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Chevrolet Volt

Ford Focus Electric

Hyundai Sonata Hybrid

Honda CR-Z Hybrid
Despite rising sales, J.D. Powers is convinced "green" vehicles will only see slow pickup, be overcrowded

Some analysts think the electric vehicle market is ready for primetime.  Others have been less convinced.  Last October, investment firm J.D. Power and Associates, Inc. estimated that by 2020 electric vehicles (EVs) would only gain a slim 7.3 percent market share.

I. Hybrid/EV Outlook -- Not Good?

Now the firm has returned with another report, bumping its estimates slightly, but remains skeptical of hybrids, electric vehicles, and clean diesel.  

Mike VanNieuwkuyk, executive director of global vehicle research at J.D. Power and Associates states in a Detroit News interview, "Alternative powertrains face an array of challenges as they attempt to gain widespread acceptance in the market. The bottom line is that most consumers want to be green, but not if there is a significant personal cost to them."

His report estimates that by 2016, market share of hybrids and electric vehicles will remain under 10 percent.  The report's basic argument boils down to that EVs and hybrids are too expensive for customers.  It cites a recent 4,000 person U.S. survey that it conducted, which showed that a growing number of customers were concerned about the prices of electric vehicles.

The J.D. Power report also cited concerns about function as a factor slowing sales -- particularly for electric vehicles.

II. Too Expensive?

Other market research firms don't necessarily agree that the price of electrified vehicles will trump the price at the pump.  Rival research firm Deloitte LLP conducted a 1,000 person U.S. study, which found that 78 percent of people would consider purchasing an electric vehicle if gas hit $5 USD/gallon.

Subcompact cars typically start at around $11,000 USD for the cheapest non-hybrid models and around $19K USD for the cheapest hybrid models (the subcompact Honda Insight and CRZ hybrids).  Thus you're looking at a premium of around $8,000 USD.

For the mid-sized sedan market pricing starts at around $20K USD, with the cheapest hybrid being the new Hyundai Sonata at
$26,545.  In this segment you're looking at around a $6,500 USD premium.

A recent report by the U.S. Department of Energy stated that the annual cost of gas for the average family is $3,625 USD (based on a gas price of $3.61 USD/gallon).  

Assuming an average household has two cars and that the hybrid sedan would get at least 33 percent better gas mileage, a family would save approximately $600 USD annually by switching to a hybrid.  In other words, it would take approximately 7 years of ownership to break even with a compact or mid-sized hybrid.

III. Small Vehicle Sales Up

According to industry statistics in the first three months of 2011 large car sales have plunged 35 percent, while small car sales have jumped 25 percent.  Hybrid sales during the period accounted for 4.7 percent of sales, up from the average 2.6 percent in 2010.

Those numbers seem more impressive when you consider that a tax credit for hybrid vehicles expired at the end of 2010.  

It seems clear that the high price of gas this spring -- with fuel regularly hitting $4 USD/gallon -- has motivated some customers to get hybrid vehicles.

EVs from General Motors Comp. (GM) and Nissan Motor Comp. (7201) are still selling slowly due to limited distribution and volume.  Both companies hope to sell a modest 10,000 units by the year's end.  Mitsubishi Corp. (8058) just released a new EV -- but only in Hawaii to start.  Ford Motor Comp. (F), Toyota Motor Corp. (7203), and Tesla Motors Inc. (TSLA) all will release new EVs by the end of the year as well [1][2][3].

Two factors working in the favor of electrified sales is an increasing selection and government pressure on fuel efficiency.  

One of the few somewhat seemingly positive aspects of the J.D. Power report was an estimate that by the end of 2016, 159 hybrid and electric vehicle options would be available for purchase -- up substantially from the 31 available in 2009. (Of course the report casts this in a negative light as well, complaining that the market will be overcrowded.)

And the Obama administration is working with the U.S. Environmental Protection Agency (EPA) to deliver new fuel efficiency mandates for the 2017-2025 period.  It is thought that those mandates would demand fleetwide average fuel efficiency reach 62.5 mpg by 2025.  That could force automakers to try to limit the sales of non-electrified models.

IV. Clean Diesel, Where Art Thou?

A dirty little secret of the EV industry is that clean diesel vehicles can currently get as good or better mileage as most hybrids.  In the first three months of the year, 24 percent of Volkswagen AG's (VOW) sales were clean diesel vehicles.  Mazda Motor Corp. (7261) and other companies are planning to offer new diesel models over the next couple years.

Still J.D. Power is also pessimistic on clean diesel's prospects.  Mr. VanNieuwkuyk states, "Advocates of clean diesel engines tend to be some of the most vocal among consumers who tout the benefits of their chosen technology. Clean diesel technology continues to struggle not only against concerns about cost and perceived fuel availability, but also against the lingering perception that diesel is 'dirty.'"

Both with hybrid vehicles and with diesel, there seems to be a clear momentum in the U.S. Yet J.D. Power seems convinced both movements will only see slow growth at best.  It remains unclear whether the pessimism is unfounded -- or whether it knows something other analysts don't.



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RE: Can this be true...
By Iaiken on 4/28/2011 12:46:00 PM , Rating: 2
quote:
But it's their roll to kill exploration, drilling, and refining domestically so we're burdened with overtaxed over imported resources at the mercy of OPEC?


Energy independence through exhaustion is not a plan.

"Drill baby! Drill!" basically translates to "The sooner the we use up all our oil, the better off we will be." Please tell me you see how ludicrous this sentiment is?

Hell, you're more at the mercy of Canada than you are OPEC, better invade them for making a piggish lifestyle hard to upkeep.

quote:
If we were drilling our own crude and refining it, the price per barrel would be a joke, like it used to be.


This is a false argument. If the US fell back exclusively on it's own reserves, they would be completely consumed in ~1000 days based on current rates of consumption. If prices went down, that rate of consumption would go up accordingly, just like it always has. After that 2.5 years of "Burn baby! Burn!" you would be completely at the mercy of foreign oil.

quote:
allow the energy industry to serve the needs of the people


Another false statement. The energy industry serves it's own needs and nobody else's. Oil companies spent over $1 billion dollars over the last 10 years to get the government on THEIR side, when the government is supposed to be on YOUR side. Some of them weren't even American corporations, Shell spent $124 million, BP spent $98 million. How is that not subversion of the government by a foreign power?


RE: Can this be true...
By YashBudini on 4/28/11, Rating: 0
RE: Can this be true...
By Reclaimer77 on 4/28/2011 1:14:43 PM , Rating: 1
quote:
If the US fell back exclusively on it's own reserves, they would be completely consumed in ~1000 days based on current rates of consumption.


Come back when you don't have to lie to make an argument. As recently as 2008 two TRILLION barrels of shale were discovered in Dakota. The potential oil reserves in this continent would last FAR longer than 2 or 3 years. Where did you get that absurd estimate?

quote:
Another false statement.


Oh word games, fun fun. Like it or not, we need gasoline. And in the strictest sense of the word, they are providing a product and service to meet that need. So chill with the anti-Capitalist dogma please. At least pick and choose your fights, that was just silly.

quote:
"Drill baby! Drill!" basically translates to "The sooner the we use up all our oil, the better off we will be." Please tell me you see how ludicrous this sentiment is?


Wow, you really are that short sighted aren't you? And I love how you assume I'm suggesting cutting off ALL imports and just using our reserves. Where did I say that again?

I know to you the acceptable amount of oil we would use would be ZERO, but some of us live in the real world. And please try to remember oil doesn't JUST get used in making fuel. The cost of other products are high as well now.

quote:
better invade them for making a piggish lifestyle hard to upkeep.


Ah, your true colors. I can see that I'm wasting my time. Yup. we're all just a bunch of over consuming warmongers. Gotcha.


RE: Can this be true...
By Iaiken on 4/28/2011 2:15:52 PM , Rating: 3
quote:
Come back when you don't have to lie to make an argument. As recently as 2008 two TRILLION barrels of shale were discovered in Dakota. The potential oil reserves in this continent would last FAR longer than 2 or 3 years. Where did you get that absurd estimate?


Somebody fell for a chain e-mail... do you believe such things just because you want them to be true?

http://www.snopes.com/politics/gasoline/bakken.asp

Let me quote the 2008 government survey of the Dakota shale:

quote:
The USGS estimate of 3.0 to 4.3 billion barrels of technically recoverable oil has a mean value of 3.65 billion barrels. Scientists conducted detailed studies in stratigraphy and structural geology and the modeling of petroleum geochemistry. They also combined their findings with historical exploration and production analyses to determine the undiscovered, technically recoverable oil estimates.


These figures have since been incorporated into the CIA fact book of US oil reserves of only 19.1 billion, a figure 102 times smaller than the one you are claiming as fact. Did you believe that hoax because it was so good that you wanted it to be true?

Even above recoverable oil faces technical challenges according to the Rand Corporation:

quote:
extraction requires the equivalent of about three barrels of water per barrel of oil


Wow, this couldn't possibly be too expensive to be of assistance now could it?

quote:
I know to you the acceptable amount of oil we would use would be ZERO, but some of us live in the real world.


That just shows you know ZERO about what I think and about as much about reality. I'm perfectly OK with people burning oil and gas, I design automated demand/purchasing systems for oil/gas/electricity retailers. In fact, it's practically irrelevant to me what people use to satisfy their energy needs. From my point of view I think it's absolutely silly that we aren't better exploiting our ability to produce massive amounts of cheap electricity.

Did you know that in the Ontario Market, the nuclear plants bid -$2000 in order to guarantee that they run at full capacity at all times and simply accept the market price because they are making money no matter what? The plants that get shut down at night are the coal fire and natural gas plants because they are better off burning that fuel tomorrow for a bigger profit.

This is what I do for a living, I help companies figure out how to get the most out of these limited resources by taking advantage of other installations to allow them to stretch their supply to their greatest advantage. I believe that the best solutions are blended solutions and not absolutes.

The example was in extreme to demonstrate to you just how small an impact such an endeavor would have considering that many reserves are not worth tapping until the prices rise significantly. Expansion of domestic drilling is basically an empty gesture and a temporary one at best. Anything else would require significant government subsidy in order to allow them to be competitive vs foreign oil. This brings it's own political pitfalls with it as any such move would be resented by OPEC.

Instead of looking at the idea behind the statement, you simply threw out the whole statement. Thank you for reminding me again just how dangerous it is to be closed minded.


RE: Can this be true...
By Reclaimer77 on 4/28/2011 9:01:14 PM , Rating: 1
LOL the CIA factbook? As if you can believe anything they say to the public. It's well known that our government downplays our oil reserves so they can keep demand and prices higher. Chain email? So I guess in 2005 the U.S Department of energy DIDN'T release those findings, I just made it up? Just because it's hard to process doesn't mean it doesn't exist. Sorry, they did indeed estimate two trillion barrels of oil in those hills. Not only that, and I quote, they claimed that we could wring "200,000 barrels a day from oil shale by 2011, 2 million barrels a day by 2020, and ultimately 10 million barrels a day."

Now if you have a problem with this, take it up with the U.S Department of Energy, but don't you dare call me a liar.

You left out the biggest reason why we can't exploit these reserves, Uncle Sam has put them off limits for "environmental reasons". So I guess it's a moot point anyway, how convenient...

So your stupid estimate of 3 years of oil reserves is completely false and not even honest. It only counts the reserves that we're currently allowed to exploit. To say nothing of tar sands in in Utah, Alaska, Texas and California, as well as in Alabama and Kentucky on federal and state lands that, by laws and administrative orders, are closed to mineral and petroleum development. Canada's tar sands turn out a million barrels a day!! So could we!

Something in the neighborhood of 90 billion barrels of oil sit beneath the ocean bed 50 to 100 miles off the Atlantic, Pacific and Gulf coasts. Presidential bans and congressional prohibitions have put the tracts off-limits to oil company exploration at least until 2012. Of course that's all shot to hell now with Obamas new bans.

And of course lets not forget The Alaska National Wildlife Refuge: About 10 billion barrels of oil are locked away here, with little possibility that federal lawmakers will open the door.

quote:
Even above recoverable oil faces technical challenges according to the Rand Corporation


So what? We're Americans. Jesus, if we can put a man on the moon we can get some oil out of rocks. No offense, but I'll take geologists opinion and the U.S Department of Energy's estimates over yours.

So you can pretty much take that "fact book" and shove it for how accurate it is. We have enough oil to meet demand for 100+ years, theoretically.

quote:
Wow, this couldn't possibly be too expensive to be of assistance now could it?


You are correct, it's not cheap. It was estimated that shale wouldn't be viable unless the price of sweet crude reached $60 a barrel. Well guess what? It's over $100 now! So you're damn wrong. At this sky high price, shale oil refining is more than viable.

quote:
The example was in extreme to demonstrate to you just how small an impact such an endeavor would have considering that many reserves are not worth tapping until the prices rise significantly.


UNTIL!? My god man, we're at $112 a barrel now!

quote:
I design automated demand/purchasing systems for oil/gas/electricity retailers.


I'm sure that looks good on your resume. Is someone qualified to be an economist because they can work the cash register at Food Lion also?

quote:
From my point of view I think it's absolutely silly that we aren't better exploiting our ability to produce massive amounts of cheap electricity.


Ok that's a shock. Because that certainly did not come off from reading your post. Here's a hint, if you are actually FOR exploiting and producing energy, don't repeat that ridiculous Liberalized "Drill baby drill" crap.


"Spreading the rumors, it's very easy because the people who write about Apple want that story, and you can claim its credible because you spoke to someone at Apple." -- Investment guru Jim Cramer














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