Electric Vehicle Sales in Neutral

The latest generation of electric cars came to life thanks to two factors – higher fuel prices and the development of advanced lithium-ion batteries with the ability to power cars over longer distances, around 100 miles.

However, sales of these latest models of electric vehicles have failed to show much spark. Not really surprising considering that hybrid vehicles, with both a lithium-ion battery and a conventional engine, have grabbed only a 2.3% market share in the United States since first becoming available over a decade ago.

In their first full year of sales, both the Volt from General Motors (NYSE: GM) and the Leaf from Nissan Motor ADR (OTC: NSANY) have come in below even the modest expectations of 30,000 vehicles sold combined.

Slow sales for these electric vehicles were attributed to supply bottlenecks and still too high prices, despite government subsidies.

Of course, in the case of General Motors, it did not help that their batteries caught fire shortly after undergoing crash tests. But even before then, GM reported that it would not meet its modest target of selling 10,000 Volts in 2011.

Nissan is doing better with its Leaf car than GM is with Volt. The company sold 20,000 vehicles through November which was just slightly below company expectations. Nissan did this despite having to overcome problems caused by the earthquake and tsunami in Japan last year.

The company is optimistic enough for 2012 that it said it will produce 40,000 Leafs this year. Its CEO Carlos Ghosn remains the industry's strong proponent. He continues to maintain that his company will sell 1.5 million electric cars annually by 2016 and he believes electric vehicles will make up 10% of the global market within a decade.

However, others are not as optimistic as Mr. Ghosn. PricewaterhouseCoopers estimates that all-electric vehicles will make up a mere 1% of the global car market in 2017. Pike Research says they will account for 3% of the global market in 2017. JD Power believes that these cars will make up only 3% of the global market a decade from now.

The main sticking point with all-electric vehicles seems to be price, according to the latest report from Pike Research. Other negatives for all-electric vehicles pointed out in the report include a limited driving range and unproven battery technology.

All three points are valid, especially price. The Volt and the Leaf, even after sizable government subsidies, still sell for nearly double the price of internal combustion engine cars.

The report also pointed out there is no first-mover advantage for GM and Nissan. People surveyed by Pike said they were more likely to buy an electric car from Toyota Motor ADR (NYSE: TM), Ford (NYSE: F) and Honda Motor ADR (NYSE: HMC) ahead of GM and Nissan.

What most likely will happen is that consumers will buy an electric vehicle from whatever company gives them one at a reasonable price and with a longer driving range.

But that may have wait until the next-generation of battery power for electric vehicles comes out within a few years.

Then when these vehicles are mass produced, we will get a true reading of who the winners will be in this industry, if any.

This article was originally writtern for the Motley Fool Blog Network. You can find all of my daily articles for the Motley Fool at http://blogs.fool.com/tdalmoe/