Are Electric Vehicles Destined To Fail?
Electric vehicles failed in the early 1900s because of high cost, insufficient battery capacity and short range.
Will these factors cause them to fail again?
The early signs are not encouraging.
The just released IEA Technology Road Map for EVs and PHEVs highlighted the large discrepancy between what governments are predicting in terms of sales, and what manufacturers are forecasting.
Worldwide annual sales in 2020, as predicted by governments, are to reach 6.9 million vehicles, while manufacturers predict sales of only 1.4 million vehicles.
Governments are predicting 5.5 million more sales in 2020 than are manufacturers who know their business.
The IEA is using the higher forecast to encourage governments to invest in infrastructure to support the higher sales volume. They are encouraging governments to build charging stations and provide subsidies to those who buy EVs or PHEVs.
This begs the question: Why should tax-payer dollars be used to subsidize a product that people wouldn’t otherwise purchase?
Another discouraging piece of information found in the IEA Road Map is that the IEA is assuming dramatic reductions in the cost of batteries.
The IEA Road Map estimates that the current cost of batteries is $800 – $1,000 per kWh capacity. Amazingly, the IEA predicts this cost will be cut to $300 per kWh by 2015, i.e., within four years.
While it’s nice to assume that battery costs will drop by over 60%, the IEA Road Map makes no mention of why they will drop.
Actual battery costs between vehicle models will, of course, vary depending on battery size and configuration. The GM Volt has a battery rated at 16 kWh and a cost of around $10,000. The Tesla Roadster, which sells for nearly $130,000, has a battery rated 56 kWh.
It’s impossible to justify purchasing an EV or PHEV on the basis of cost savings. The average family cannot afford to pay an extra $10,000 for their family car – even when SUV versions hit the market. If battery costs come down to the point where a buyer could recover his/her cost in four years, it’s still unlikely the average person would pay the additional money because of the uncertainty surrounding how long he/she would own the vehicle.
Actually, the Boston Consulting Group forecasts it will take six years to recover the extra cost of a PHEV and seven years to recover the extra cost of an EV.
Just as in the early 1900s, high cost may kill the electric car – again.
Essentially, the only people who will buy EVs and PHEVs are environmentalists, first adopters, the elite who can afford a second car and view it as a status symbol, and government bodies that are forced to buy EVs and PHEVs for political reasons.
If this becomes the de facto market, there is little chance that sales volume will ever reach 1,000,000 vehicles in the U.S. by 2015, as stipulated by president Obama.
There are also the infrastructure problems surrounding EVs and PHEVs. These and other issues were covered in detail in a three part series Hidden Costs of PHEVs on November 15th, 17th and 19th of last year.
At the moment, the IEA Technology Road Map for EVs and PHEVs seems to highlight that prospects for these vehicles aren’t bright.
It’s too early to predict the demise of the electric car again, but the news for EVs and PHEVs isn’t good.
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