Taxpayer-subsidized EV sales grow, but that???s not expected to continue

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U.S. sales of electric vehicles, which are tracked obsessively, brings cause for both celebration and consternation.

Despite the billions of dollars in taxpayer subsidies that have backed the production of alternative energy cars, President Obama???s goal of 1 million in electric auto sales by 2015 won???t be met, as Watchdog reported a few weeks ago.

But 2014 did set new marks with more than 100,000 units ??? both plug-in hybrids and full electrics ??? delivered. Nissan, beneficiary of a $1.4 billion stimulus loan to modify a Tennessee plant for EV production, saw its Leaf model establish a new high in sales of all-electrics, with 30,200 sold.

The optimism dips in 2015.

Obama recently visited a Ford assembly plant, redesigned with the help of a $5.9 billion taxpayer-backed loan via the Department of Energy for the production of more fuel-efficient vehicles ??? including EVs. But the Michigan facility closed last week because of a lack of demand for small cars and hybrids, according to the Detroit News.

Overall, the automotive industry is enjoying a recovery aligned with the improved jobs picture and lower gasoline prices, with 16.5 million cars and light trucks sold in 2014. But cheap fuel is another reason EVs haven???t taken off, in addition to persisting problems of limited range, long re-powering times and expensive up-front costs. The percentage of electrics languishes around .7 percent of all vehicles sold.

With gas below $2 per gallon in many states, demand for EVs is expected to decrease even further. A forecast for 2015 published by LMC Automotive, an international economics consultancy, sees a slight decline, which would reverse the steady upward trend the past few years. This is despite attractive incentives and strict mandates in California to spur the sale of zero-emission vehicles ??? LMC expects that automakers will just dump their limited inventory of electrics into the Golden State and reduce their distribution elsewhere.

But it???s not just economic analysts who are bearish on EV prospects. Makers of some of the most successful energy-efficient automobiles in the world are re-evaluating their lineups.

According to, the electric version of Honda???s Fit will be discontinued after 2015. In a more astonishing development, sales of the extremely popular gas-hybrid Toyota Prius declined by 11.5 percent in 2014 from the previous year. The percentage of overall automotive sales for the gas-hybrid segment dropped to 2.8 percent, which defied a J.D. Power projection from 2008 that said it would attain 7 percent market share.

Cheap gasoline is part of the explanation, according to Kelley Blue Book???s Karl Brauer, but so is the competition???s improvements in fuel efficiency without need for hybrid technology.

???A lot of vehicles today get 40-plus miles per gallon,??? Brauer told Money online, ???and you don???t have to make the sacrifices you do with the Prius.???

Money speculated that it might mark the ???beginning of the end??? for the Prius. Businessweek last month said, ???(W)ith $2 gas, the Toyota Prius is for drivers who stink at math.???

The trend of diminished demand raises questions about the wisdom of the Obama-led stimulus investment of billions in taxpayer dollars for ???green??? transportation initiatives. But it???s another government policy ??? regulation ??? that guarantees at least a minimum production of alternative energy vehicles for the next several years.

Corporate Average Fuel Economy mandates, known as CAFE standards ??? as outlined in the 2007 Energy Independence and Security Act but specifically designed by the Department of Transportation ??? are required to improve average fuel economy for the 13 largest automakers to 54.5 miles per gallon for cars and light trucks by 2025. The goal was established under a 2011 agreement between manufacturers and the Obama administration.

???The automakers can???t give up on EVs, because they???re going to be necessary to meet the CAFE requirements of 2025,??? Devin Lindsay of IHS Automotive, an industry market consultant, said to

Indeed, most such vehicles produced by major manufacturers fit in a category industry experts call ???compliance cars??? ??? a term for models of which only few are produced to meet fuel economy standards; in the immediate term, that mean???s California???s strict standards. Among them is the Honda Fit, which says was only offered for lease, not sale. Another is the Ford Focus Electric, which upon its introduction in 2012 was not promoted widely, unlike its good-selling gas-powered counterpart.

???The marketing of the Focus Electric is to people who buy electric vehicles, not to you and me,??? Jim Farley, Ford head of global marketing, said to USA Today at the time. ???We???re focused on the people who buy them.???

Obama remained undeterred by the dormant, refurbished Ford plant he visited last week.

???I would strongly advise American consumers to continue to think about how you save money at the pump,??? he told the Detroit News. ???Because it is good for the environment, it???s good for family pocketbooks and if you go back to old habits and suddenly gas is back at $3.50, you are going to not be real happy.???