed the line because of low sales.

I have read "off the record" quotes from Honda and Toyota representatives where they state that their business model is built around the ICE. As far as they're concerned EVs are a disruptive technology and they have no intention of promoting them regardless of what the public wants. I think that if and when we see viable EVs on the market place it won't be from one of the current, established major auto-manufacturers but rather a 2nd tier manufacturer like Subaru or Mitsubishi and maybe new players from China or India. While Honda and Toyota were disruptive to the status quo in the 70s and 80s they have now become the status quo.

socala4 · June 2006

Over 90% of all trips are under 70 miles. The average person drives 38 miles per day.

This alone should tell you that the cars in their current form don't work. You want the average consumer to drive the thing every day until it's practically running on fumes? (OK, so it doesn't generate fumes, but you know what I mean...) You have allowed for almost no change in routine or room for error, which means that sometimes we're just going to get stuck for hours at a time. That's horribly impractical, and not of interest to the marketplace.

For the cars to make sense to the average consumer, they need to have a fairly long range, be refueled quickly and have a wide number of refueling points. The cars don't have the range, they require numerous hours to recharge, and there aren't many places where one can stop to pick up fuel. (Lots of outlets, but not many that we're permitted to actually use.) These cars simply won't work unless you address these core problems.

tpe · June 2006

One reason that you can't plug a Prius into a wall socket is because Toyota did NOT want to have the Prius associated with electric cars. (It would have been a bad marketing move to associate its technology with a technology that consumers do not desire.)

Okay, a Prius gains it's mileage advantage through the use of batteries and electric motors. The buyers of these vehicles know this and apparently have a high social conscious because they are willing to pay a price premium that can't be made up through the gas savings. So you're saying that for these people the ability to plug in and save even more gas would have resulted in such an aversive association with electric vehicles that it would have hurt sales. I don't buy it.

socala4 · June 2006

So you're saying that for these people the ability to plug in and save even more gas would have resulted in such an aversive association with electric vehicles that it would have hurt sales.

Absolutely. Electric cars aren't just unpopular, they have a stigma attached to them as a siren song built on false promises, except when powering something cutesy like a golf cart. This may change, but as of now, Toyota needs to deal with market reality.

Again -- if the market wanted it in its present form, it would be here now. The market doesn't want it, for the reasons that I've stated. You need to accept reality, and understand that the product must change to meet the demands of the consumer, not the other way around.

socala4 · June 2006

OK so the automaker slightly expands the size of the fuel tank, that means I can go even further using regular fuel, right? Either way you are stopping for fuel more times than with E85.

I think that you missed my point. The overall issue is one of convenience, i.e. will the consumer be so annoyed by refueling more often that it will affect his purchase choices?

I believe that the answer to that will vary based upon degree. If the consumer had to refuel every ten minutes, that's clearly impractical, but is the difference between, for example, once per week versus twice per week going to matter to most people?

I'd speculate that it won't, because fuel stations are abundant, it's relatively easy and painless to do, and the process just takes a few minutes. If fuel stations were few and far between, if getting fuel was a nasty experience, or if refueling took a long time, I could see the few additional stops posing a difficult barrier, but since it is easy to find fuel and a fill-up takes perhaps five minutes, it's not a big deal. An extra five minutes per week isn't going to influence the purchase decisions of many people, particularly given that they are already accustomed to the routine. And if there was a cost savings associated with the more frequently needed of the two choices, that would further encourage trading time for the occasional extra fill-up.

tpe · June 2006

I've read a lot about the EV1's history in California and here is a pretty typical story. A wife would badger her husband into getting one as their second car. The husband would agree so as to placate his "tree hugging" wife with the condition that he doesn't have to drive this "glorified golf cart". Well at some point he decides to try it and when he finds out it accelerates like a Corvette suddenly you can't keep him out of it. My point is that a lot of people are throwing out opinions on EVs based on misinformation or lack of information.

Speaking of Corvettes I read a quote from a retired GM exec who said that he felt that they could have sold as many EV1s as Corvettes.

gagrice · June 2006

Obviously, they can't sell more of them

VW diesels are selling very well, in fact all the dealers can get. You are overlooking one small detail. They are not allowed to be sold in the biggest market CA. That makes them a big premium when the Odometer reaches 7501 miles. There is a dealer in Orange County that sells VW diesels exclusively. The going price for a used Passat diesel Wagon loaded today is $32k. I sold mine too cheap at $29k.

Another vehicle with a very limited range is the Honda Civic GX. If you check around there are very few commercial CNG refueling places. Yet that car sells very well with only a 180 mile range. Many are installing a unit to refill the tank over night. I think the limiting factor on Electric Vehicles today is not the range. It is the cost of batteries. If the cost ever comes down you will see electric vehicles everywhere. For example the RAV4 EV was selling for $40k. Not very cheap. That was the limiting factor not the range.

socala4 · June 2006

Speaking of Corvettes I read a quote from a retired GM exec who said that he felt that they could have sold as many EV1s as Corvettes.

GM delivers about as many Corvettes in one week as it leased EV-1's for the entire life of the program.

Again, not many people want a car that has a limited range. Do you think a person who gets antsy when the needle gets to one-quarter or one-half of a tank of gas is going to want a car that has just a few miles worth of juice in it at the end of their commute? Those people have more range in their cars when they stop to refill than the EV1 had when it was fully recharged.

800 EV-1's, in a market where more than one million cars are sold each month. Compare those two figures before you start believing that electric cars were a big hit with the public.

socala4 · June 2006

VW diesels are selling very well, in fact all the dealers can get.

Less than 3% of US new vehicles sales are of vehicles that run on diesel. That means about 97% are using gas.

If the cost ever comes down you will see electric vehicles everywhere.

The cost would come down if they built more of them. (Economies of scale would come into play.)

But they aren't building more of them. Why? Because the scale won't match the demand. There is no demand (or at least not nearly enough to matter).

tpe · June 2006

The people that would know the best as to whether an EV1 could meet their needs would be the people that drove them. At the end of their leases these people almost universally wanted to buy them outright. They weren't allowed to.

There seems to be a little disconnect here in what I am saying and what you are comprehending. You continually cite the 800 EV1s leased as an indication of demand. That is all GM made. So the sales figure can't be higher than that. Now if these cars were sitting on dealers lots for extended periods to the point where the dealer had to basically give them away then that might be a good indicator of limited demand. That's not the case. They were all pre-sold.

I read an article written by an actress that was one of the first EV1 leasees. At the end of her lease she asked to buy the car. The request was declined. In fact GM charged her a substantial fee for some door dings. They then hauled the vehicle to some desert in AZ and crushed it. That's what they did with all of the EV1s that came off lease. Why did GM care about the dings?

snakeweasel · June 2006

I think that you missed my point.

No I got your point, you didn't get mine. If they can provide a larger fuel tank to expand the range using E85 then it expands the range of the same car using regular gas.

I'd speculate that it won't, because fuel stations are abundant,

Fuel stations are, E85 stations are not. FWIW I don't know about you but I would rather not make more trips to the gas station than I need to.

fireball1 · June 2006

More news on your best friend and mine, Archer-Daniels-Midland:

10th most toxic U.S. air polluter is taxpayer-subsidized ethanol giant ADM

The world's biggest ethanol producer, Archer Daniels Midland ("Supermarket to the World") recorded a 2002 U.S. toxic air release of 12.4 million lbs.
-- From "THE TOXIC 100: Top Corporate Air Polluters in the United States," as posted on this May 11, 2006 University of Massachusetts site: http://www.umass.edu/peri/programs/development/toxic100table.htm
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No. 10 in toxic air pollution, ADM ranks higher than Dow Chemical Co. (No. 11) and Exelon Corp. (No. 83), the largest U.S. nuclear plant operator.
"The Toxic 100 informs consumers and shareholders which large corporations release the most toxic pollutants into our air," says James K. Boyce, director of PERI's environment program. "We measure not just how many pounds of pollutants are released, but which are the most toxic and how many people are at risk. People have a right to know about toxic hazards to which they are exposed. Legislators need to understand the effects of pollution on their constituents."
-- From "TOP CORPORATE AIR POLLUTERS NAMED" at: http://www.umass.edu/peri/programs/development/toxic100press.htm
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"The Archer Daniels Midland Corporation (ADM) has been the most prominent recipient of corporate welfare in recent U.S. history ... ADM has cost the American economy billions of dollars since 1980 and has indirectly cost Americans tens of billions of dollars in higher prices and higher taxes over that same period. At least 43 percent of ADM's annual profits are from products heavily subsidized or protected by the American government. Moreover, every $1 of profits earned by ADM's corn sweetener operation costs consumers $10, and every $1 of profits earned by its ethanol operation costs taxpayers $30."
-- From "Archer Daniels Midland: A Case Study In Corporate Welfare," by James Bovard, at this Cato Institute site: http://www.cato.org/pubs/pas/pa-241.html

I am not a Cato Institute adherent (too conservative), but they can recognize when a corporation is bilking the American taxpayer.

gagrice · June 2006

The cost would come down if they built more of them.

I guess we just have to disagree. I do not see batteries for electronic devices of which millions are sold coming down. I paid more for a laptop battery this year than last. It was the very same battery for the same laptop. Batteries are expensive to build one or a million. That is the limiting factor on electric vehicles. It was a big factor on GM pulling the plug on the EV-1 project. That and CARB pulling the mandate in favor of hybrids.

I have said the Prius is losing its momentum on sales because it has sold fewer this year than last. Hybrid proponents say it is because Toyota is building less than the demand. You say that would not happen. That car makers build what people want to buy. I say they build what makes them the most money. Then they build cars to satisfy CAFE, EPA & CARB only to the extent they have to. AS those are not the money makers.

I believe there is a big demand for electric cars and diesel cars that are not being addressed by the automakers. The only reason that GM & Ford are touting their FFVs is to take pressure off the fact that they are not keeping up with the rest of the automakers high mileage vehicle sales.

Right today, now, an electric vehicle would be more practical for me than a FFV. I have a spare outlet I could plug it into at night. Then my daily trip to the grocery store, Home Depot and the farmer's market would cost me pennies instead of a couple dollars worth of gas. The guys that sit on the Ford or GM board of directors will see that I have a gas car that takes care of his buddies on the board at Exxon or ADM. That is the way it works here. And the lobbyists in Washington see to it with mandates.

fireball1 · June 2006

I'm certainly not an authority, but Ed Wallace's columns have, I think, fit the peg in the pegboard pretty good. He's done his research. It is more than "anecdotes," I think. If you are referring to the CorpWatch indictment of ADM, geez, I don't need anyone telling me how that corporation works. I find it somewhat amusing that farm commodity groups are jumping in the air cheerleading fo corn ethanol, all the while not admitting that ADM (and Cargill and others) are beating them to the punch and sapping the ethanol profits from the rural folks to the big corps. That may be a strong indicator of where this issue goes: Will ethanol really, really benefit the struggling farmers who need help the most, or will it end up as another increase in the corporate paycheck, sometimes at the expense of our family farmers. Certainly this is an energy issue, but the way it's being played out in Midwestern states like Iowa and Nebraska, it's a critical issue for farmers, rural communities and their very existence. Once that falls through, and once politicians and others see that ethanol is not propping up most farmers and most rural communities, ethanol -- at least the kind made from subsidized corn -- will have to survive on its own, without subsidies and tax breaks.

socala4 · June 2006

If they can provide a larger fuel tank to expand the range using E85 then it expands the range of the same car using regular gas.

I understand that. My point to you is that the average consumer may not care about making an additional fuel stop every couple of weeks to buy E85, particularly if it had a cost advantage.

You presume that everyone is using the number of fillups required for gas as some sort of benchmark, and that anything that exceeds that level becomes problematic for the customer.

My point is that the process of buying fuel is easy enough that a lot of people probably won't care about this alleged advantage. (You and Tpe care, obviously, but I doubt that many consumers share your concern.) And in any case, the need to recharge a car every fifty miles would convey a much greater burden than this supposed disadvantage related to ethanol.

heel2toe · June 2006

You really should stop claiming that there is no demand for diesel vehicles. The roadblock today is regulatory and depends on the completion of the ULSD switchover. No automaker has wanted to invest in 45 state technology that the EPA is phasing out, so there has been no real product development...until now.

My wife and I are in the process of purchasing a 2006 Jetta TDI. Assuming that automakers can get the emissions scrubbing right (and Honda is in the process of building a brand-new engine plant on this basis, so I'd assume they think they can), I'd bet a lot of money that Americans are going to *love* diesel vehicles in a few years.

socala4 · June 2006

The people that would know the best as to whether an EV1 could meet their needs would be the people that drove them. At the end of their leases these people almost universally wanted to buy them outright. They weren't allowed to.

800 customers reflect the general tastes of the US auto market?

Come now, you know how off the mark that is. GM sells 11,000 GTO's in a single year, yet most of us recognize that it was a commercial flop.

The EV-1 was not a car that many people would want. The automakers would be rushing to market with the next generation if they thought they could make money from it. God knows, GM could use a hit right now...

tpe · June 2006

800 customers reflect the general tastes of the US auto market?

First off, GM produce 1,100 EV1s, they leased 800. You keep bringing up this number as if it reflects the demand. Is that what you believe? Do believe that there were only 800 people in this country that wanted an EV1? I keep pointing out the fact that there was a several year waiting list for EV1s despite the fact that GM spent almost no money marketing them. Isn't this an indication that maybe there was a greater demand? Who knows what it would have been but the one thing that is abundantly clear is it exceded 800 vehicles. If you keep bringing up this number as being representative of actual demand I can only conclude you don't posess the ability to grasp simple concepts.

Auto manufacturers have demonstrated over time a willingness to produce limited production, image vehicles. These cars aren't meant to make a profit but rather have value as a marketing tool. Acura never made a profit off the NSX and I doubt Chrysler profited from the Viper. The demand for EVs in the late 90s into the next century exceded what the auto manufacturers were willing to produce. This was prior to $3/gallon gas. GM, Ford, Toyota, Nissan, et al invested well over $1 billion dollars developing these cars. Wouldn't it enhance their image to at least keep producing a handful of them? I think it would.

You shouldn't speak of the US consumer as if they share a common mind, clearly they don't. There are people buying Hummers and people buying Honda Insights with most buying somewhere in between. A 100+ mile EV that was priced in line with a Camry or Accord would appeal to at least 20% of the market. Some company will eventually step in and meet that demand. The rest will be forced to play catch-up like the Big 3 did in the 80s.

gagrice · June 2006

may not care about making an additional fuel stop every couple of weeks to buy E85, particularly if it had a cost advantage.

No place including Iowa and MN does it have a cost advantage. It goes up with the price of oil. It takes lots of oil to make ethanol. It takes lots of natural gas to make fertilizer to grow corn to make ethanol. Currently the best case difference is in MN where they cut the tax on E85 to give it a boost. Even with a tax break it is the same price as unleaded regular. It would have to be $2.02 per gallon to break even. Not counting the extra miles to find a station that sells the stuff. Here are the latest price comparisons from one of the E85 websites.

E85 Price: 2.89
Station Name: Cenex convenience store
Station City: St. Cloud, MN
Unleaded Price: 2.89
Date: Wednesday, June 14, 2006

E85 Price: 3.359
Station Name: CITGO
Station City: Arlington, VA
Unleaded Price: 2.999
Date: Wednesday, June 14, 2006

socala4 · June 2006

No place including Iowa and MN does it [ethanol] have a cost advantage.

I never claimed that it did. What I have said that IF ethanol had a cost advantage, then it might be adopted.

Obviously, that isn't true today. As I've stated, if the status quo remained as is, then I suspect that E85 will fail. I suspect that there will have to be a fairly significant price advantage as compared to regular gas (at least something close to parity on a net-net basis when factoring in the loss of fuel economy) for E85 usage to become popularlized. That will require higher gas prices, lower cost biomass, more efficient production, subsidies, or a combination of these.

socala4 · June 2006

I have said the Prius is losing its momentum on sales because it has sold fewer this year than last. Hybrid proponents say it is because Toyota is building less than the demand. You say that would not happen.

Aside from the fact that I've not once commented on that specific point, you have been corrected numerous times on your factual error.

Sales of the Prius declined because Toyota is busy adding hybrid technology across other cars within its line, such as the Camry and Lexus GS. Creating hybrid versions of those cars has taken away resources to build Priuses.

If anything, this shows that the Toyota multi-tiered marketing strategy is working. The Prius is a niche fringe car, with odd styling that screams out that it is different. Now, Toyota is putting hybrid technology in both its flagship sports sedan and its bread-and-butter Everyman car. Toyota is moving on from the "innovator" tastemakers who comprise the leading edge of the market to the more conventional purchaser. Meanwhile, inventories of the Prius remain scarce (below 10 days, if memory serves) and prices remain high, all signs that this thing is a hit.

socala4 · June 2006

You keep bringing up this number as if it reflects the demand. Is that what you believe?

I don't know if the precise demand figure is 800. It might be 1,000, or 2,000 or even 5,000. I don't have data on that.

But we do know this -- no automaker is making an electric car to serve either the mainstream consumer, not the niche buyer. List all the automakers, and none of them are doing it.

Since companies pursue profits, we should ask ourselves why Toyota isn't making the Corolla Electric or whatever. The answer -- there isn't enough of a market to make it worth their while, and they have better places to invest their resources.

You don't need a study from a fringe group to know what's up, the companies who build cars for a living are already telling you. Yes, they will experiment with electrics for the sake of R&D, building goodwill, and placating regulators, but they will not put themselves on a limb to build a product that they figure is going to lose.

Maybe you want one, despite their limitations, and perhaps a few other people do as well. But there aren't enough of you to make a difference. It's a revolution without any revolutionaries.

gagrice · June 2006

Americans are going to *love* diesel vehicles in a few years.

I bet you are right. I really enjoyed the Passat TDI for the year I owned it. So much so I would not consider a gas car or vehicle again. No comparison to the driving experience between a modern diesel and gas version. The diesel has the power where you need it and gets at least 25% better mileage. I would bet that more people will be using diesel to power their personal vehicles in 2010 than those using E85. I don't think they will be producing enough ethanol for the mandated pollution of the gas supply by 2010. B20 biodiesel will be in more stations than E85 by 2010.

socala4 · June 2006

You really should stop claiming that there is no demand for diesel vehicles.

Why would I? The automakers don't sell them in the US because US consumers don't want them.

It's not as if our automakers don't know anything about it. Many automakers that sell cars in the US market choose to sell diesels abroad, yet don't sell them here. Even Cadillac is selling a diesel-engined car in Europe that is not being imported here. (Of course, in an exercise in platform sharing, the Caddy is really a Saab, but I digress...)

It's pretty obvious that this omission isn't an oversight on their part. They would sell more diesels here if it made sense for them, but trying to sell cars to us that we don't want would not be a good business strategy.

I'd say that diesel has a chance of increasing adoption, but diesels have largely failed in the United States. It's pretty clear that until now, US consumers have chosen gas-engined cars, despite lower fuel economy and the lower range per tankful, because diesel is perceived as having more disadvantages than advantages.

In Europe, taxes on diesel are significantly lower than are the taxes on gas, which has helped to spur demand there. We currently have no such policy, so demand remains low.

I'd say that if you changed the taxation policies on whatever fuels we have, you will impact demand. If you increased taxes on gas, and reduced taxes and/or layered in subsidies for alternatives, then the demand for gas would decline and demand for the alternatives would increase. But again, as of today, it isn't happening and without government intervention to stimulate demand, I don't see much happening anytime soon.

gagrice · June 2006

Since companies pursue profits, we should ask ourselves why Toyota isn't making the Corolla Electric or whatever. The answer -- there isn't enough of a market to make it worth their while, and they have better places to invest their resources.

Then how do you explain the Prius. They brought them over in 2000 at a cost of $35,000 per car. They had a tough sell at $20,000 a pop. It was not until 4 years later when they came out with the Prius II that the market opened up. Then only after they gave a few away to noted personalities. And they are still a niche market. If they had put as much effort into the RAV4 EV which there was a waiting list to buy, they may have had a money making electric vehicle by now.

From the Toyota website.

Toyota Motor Corporation discontinued production of the RAV4 Electric Vehicle worldwide in the spring of 2003. Therefore, Toyota will no longer take orders for the RAV4 EV.

Please be assured, Toyota will continue to ensure that dealers capable of servicing RAV4 EVs are located in each major metropolitan area in California throughout the 5-year powertrain warranty period of your vehicle.

Notice they never offered them outside CA. They were not offered to the public until 2003. That was four years after the sold them to government agencies.

Yes, you can drive an earth-friendly, electric car to work if you live in the mountains, and you dont even need to be an electrician to do it. With a range of over 100 miles per charge, this car has no problem tackling my forty-mile round-trip Highway 17 commute, even with lunchtime errands or after work trips. The majority of our driving needs revolve around getting to work and back every day. Most commutes are less than forty miles round-trip, so the RAV4 EV (Electric Vehicle) can fit seamlessly into your daily life.

The clean, quiet power of this car is a joy. Practical, compact SUV styling makes it a functional choice for the environmentally conscious driver.

After about four years of use in the rental and government vehicle fleets, the electric Toyota RAV4 is available for sale to the public.

http://www.mnn.net/rav4ev.htm

They would sell if they were offered.

gagrice · June 2006

The automakers don't sell them in the US because US consumers don't want them

That is so much baseless crap. Jeep planned to sell 5k Liberty CRDs. They are at 11k and having to discontinue because of new regulations. Mercedes sold 5k more E320 CDI vehicles than they had hoped to sell. VW is selling out every Jetta TDI they get in. To the tune of 20% of the Jettas sold. Notice that Jetta is up 30% this year over last. No small percentage was diesel. That all without selling in the largest market CA. It is regulations not consumers that are keeping diesels from selling. You should drive a Jetta TDI then you would know why they are selling so fast. Modern diesel cars are superior to gas cars in every aspect. I hate to admit it but the Europeans are much smarter than US when it comes to vehicle purchases.

socala4 · June 2006

Then how do you explain the Prius.

Toyota believes that it can build a market for hybrids, that will give them a competitive advantage in a highly competitive market. That is why it is pursuing stages of adoption, beginning with the fringe innovators who value technology above all else, before transitioning to the pragmatists who are willing to pay a premium for a unique benefit, and finally to the mainstream consumer who values a low price.

Toyota was not expecting to make a profit on the Prius, the purpose of this car has been to create an entirely different market. It figures that if it starts the market that it will be Toyota's to keep, at least for enough time that it makes it worth their while.

If Toyota thought that electrics were great brand builders then they would be building them. Clearly, they don't. TMC is an extremely well-managed and successful company, so it would be wise to look at they are doing, and figure out why they are doing it. I can assure you that their failure to largely avoid the electric market is no accident, they are avoiding it for a reason.

socala4 · June 2006

Again, diesel sales comprise less than 3% of the total car market.

You are trying to claim a mandate for a candidate who was clearly defeated in a landslide election. The consumers cast their vote with their money, and the diesel didn't get a lot of votes.

Focusing on the 3% while ignoring the 97% is just wishful thinking by someone who views this as a religion, not just a technology. Even if diesel demand tripled to reach a level of less than 9%, you think that the other 91% doesn't mean anything?

splatsterhound · June 2006

I'm not reading this thread at all...but I saw some misinformation.

E85 in MN is cheaper than unleaded.
E85 last weekend in Mpls. suburbs was 2.35, unleaded was 2.89. That's not from a website, that's from my eyeballs.

heel2toe · June 2006

Did you even bother to read my post? Have you actually read anything about the USLD phase-in later this year and the resulting change in EPA regulations? You do realize that no manufacturer was going to invest to not be able to sell in the CARB states? The only big unknown I see is how hard and expensive the NOx emissions equipment will be to produce. Honda has already stated that they can accomplish this...so I'd be pretty confident.

I wouldn't be surprised to see diesel penetration reach European levels over a decade or so. Half the cars sold there are diesels, and the petrol half are almost entirely 2.0L and smaller engines, mostly mated to manual transmissions. Americans, in general, don't like those cars much.

I am hardly religious about diesel tetechnology... My wife and I drove a Jetta TDI on a lark and it is an amazing vehicle.

socala4 · June 2006

I wouldn't be surprised to see diesel penetration reach European levels over a decade or so. Half the cars sold there are diesels, and the petrol half are almost entirely 2.0L and smaller engines, mostly mated to manual transmissions.

Yes, and as I have pointed out, the primary reason for this is because diesel is substantially cheaper than is gasoline, because fuel taxes on gas are set at higher rates to deliberately encourage the use of diesel and public transit. According to the EIA, as of late May 2006, average pump prices were as follows:

Fuel prices ($US per gallon, incl. tax)
Nation: Belgium/ France/ Germany/ Italy/ Netherlands/ U.K./ U.S.
Gas: 6.33 / 6.18 / 6.30 / 6.45 / 7.07 / 6.71 / 3.07
Diesel: 5.02 / 5.29 / 5.27 / 5.77 / 5.30 / 6.88 / 2.88

You can see that with the exception of the UK, where the prices are about the same (and high in both cases), diesel is often $1 per gallon less, with a difference of about $1.80 per gallon in the Netherlands.

If the US had similar tax policies to specifically discourage gas use and to choose alternatives, we could potentially similar results for diesel, biodiesel, E85, etc. But for now, diesel is roughly the same price, so there is no incentive to change.

You have to consider the drivers of demand if you are going to create solutions that have a chance of succeeding. If you can't increase the demand for diesel in a meaningful way, then you can't look to diesel as a solution. None of this will matter if people won't use it, and there are no policy changes on the horizon that lead me to believe that demand will increase substantially.

EIA: diesel prices
EIA: gas prices

john1701a · June 2006

> They had a tough sell at $20,000 a pop.

That is absolutely not true!

There were horribly long waiting lists, as long as 6 months for awhile.

It's a good thing the blogs & newspapers document what actually happened, which is quite different from your claim.

JOHN

gagrice · June 2006

Maybe in the Midwest. There was never a rush to buy the Classic Prius in CA. Not until the Prius II came on the market was there waiting lists in CA the largest hybrid market by far. Not everyone agrees with you on hybrid sales. So when is Toyota going to offer the hybrids as FFVs?

Hybrid sales are cooling off in the US despite high gasoline prices, mostly because the fuel-saving vehicles are still too expensive, analysts say. "Most people who wanted (a hybrid) already have one," said Jesse Toprak, an analyst for Edmunds.com. "They bought one not to save money necessarily, but to make a statement. But that market is not unlimited.

Hybrid sales

john1701a · June 2006

> There was never a rush to buy the Classic Prius in CA.

Your attempt to rewrite history won't work.

My website was founded to help the very situation you claim didn't exist. People were going nuts dealing with the long deliver wait nationwide. In fact, many of us were frustrated by the reality that CA was getting more allocated to them because sales were so hot there.

As for your absolutely hysterical "cooling off" nonsense, get over it. Lumping all types of hybrids into a single category is just plain wrong, and quite misleading. Prius will sell all 100,000 for this year without any trouble.

JOHN

seniorjose · June 2006

All VW diesels have been canceled for 2007 -- the 2006's should be firesaled out...they are now orphans that probably will carry a really low price.

tpe · June 2006

There does appear to still be a strong demand for a Prius. I base this on Edmund's indicating that it is selling for $1,000 over MSRP. The question I have is why the hell is the government (meaning taxpayers) subsidizing a vehicle that is selling for over sticker price. Basically my tax dollars are going in the pocket of Toyota dealerships and their salespeople. Let's take away the subsidies and see what the demand really is.

snakeweasel · June 2006

But for now, diesel is roughly the same price, so there is no incentive to change.

There is incentive to change, that being that diesel engines give better mileage and more power from the same size engine. The problem with diesel is government intervention. Almost 25% of the population are forbidden to buy new diesel engines due to state mandated bans on them. Federal regulations on the fuel and emissions don't help the rest.

Will ethanol E85 catch on in the US? Will we Live Green and Go Yellow?

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