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Look at the sales trends of affordable battery-electric vehicles and plug-in hybrid electric vehicles sold in America over the past decade and the trend is obvious. Affordable EVs ales have stagnated or declined in America. Publications targeted at electric vehicle advocates repeatedly publish stories hinting that the sales volume of EV models from various automakers of EVs are related to consumer demand and preference. It turns out, nothing could be further from the truth. The fact is, all of the EVs built sell, and sell pretty quickly. Visit any EV forum or Facebook EV club and you will see that motivated shoppers are frustrated with a lack of inventory. Demand isn’t limiting the EV market, production is. More specifically, sales trends are dictated by production limitations due to the high cost and limited availability of lithium-ion batteries.

Related Story: The U.S. Has a Battery Problem In the Race For EVs (Bloomberg)

Peak Battery - Affordable EV Sales Always Level Off At 2,000 Per Month
Take the Chevy Volt extended-range electric vehicle. In 2013 the Volt was on a pace of about 2,000 units sold per month. Compare that to a Civic about the same size that averages over ten times that volume of sales. Still, the Volt was the top-selling affordable EV ever in this country. Over time the Volt’s sales moved up and down a bit, but never really took off. Yet, owners love the Volt and it sold without much, if any, advertising support, promotion, or the active support of dealers. Look at the sales trends of the battery-electric Chevy Bolt and the Toyota Prius Prime PHEV and the same volumes are revealed. The new Honda Clarity plug-in hybrid also followed that same pattern for a bit but has now dropped off. Kia’s new Niro EV line and Hyundai’s Kona Electric are getting rave reviews from fans and those who test cars. Yet, sales are under 500 units per month. Why?

The simple reason is that automakers don’t have a way to make the batteries work. Not technically, the design, engineering, and production are mature now. Rather, automakers can’t source enough of them or build enough of them. The cost and availability of the lithium-ion batteries is still the bottleneck, just as it has always been for a decade now.

Peak Battery - Affordable EV Battery Supply Chain Shortages
With every automaker (pretending, hoping, claiming) to be moving strongly towards an “all-electric future,” the demand problem is not getting better, it is getting worse. With Tesla and Panasonic effectively having cornered the market on these batteries, affordable models like the Volt, Bolt, Prius Prime, Honda Clarity, Kia Niro, and Hyundai Kona Electric cannot be built in volume because there is no way to make the global battery supply chain work.

So how does Tesla do it? I learned the answer to this question in 1990 while I worked as an undergraduate on electric vehicle battery cooling as a senior student. My professor at the time told our team, “Pick any two; affordability, performance, or range, you cannot have all three with EVs.” Tesla picked performance and range. Tesla cannot produce an affordable electric vehicle. Rather, it cannot do it and not lose huge sums of investor money. Even with thousands of dollars of consumer-facing tax rebates and state incentives, and with back-end industry-mandated ZEV credit funding totaling billions in revenue, Tesla still finds a way to reliably lose money on luxury-priced EVs equipped with almost no luxury features to speak of. In fact, Tesla owners in online forums now take offense if one refers to a Model 3, priced into the $70Ks as a “luxury car.” Despite shaving costs on seats, interiors, and features, and with no conventional dealer network to pay, Tesla still loses money on expensive electric cars. And remember, Tesla is a sixteen-year-old car company now selling its third generation of electric vehicles.

Related Story: Tesla Struggles To Get Enough Batteries (The Verge)

Peak Battery - Automakers Begin to Admit the Reality
There have long been reports and warnings about the difficulty automakers have had with battery production. Including recent battery warnings from Tesla. Yet, automakers were afraid to admit the real problem openly. Why? For many years it was not politically correct to do so. Stare down the California Air Resources Board, EPA, and the green-vehicle congressional caucus at one’s peril. Better to play along, pen press releases claiming the great EVs are just “five years away,” and hope that a battery miracle happens. So far it has not. Instead, we have had slow generational improvements in battery density and cost. Like almost every product evolution. With the one exception that availability is not improving.

Related Story: In Japan, China and U.S., Scientists Work Feverishly For a Breakthrough on Powerful Batteries For EVs (Japan Times)

What seems to have changed lately is that the rank and file employees at major automakers are starting to loosen up a bit. When a recent automaker was asked if its plug-in hybrid model’s sales were production or demand limited, the automaker actually answered! The automaker replied, “Production.” While chatting informally at a recent media event about EVs, an employee at a top automaker was asked if the exciting new EV line would sell well, the quick answer was, “It can’t, because we can’t get the batteries. Nobody can.” We’ll skip the names. Being on the wrong side of the EV conventional wisdom is bad for business.

Related Story: Audi's First Electric Car Delayed Due To Battery Issues (The Brussels Times)

Peak Battery And the Toyota Prius
Toyota has never toed the line on electric vehicles. Because of this, Toyota takes a daily beating from the electric vehicle advocacy press. Since Toyota has dared to explore hydrogen fuel cell electric vehicles, and since it still produces popular well-selling hybrids, it is vilified by writers who serve the battery-electric fan community.

Related Story: Toyota Has a Curious Justification for Not Selling Any Fully-Electric Vehicles -Yet (Car and Driver)

Oddly, Toyota still manages to have the top-selling affordable electric vehicle in America, the Prius Prime PHEV, and sells more green vehicles than any other automaker - As it always has. The EV advocacy community is fickle. Saving fuel and reducing pollution are no longer the primary objectives. Toyota has long made clear that it does not see a viable way to produce affordable electric vehicles in volume. That Toyota has so far been proven correct only makes things worse for the company among the EV fan base.

Just one of Toyota’s many new green vehicle introductions is an all-wheel drive version of the iconic Prius hybrid. Like vehicles with a plug, the Prius hybrid uses a battery and can propel itself short distances on battery power alone. Toyota had adopted lithium-ion batteries for the Prius in its current generation, moving away from nickel-based batteries. Lithium batteries have many advantages. However, there are areas of battery selection where lithium is at a clear disadvantage. One is poor cold-weather performance. This past year, multiple respected outlets including Consumer Reports tested BEVs in the cold and revealed that lithium batteries have about a 40% range drop. It was also proven that BEVs take longer to recharge when temperatures are near the minimums we find in America. Since Toyota’s Prius AWD is targeted specifically at colder areas, Toyota says it opted to use nickel-based batteries in its Prius AWD trim for performance reasons. We believe Toyota, but the fact that getting lithium-ion batteries is now becoming a major problem for automakers must have factored into that decision.

Peak Battery and the Tesla Effect
Ironically, Tesla’s success in sales/production of the Model 3 may also have influenced Toyota’s design decision. With Tesla now providing tens of thousands of lithium battery-equipped cars per month in a world starved of lithium batteries, designing one into an affordable car is a bad idea. The cost curve will turn ugly before it turns pretty.

Peak Battery and The Future of Affordable EVs
Vehicles like the outstanding Kia Niro Electric prove that automakers can produce great electric vehicles designed for successful widespread adoption. Toyota, Nissan, Honda, and GM have all proven that they can produce electric vehicles that owners love. What no automaker has proven is that electric vehicles can be produced affordably and in volume - even with massive subsidies at both the front and back end of the business. The problem is the battery, and that problem has not been solved despite a decade of support from researchers, government, taxpayers, green vehicle shoppers, and frantic efforts by automakers and suppliers around the world. But don’t worry. The solution is just “five years away.”

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John Goreham tweets at @johngoreham. Please send him news tips and follow us at @TorqueNewsAuto.