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Predicting the 2020 EV Market: Consider the Wild Cards

It's always fun to predict the future, and the beauty is that if you are projecting far enough ahead no one's likely to remember what you'd said--even if turned out to be egregiously wrong.

How many battery electric vehicles, plug-in hybrids and just plain hybrids will sell in 2020? I can make only educated guesses, which is also the case for Lux Research, which just released its latest report, "Unplugging the Hype Around Electric Vehicles." In that study, it predicts the size of the market based on different oil-price scenarios. Roughly, the higher the oil price, the more EVs will be sold. If oil reaches $200 a barrel by 2020, for instance, Lux thinks that light plug-in hybrids will be the best-selling EVs in the U.S., with a million units sold annually. "At lower oil prices, plug-in hybrids and battery electrics languish."

Even a million EV cars and trucks is not a lot when you consider that the entire auto market today is around 10 million (down from 16 million annually). That's a dent, but not a huge one.

My problem with Lux's analysis here is that it assumes that car sales are wholly based on the fluctuations of the free market. Much as we all may want to keep Adam Smith's dream alive, there are other factors at play, especially with EVs. A market-only scenario, for instance, discounts the role of such physically unavoidable barriers as peak oil and greenhouse gas buildup. Both have already influenced the "free" market.

Government subsidies for not only electric cars but also hydrogen and biofuels is an international fact. The Obama Administration is committing more than $27 billion, through the Department of Energy (loans and grants), for U.S.-based manufacturing plants to build both EVs and batteries. The French government has invested $2.2 billion in EV charging stations, and governments all over Europe and Asia are encouraging hydrogen and fuel-cell development (the U.S. is a laggard).

If the U.S. passes a cap and trade program as part of its forthcoming climate legislation, that will assign a price to carbon and provide incentives further incentives for reducing auto emissions. The U.S. is already committed to improving fuel economy to 35.5 mpg by 2016, and that means either drastic improvements to gas cars or increasing the electric car fleet.

Lux's analysis was posted at Smart Grid News, and I talked to Jesse Berst, who is the founding editor of that site. "What Lux did is a straight-line extrapolation, which left out the mitigating factors, the wild cards, that can absolutely change the equation," he said. "A lot depends on whether there is a carbon price or not. And in addition to the things you cite, there is also the possibility that EV batteries could become an asset to utilities."

Berst sees the vehicle-to-grid (V2G) scenario, in which EV's plug in and return power through their batteries, as still distant, but smart charging (with vehicle and grid interaction to choose optimal charging times) as quite doable now.

Ford's Nancy Gioia, now the company's director of global electrification, told me that by 2020 she expects that between 10 and 25 percent of the new cars sold will be hybrids, plug-in hybrids or battery EVs. That's as good a projection as any, but it's also a cautious one. Depending on which wild cards are dealt, there could be many more battery vehicles on the road in 11 years.

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