Electric Cars Are Catching On, but Electric Carmakers... Aren't

Last Updated Jul 25, 2011 4:45 PM EDT

Tesla will likely survive the coming electric carmaker shakeout.
At this point, with three serious electric cars in the market -- the Nissan Leaf, the Chevy Volt, and the Tesla (TSLA) Roadster -- you'd have to say that the sins of the ill-fated EV1 have been atoned for. Rather than a flash in the pan, electric vehicles, or EVs, look like they're here to stay. But you can't say the same for electric carmakers.

Playing with the big boys
My BNET colleague Jim Motavalli has covered the startup EV scene in great detail. Fisker, Tesla (TSLA), Better Place, Aptera -- these and numerous other EV companies didn't exist until quite recently. All are now trying to survive as the market matures.

But it's not as if major automakers are surrendering the field to the plucky new arrivals. Tesla led the charge with its snazy, $100,000-plus Roadster, proving that EVs could be as hot as Ferraris. Then Nissan and General Motors (GM) arrived, with the Leaf and Volt. (In fact, the Leaf, after lagging the Volt in sales, has more than caught up of late.)

Meanwhile, the fortunes of other EV companies have declined. Think went bankrupt. Fisker hasn't delivered a single car yet (although that should change soon). Aptera has struggled with financing woes.

So is the brave new world of EVs going to look like the technology world, with new companies like Apple (AAPL) and Microsoft (MSFT) displacing former giants, such as IBM?

Um, maybe not
The future of smaller EV companies isn't looking too promising at the moment. Major carmakers have the leverage to dominate the space -- and the large pools of capital (and access to even larger pools) that the auto industry demands.

Of course, you could ask, What about Tesla? There's a company with a clear Silicon Valley ethos that's definitely still in the game. However, Tesla has always sought to capture the hearts and minds of influential earlier adopters, expanding from the very small, performance-craving niche to attack larger market segments (first luxury with its forthcoming Model S sedan, then everyday consumers with a promised crossover).

The lesson here is that, outside of some extremely limited niches (Aptera's combination of ultra-high MPGs with futuristic, aerodynamic design), there may not be much room for new car companies, even ones that are focused on EVs.

The tech is the thing
That doesn't mean that these startups will completely vanish, as Toyota (TM), Honda, and Ford (F) all join Nissan and GM in the EV Olympics. Rather, their innovative technology may be absorbed. They may live on that way.

But in name, they may be finished. Estimates vary, but if EVs become (optimistically) 10 percent of the total vehicle market in the U.S. by, say 2020, that could mean less than 2 million total cars. The major automakers could carve that up rather effectively, leaving room for maybe one new entrant, probably Tesla. Better Place could also hang around, as a provider of charging solutions/battery swapping.

That sounds, well, sort of sad. But it's just business. And it's certainly worth noting that the big boys wouldn't have taken EVs so seriously this time around had it not been for the very real money that was ventured on idealistic electric-car startups.


Photo: Matthew DeBord