Strategy

No Alberta buzz for the GM Volt

Even outside the Prairies, analysts expect electric car sales to be sluggish in Canada.

When electric cars hit the Canadian consumer market in mid-2011, Prairie cities will be left out of the buzz. GM Canada announced its initial rollout locations for the electric hybrid Chevrolet Volt last month, naming Victoria, Vancouver, Toronto, Oshawa, Ottawa-Gatineau, Montreal and Quebec City as the lucky cities. Notably absent were the markets in Calgary and Edmonton, both with populations near one million people in a province where the economy is heating up and the unemployment rate is the lowest in the country.

According to GM Canada, the seven cities were selected for their large population base and also for being known as “leaders in adopting groundbreaking environmental technologies.” The Volt will be available in the rest of Canada by the end of 2012. Nissan, which will launch its electric Leaf in 2011, will also skip the Prairies in its initial rollout. Nissan is focusing on the biggest cities first — Vancouver, Toronto, Montreal and Quebec City — to develop the infrastructure required to charge its fully electric cars.

GM Canada spokesperson Tony LaRocca is upfront about the fact that the Volt launch is targeted at niche consumers who are willing to understand how to properly operate an electric car. GM wants to ensure the first Volt drivers have, above all, a good experience.

“We think that’s the way to get it into the market, so that electric vehicles are more broadly accepted,” LaRocca says. “Because it isn’t the same. You do have to bring your car home. You have to plug it in. You have to be conscious of that type of thing.”

Perhaps by skipping the Prairies in initial launches, car manufacturers also realize there is some truth to the stereotype of Albertans as big truck- and SUV-driving types who are not as interested in fuel-efficient vehicles. Auto industry analyst Dennis DesRosiers, founder of DesRosiers Automotive Consultants, says a combination of function — the need for larger trucks and SUVs for rural areas — and consumer mentality means Albertans will continue to favour larger vehicles, at least in the near future.

“They view themselves as the big-honking-vehicle capital of Canada, and they’re going to stay that way,” DesRosiers says. In addition, lower fuel prices and lower tax on fuel in Alberta means consumers have less incentive to purchase smaller or alternate-fuel vehicles, he says. (At press time, gasoline cost $1.10 per litre in Toronto and was hovering around $1.03 in Calgary and $1.01 in Edmonton.)

If 2010 hybrid sales are any indication, consumers in the rest of the country won’t be rushing out to purchase electric cars in record numbers, either. In Canada, hybrid sales represented only 1% of the market in 2010, which is actually a drop of half a percentage point from the previous year, according to Geoff Helby, a director at the market research firm J.D. Power and Associates.

Nevertheless, he says rising fuel prices could, to some extent at least, increase interest in electric cars and hybrids. “Consumers act in sort of a knee-jerk way,” says Helby. “Once they see fuel prices escalate, they think, ‘Hmm, maybe I should think about purchasing.’ Then, once fuel prices stabilize it’s ‘Oh, I guess I don’t really need that hybrid vehicle.'”

There are, however, some sales for the Volt and the Leaf that seem almost guaranteed. Both DesRosiers and Helby predict the strongest sales of these cars will be in Vancouver, where environmentally conscious consumers faced with high gas prices lead the country in hybrid purchases.