Fledging electric car market in turmoil with few buyers

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The fledgling electric car business is in turmoil as predictions about potential sales have proven to be wildly optimistic despite volatile fuel prices and plenty of media hype.

Weak consumer demand is hitting both the big automakers like General Motors and Nissan - which have failed to meet sales targets on the plug-in Volt and all-electric Leaf - and smaller start-up firms trying to carve out a piece of a very small niche.

"Electric vehicles don't make any more sense today than they did in 1912," says Sean McAlinden, an analyst with the Centre for Automotive Research in Ann Arbor, Michigan.

"They take too long to charge, the range is too short and they cost too much."

Electric cars also face stiff competition from hybrids and improved fuel efficiency in conventional vehicles as automakers update their fleet to meet tougher government standards.

Toyota recently announced plans to drastically scale back the release of its all-electric eQ and Honda has limited the release of its Fit EV to 1,100 US customers over the next two years.

The Chevy Volt - which can switch over to a regular gasoline engine once the battery runs out of juice - is by far the most successful electric car in the United States.

After a slow start, Volt sales have tripled this year with help of discounted leases and a decision by California to allow them in fast-moving carpool lanes on the state's clogged freeways.

But sales of 16,348 through September are still far short of the 45,000 Volts that the US Department of Energy forecast in a 2011 report that GM could sell per year.

While the big automakers can cushion their massive investments in electric vehicles with sales of conventional cars, the painfully slow growth and the difficulties in adapting electric technology to the tastes of modern motorists have posed huge challenges for startups.

Tesla Motors is falling behind in its efforts to produce a sleek new electric vehicle, the electric vehicle start-up company spawned by Silicon Valley billionaire Elon Musk acknowledged in a recent regulatory filing.

That leaves Palo Alto, the California-based company, in danger of failing to meet the terms of a $465 million Energy Department loan.

Nonetheless, electric vehicles advocates remain upbeat and investors are not shying from the companies.

Fisker Automotive has sold more than 1,000 Karmas, which cost $103,000, since the car went on sale last December.

The company is moving ahead with plans to build its next vehicle, a sedan dubbed the Atlantic that will costs roughly half as much as the Karma, and expects to raise another $200 million in private equity funding soon.