Despite $4 Gas Electric Cars Aren't Selling

In spite of a rapid spike in gasoline prices and a media-driven cultural buzz, electric cars aren't selling in the United States. In May, with gasoline prices reaching an average of $4.00 per gallon across the country, sales of hybrids and plug-in electric cars plunged to a 16-month low. Just when the fuel-efficient cars should be a more popular choice for price-conscious consumers, the electric car trend is stalling.

Effects of the Japanese disaster

The earthquake and tsunami that ravaged Japan resulted in disruptions at auto manufacturers like Honda and Toyota, and delivery of eco-friendly cars in part was interrupted briefly. American car buyers apparently overestimated the problems, however. For instance, Toyota sold less than half as many of the trend-setting Prius hybrids in May 2011 compared to the same month in 2010.

"It's really incredibly bad luck that the Japanese earthquake and associated production disruptions occurred as gas prices were reaching their highest levels in three years," says Edmunds.com Chief Economist Lacey Plache.

Chevy Volt

General Motors introduced the Chevrolet Volt plug-in top much fanfare, and it earned Motor Trend magazine's 2011 Car of the Year award. But fewer than 500 Volt's were sold in May, and GM announced that the Detroit area factory where the cars are produced will shut down for four weeks of retooling in June.

"Coupled with already low dealer inventories and strong demand, the suspension of production will result in limited availability and reduced sales in June and July," GM announced.

Nissan Leaf

While Nissan announced a modest sales increase for the all-electric Nissan Leaf in the month of May, it still amounted to fewer than 1,500 cars sold nationwide, and the company revised its projection for 2011 sales downward from 20,000 vehicles to roughly half that.

"That's a reasonable figure," says Al Castignetti, Nissan's vice president of U.S. sales. "We're very positive about this program. It's different than anything we've ever done, launching the car in three global markets at the same time. We knew it wasn't going to be easy."

What's the problem?

Overall car sales were up in May, so why aren't car buyers opting for the fuel-sipping electric models in the face of high gas prices?

Availability is one issue. Chevy has diverted many of the Volt's rolling off the assembly line to dealers as demonstration models and Nissan has acknowledged battery manufacturing issues that, coupled with the natural disaster in Japan, have slowed production. But the biggest factors may be the cost of installing a home charging unit, and the scarcity of electric car chargers on American streets. While electric cars will plug into power outlets similar to those of a home clothes dryer, it takes a specially-installed charger to bring the car up to full power in a timely manner.

Electric cars and chargers are like the proverbial chicken and egg; neither can get started without the other. While gasoline may be expensive at $4.00 per gallon, at least it's available everywhere, and drivers don't have to worry about being stranded with nowhere to fill their tank.