Are Electric Vehicles Ready for Prime Time?

While researching and writing an article about electric vehicles for this month’s issue of ASSEMBLY (see “Electric Components Open New Doors for Suppliers”), I had to carefully tip-toe my way past an endless barrage of bullish optimism. As I enquired about the mass-production potential of electric motors, drivetrains and other key EV components, I encountered a diverse array of predictions.

I tried to remain objective, but I became somewhat skeptical about some of the overly optimistic statistics that were thrown at me by some sources. As with any promising new technology, there are all sorts of predictions and projections floating around out there relating to the future of electric vehicles.

For instance, Nissan Motor Co. predicts that electric cars will account for 10 percent of global sales by 2020. The Japanese automaker is currently cranking out its new Leaf at a factory in Japan. The first boatload of cars should arrive at the Port of Los Angeles just about any day now. To gain a foothold in the EV market, Nissan also plans to launch three more all-electric vehicles in the United States during the next four years.

That kind of aggressive assault on the market may work, but is the American public really ready for electric vehicles? A new report offers some sobering statistics on the subject.

J.D. Power and Associates claims that future demand for EVs may be over-hyped. Several factors, such as regulatory inconsistencies, relatively stable oil prices, and consumer concern about cost and ease of operation, will ensure that the good-old internal combustion engine is with us for a long time to come.

According to “Drive Green 2020: More Hope than Reality,” combined global sales of hybrid electric vehicles (HEVs) and battery electric vehicles (BEVs) are expected to total 5.2 million units in 2020, or just 7.3 percent of the 70.9 million passenger vehicles forecasted to be sold worldwide by that year. By comparison, global HEV and BEV sales in 2010 are forecasted to total 954,500 vehicles, or 2.2 percent of the 44.7 million vehicles projected to be sold through the end of this year.

According to the report, it will be difficult to convince large numbers of consumers to switch from conventionally powered passenger vehicles to HEVs and BEVs. Specifically, a consumer migration to alternative power train technologies will require one or more of the following scenarios:

• A significant increase in the global price of petroleum-based fuels by 2020.
  
• A substantial breakthrough in green technologies that would reduce costs and improve consumer confidence.
  
• A coordinated government policy to encourage consumers to purchase these vehicles.

“Based on currently available information, none of these scenarios are believed to be likely during the next 10 years,” says John Humphrey, senior vice president of automotive operations at J.D. Power and Associates. “While considerable interest exists among governments, media and environmentalists in promoting HEVs and BEVs, consumers will ultimately decide whether these vehicles are commercially successful or not.”

“Based on our research of consumer attitudes toward these technologies-and barring significant changes to public policy, including tax incentives and higher fuel economy standards-we don’t anticipate a mass migration to green vehicles in the coming decade,” adds Humphrey.

While many consumers around the world say they are interested in HEVs and BEVs for the expected fuel savings and positive environmental impact they provide, their interest declines significantly when they learn of the price premium that comes with purchasing these vehicles.

“Many consumers say they are concerned about the environment, but when they find out how much a green vehicle is going to cost, their altruistic inclination declines considerably,” claims Humphrey. “For example, among consumers in the U.S. who initially say they are interested in buying a hybrid vehicle, the number declines by some 50 percent when they learn of the extra $5,000, on average, it would cost to acquire the vehicle.”

The overall cost of ownership of HEVs and BEVs over the life of the vehicle is also not entirely clear to consumers, and there is still much confusion about how long one would have to own such a vehicle to realize cost savings on fuel, compared with a vehicle powered by a conventional internal combustion engine. “The resale value of HEVs and BEVs, as well as the cost of replacing depleted battery packs, are other financial considerations that weigh heavily on consumers’ minds,” says Humphrey.

“While HEVs and BEVs offer an interesting alternative for the future, many of the shortcomings that defined battery-based vehicles 100 years ago are still prevalent today,” warns Humphrey. “These include limited driving range, extended recharging times, limited support infrastructure and the high cost of battery packs.

“Moreover, while reducing exhaust emissions was not an important factor in the development of battery-based vehicles 100 years ago, it has been a significant driver behind the development of BEVs today,” Humphrey points out. “For many governments, the primary goal of transitioning to alternative power trains is to reduce exhaust emissions, and it is not clear how much of this can be achieved.”

During numerous business trips to Detroit over the years, I recall seeing a large billboard (from a tire company, I believe) along I-94 that features a constantly changing display showing annual automotive production volume. Perhaps some entrepreneur should erect a similar sign related to green vehicle production.

Will it take decades before EV production volume comes anywhere near what we’ve become accustomed to over the last century with the traditional internal-combustion engine? Or, are we finally at the brink of a bold new era in the auto industry?

Only time will tell. I look forward to watching the story unfold.