Electric Vehicle Market Predictions: Hocus Pocus or Sound Logic?

It doesn’t take long from the first mass production EVs to start hitting the streets before people start to predict where they will be in 10 years time. Professionals, academics, industry speculators and politicians have started to begin quoting likely EV market penetration rates over the next five, ten and fifteen years. Barack Obama recently stated his (and by extension, America’s) desire to have over one million plug in vehicles on US roads by 2015. Some predictions have been somewhat conservation predicting EV sales to amount to 5% of the market by 2015 whilst others predict a large expansion between 2015 and 2020 with sales rising towards 20% of the market. The range of these predictions shows the uncertainty that currently prevails in the market.  Why are these predictions so wide of each other, is it related to a variation or flaw in the methodologies used or the assumptions made? I will not pretend to have critically appraised all of the market predictions made but will talk here about how I would go about making a prediction based on reasoned and rational thinking rather than guesstimation.

To jump straight in, we know from previous research that vehicle costs are a big factor with consumers. Currently, EVs attract a price premium linked to their advanced technology making them relatively more expensive compared to their conventional counterparts. Now if we assume that conventional vehicle prices will remain constant at best or perhaps decline in the future, one way to boost the demand for EVs would be to decrease their price relatively faster. Recently, industry experts have stated that scale is not an issue with reducing the costs of producing EVs with more gain expected from technological breakthroughs. So, if we assume battery technology will advance at an increased rate in the future then this will assist EV market penetration. Similarly, if there is an increase to the purchase cost of conventional vehicles (a sales tax for instance), this will also assist EV demand. EVs currently require rare earth materials in their manufacturing with the extraction of these raw materials almost completely conducted in China. The Chinese Government has recently imposed a 90% restriction of the export of rare earth materials thus restricting the supply of a key factor of EV production to automotive firms. R&D has been switched on in an attempt to find substitutes for these materials but, if nothing economical can be found, this may prove a real barrier to mainstream market deployment of EVs.

Vehicle Innovators will embody the Pioneer Spirit

The first mass produced pure EVs will be hitting the streets in the UK over the coming months heralding the true beginning of electric personal vehicle mobility. Nissan has said that its order book in already full for all Leafs coming to the UK market until the end of this year. The total volume of EV sales, even if supply is saturated, will still be small change compared to the total market however they are expected to grow rapidly in market share over the coming few years.

The innovators in the market will play a crucial role in helping to form public opinion surrounding EVs. They will act as opinion leaders and diffuse their experiences throughout their social networks. It has been regularly put forward that these innovators will have distinct characteristics encompassing strong green views and a desire to be on the technology frontier. A dimension that has garnered less exposure is the aspect of freedom these vehicles will provide to their owners. Not freedom in the sense of being able to go wherever they please but rather liberation from oil dependency.

Can Motorsport play a Role in the Greening of Passenger Vehicle Transport?

Last weekend saw the first race of the 2011 Formula 1 season in Melbourne Australia. Sebastian Vettel stormed to a well deserved first place finish and was like always magnanimous in victory heaping praise onto his team.  A part of me cringes to consider the amount of fuel this sport consumes in a season but the shear popularity of F1 means it generates a great deal of happiness for all those barrels of oil. This season sees the return of the Kinetic Energy Recovery System (KERs for short) a form of  mild hybrid system allowing the car to preserve some of the energy lost under the ferocious decelerations these cars go through and provide a 5 second 80 horse power boost per lap for the driver to assist in overtaking.

A new contender is entering the motorsport ring this year and promises to be something we’ve never seen before. The EV Cup will hold 6 races (5 in Europe and 1 scheduled for the US) with all cars being solely fuelled by electricity. It will be split into 3 classifications which and combine a variety of formats. EV manufacturers and enthusiast will be able to bring their prototype muscle EVs to set lap times in a time trial format. The EV Cup has developed (alongside Westfield Racing) its own racing car dubbed the iRacer (see main picture) that will incorporate a boost system similar to KERs in F1 and will be open to experienced open top motorsport drivers. In sharp comparison to the other 2 classifications, the EV Cup will also see City EVs (provided by Th!nk) battle it out on the track for dominance. I believe this classification is included simply as a showcase to the public to inform them that production EVs are reality but it will be interesting to see which classification proves the most popular.

Electric Vehicles will be Risky Business

Whenever a new firm enters a market offering a distinctive innovation, their reputation is often closely linked with the success (or lack thereof) of their new product. A classic example is that of James Dyson who introduced the dual cyclone bagless vacuum cleaner. Mr Dyson was so confident that his new innovation was going to be successful that he decided to brand the product with his family name. Sources of innovation are not solely limited to entrepreneurs; established companies spend significant amounts of their revenue on research and development into new ideas. Whenever an established manufacturer considers introducing a new innovative product there is the opportunity for market success which will further strengthen then manufacturer’s brand or failure which would cause significant brand damage.

This is no less true in the automotive industry where there is a constant drive for product innovation and diversification. In some instances, these innovations are small such as the introduction of parking sensors and reactive headlights. In other situations, the innovations are fundamental to the operation of the vehicle. This will be the case with the introduction of electric driver powertrains. This market innovation has attracted startup companies establishing their brand in the EV market niche such as Tesla. The more conventional manufacturers such as Nissan, Ford and General Motors are bringing their EVs to market and will be staking a substantial chunk of their reputations on the success of these offerings.

Could Electric Vehicles Reduce Mobility?

EVs have come under intense scrutiny and criticism recently due to their re-emergence in the market. Most of the topics that have been brought up are old issues that were present in the previous false dawns of EVs. These concerns can be broadly placed into two categories:

1.       Will an EV be able to do the job of a conventional vehicle?

2.       Will an EV be able to reduce the problems of environmental impact and energy security related to personal vehicle transport?

The second category can be answered by relating to the fuel source used to power EVs and the materials and techniques used to build them. If the fuel used to generate the electricity for EVs is of similar carbon intensity the pollution is simply being exported and centralised from multiple sources on roads to rural power plants. Now this may not be an entire failure as centralisation of emissions away from urban centres does have benefits for human health. Energy security is dependent on where the fuel is sourced from and if this source is stable in both overall production and also price level.

The first category relates almost entirely to the practical functionality of an EV such as luggage capacity, performance, safety and range.  Range is a reoccurring theme for EVs and technological innovation has taken place in an attempt to overcome range anxiety. Battery technology is enjoying heavy investment levels and range extending EVs (that incorporate small ICEs to recharge the battery) could be of significant potential.

The Year of the EV – Are we getting ahead of ourselves?

2011 seems to be the year pure EVs will turn from myth into reality with the introduction of the Nissan Leaf, Citroen C-Zero and Peugeot iOn into the mass automotive market. Other manufacturers will be rolling out their EV offerings soon after with the Volkswagen e-motion, Renault Fluence and Ford Focus EV expected in 2012. Mild and Plug-in Hybrids will also be introduced with the Prius Plug-in version highly anticipated. It can be easy to view this year and the next as the years that the EV finally hit the big time but our previous article (looking at previous False Dawns) will hopefully temper some of this enthusiasm. There is still a long road ahead if EVs are to become firmly established in the market and there is an argument that we might be looking too far into the future.

I sincerely hope the long term future of the personal vehicle is electric however, this most certainly is a long term ambition and we shouldn’t blind ourselves to any short and medium term options of addressing the associated problems with conventional vehicles. Pure EVs will have an important role to play between 2025 and 2050 but before then other technologies should not be forgotten. Mild hybrids are likely to become much more integrated into the market employing energy recovery systems and plug-in hybrids could see their desirability increase dependent on the price of oil over the next decade.

With Electric Vehicles, Experience Matters

The first vehicle trials with EVs held in the UK have produced their initial results regarding user impressions of the vehicles. Not surprisingly, the users tend to have sceptical views when starting the trail but as they become better acquainted with operating the vehicles to meet their mobility needs these views tend to become more positive. This affect is not solely limited to EVs but has been demonstrated with a number of new technology introductions. Experience and information seem to be the best way to overcome fears and anxiety concerning new technologies with the former usually more effective than the latter.

So if drivers need to have experience with EVs before they will tend to view them in a positive light and consider them for their next vehicle purchase, the question is how do we provide this experience? There are a number of ways that can be considered. Firstly, with improvements in computer and virtual reality technology the application of EV simulators is a real possibility. These would allow drivers to go for a virtual journey in an EV and get an impression of how these vehicles operate. This method does have the limitation that no matter how realistic the simulation is the user will always know that it is not genuine and so will question is validity. However, a simulator may prove to be a cheap option allowing a large number of drivers to experience an EV journeys from a central location.