Can Tesla Help Awful Electric Car Sales?

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Electric cars have only one problem. No one wants to own one. That might change because of the wildly positive publicity around the success of Tesla Motors Inc. (NASDAQ: TSLA). But the sales of a car that costs about $80,000 may do nothing for vehicles priced only half as much. The rich may have tastes that the middle class does not. Perhaps other electric vehicles (EVs) are just not very good cars.

General Motors Co.’s (NYSE: GM) Chevy Volt and Nissan’s Leaf should be considered the pioneers of the electric car movement. However, neither has flourished. Volt sales through July were only 28,989, slightly down from last year. Leaf sales only reached an abysmal 11,703. That was up sharply from the year before, but still pathetic at such a tiny level.

GM finds itself so desperate for Volt sales that it cut the car’s sticker to $5,000 for 2013 models. Purists would not call it a true electric car anyway because of its gas-powered generator. However, for most of the unschooled public, it is electric enough.

The Leaf bills itself as fully electric. If so, demand for the fully electric class counts as worse than the Volt. Nissan customers can get 0% financing on a Leaf for a 36-month loan.

A few other manufacturers, including Ford Motor Co. (NYSE: F) and Honda Motor Co. Ltd. (NYSE: HMC), have entered the EV sector. Neither sells more than a handful of these cars a month.

Compared to these cheap vehicles, Tesla has several advantages. First is the breathlessly positive reviews the car has received for safety, style and remarkable handling. The more modest-priced EVs have not received accolades that even approach these. Car researchers have been lukewarm about the balance of the vehicles in the class.

Tesla also has benefited from the lack of available cars. When so many people want the same thing, demand can appear tremendous. The last major product that enjoyed such a supply-and-demand balance was early versions of the Apple Inc. (NASDAQ: AAPL) iPhone. In contrast to Tesla, cheaper electric cars are easy to find.

Electric car sales have been a failure since the launch of the Volt and Leaf in late 2010. Without the Tesla’s fantastic speed, reviews and safety reports, lower priced EVs have been unable to crack the market. None has been able to draft behind Tesla’s success.

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