The size of the early adopter market for EVs remains a big question mark, and a lot depends on the size and availability of subsidies. J.D. Power has added all that up and come to some rather negative conclusions -- specifically, that the combined penetration of electric cars and hybrids will stay in "single digits" until 2020. Still, the marketing company sees more than 300 percent EV growth, to 7.3 percent of the global auto market by 2020 (they're likely to be just 2.2 percent of the 44.7 million cars produced in 2010).
I'd like to see these surveys done the way the United Nations does them, with a high, middle and low scenario. Why? Because there are so many variables, from battery and oil prices to legislative support. Forecasting total hybrid and plug-in electric sales at a very specific 5.2 million in 2020 seems rather arbitrary to me.
Power correctly identifies some of the factors that would cause sales to be higher, and it sums them up as:
- A big increase in oil prices.
- A breakthrough in green tech that would make battery costs lower and improve consumer confidence.
- Coordinated government policy to encourage consumers to buy EVs.
I don't see the big breakthrough in green tech, or a battery technology more efficient than the current lithium-ion, but virtually anything's possible. And the government support, well, that's a total wild card.
For instance, Jay Friedland, the legislative director of Plug In America, a California-based nonprofit, told me he's still pessimistic that Congress, in its lame-duck session next month, will renew the up-to-$2,000 federal income tax break for EV home chargers, which expires Dec. 31.
Also highly questionable are the chances for an evolving EV subsidies bill supported by the Electrification Coalition. Friedland says that the latest version is folded into the scaled-down (no cap and trade) 2010 energy bill backed by Senator Harry Reid (D-NV), and it looks "dead in the water" right now, but that could change. "All bets are off," Friedland said.
These subsidies, taken together, are a big driver for people to buy the EVs that will be expensive otherwise. Meanwhile, environmentalists in California are fighting Propositions 23 and 26, which would kill (among many other things) the $5,000 per car rebate currently available to state EV buyers for the next six years. Prop 23 is in trouble, but 26 has major oil company support from Chevron and ExxonMobil, and its chances are rated about even right now.
Since California could be half of the first-year EV sales in the U.S., the fate of these initiatives definitely affects what happens in 2011. With the rebate, a Californian armed with state and federal subsidies can buy a Leaf for $20,000 -- and get access to the HOV lanes that will be off-limits to regular hybrids. That's a deal. What happens next year (and next week) absolutely sets the stage for 2020.
John Humphrey, a senior vice president at J.D. Power, told me the company's predictions are based on a group of Ph.Ds sitting around with all the variables, and "tend to be pretty accurate." He points out, with complete accuracy, that if the U.S. was really serious about EV adoption it would raise gas taxes (which are half of Japan's currently). But he knows and I know that's anathema in an American election year.
Humphrey thinks that China, which is flush with cash and has an authoritarian government that could simply order the electrification of the auto industry, is in the best position to switch to EVs. That's true, too.
Ultimately, J.D. Power is bullish on EVs -- it's the timetable that's in question. "In emerging markets it's difficult to see the sky as it is, and we have to do something about it," Humphrey said.
Oliver Hazimeh, head of the global e-Mobility practice at the management consulting firm PRTM, a global management consulting firm, is much more optimistic about EV and hybrid penetration rates. PRTM says that by 2020 battery EVs will be at four to five percent, plug-in hybrids at five to six percent, and regular hybrids at 20 percent. Add those up and it's as much as 31 percent of the market. There's a big gap between that and J.D. Power.
I could offer my own numbers, but I don't think I want to make predictions when the situation is in such constant flux, and consumers (the people who'd actually have to buy the cars) confused about it all.
- Consumers are Confused about EVs, and it's Affecting Their Purchase Decisions
- Congressional Dysfunction Likely to Kill an EV Subsidy Everyone Likes
- Federal EV Subsidies Likely Killed by Politics