Electric cars now enjoy a white-hot market, with customers on waiting lists for many models. General Motors is building a new Maryland plant to meet demand for motors for its Chevy Volt. But can the tax-subsidized vehicles also create sustainable job market?
With the technology for electric cars steadily improving, and gas prices fluctuating, consumer interest has taken off.
"We've been sold out since they brought the Volt to market. And I'm probably sold out well into 2012," says Neil Kopit, director of marketing at Criswell Auto, which operates a GM dealership in Gaithersburg, Md.
In the past year, GM has invested nearly $1 billion in electric vehicles. And last month, the carmaker broke ground on a $270 million electric motor plant near Baltimore, Md. The project will create more than 200 blue-collar and managerial positions, along with hundreds more assembly line jobs when the plant starts production.
Mike Robinson, GM's vice president for environment, energy and safety policy, expects the new plant will be a job engine for many years to come.
"This is the wave of the future. And we expect that plant is going to produce 40,000 or so electric motors for us by 2013," he says. "And we do think this is a long-term bet that makes sense, and we expect market volumes will support that kind production."
Such expectations have other carmakers staking out their corner of the market, as well. Nissan has its all-electric Leaf; Toyota is working on a small electric car; and Mitsubishi and Honda have models ready to roll into showrooms by the end of the year. Industry analysts predict there could be as many as 1.5 million electric cars on U.S. roads by 2015.
At the Criswell dealership, software engineer Mark Bartosik and filmmaker Swati Srivastava wrote a check for $43,000 for their new Volt. As a result, they'll receive a $7,500 tax credit from the government next year.
"I think it's a market that's waiting to explode," Bartosik says. "When the price comes down just a little bit more, and there's a little bit more volume, there simply won't be enough vehicles for people to be able to buy them."
Another part of electric cars' appeal, Srivastava says, is that it's easier to predict how much they cost to operate.
"Gas prices are always volatile," she says. "It keeps us dependent on the Middle East for oil and everything. It makes no sense to us why people do not just buy more electric cars."
President Obama wants to make sure that happens, which is why the federal government provides buyers of electric cars up to $7,500 in tax credits. But that prompts a question: With a sticker price of more than $40,000, would sales of electric cars be hopping without a tax subsidy?
For now at least, the subsidy is needed, says auto industry analyst George Magliano, of IHS Global Insight.
Acceptance of electric cars "will not occur without some sort of incentives, unless the price of the technology changes," he says. "People who are buying them today are basically people that want to make a statement. And without the push from the government, this is a difficult sell."
But Magliano also thinks that green technology will boost economic growth and create tens of thousands of new jobs. GM's Mike Robinson says he isn't worried about the challenges that lie ahead.
"Our own expectation is the costs will come down as we go through what engineers [call] 'generations of learning,'" Robinson says. "We'll go through that on the battery technology; the motor technology; it will help drive costs down. And if the customer doesn't see value at the end of this, we won't be successful."
Electric and hybrid vehicles make up less than 2 percent of the auto market. For now, analysts say it's still a "niche vehicle," relegated to the greenest corner of the marketplace.