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
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
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
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
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
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 .
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
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.
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.
quote: Another false statement.
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?
quote: better invade them for making a piggish lifestyle hard to upkeep.
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?
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.
quote: extraction requires the equivalent of about three barrels of water per barrel of oil
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.
quote: Even above recoverable oil faces technical challenges according to the Rand Corporation
quote: Wow, this couldn't possibly be too expensive to be of assistance now could it?
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.
quote: I design automated demand/purchasing systems for oil/gas/electricity retailers.
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.