A premium plug-in sport car, the Tesla S. (Tesla website)
Sales of eco-friendly plug-in electric vehicles (PEVs) in major markets have not been as promising as expected. According to a new report from Pike Research, around 410,000 PEVs will be sold between 2011 and 2015 in the U.S., with cumulative U.S. sales not to total one million until 2018.
Practical challenges of launching new models and expanding PEV sales to mainstream consumers, however, have proven more difficult than automakers' or policymakers' forecast.
The U.S. government has made putting one million EVs on American roads by 2015 a centerpiece of its transportation policy, responding to which automakers in Japan and the U.S. have ramped up production of PEVs over the last two years.
Nevertheless, PEV sales are expected to rise strongly in the second-half of this decade. Global PEV sales are expected to surpass one million vehicles yearly by 2017 and, by 2020, worldwide sales volumes will reach 1.7 million units annually, forecasted Pike Research, the market research and consulting firm.
“While it is true that PEVs have seen delays in arriving on the market and have been sold in fewer numbers than originally anticipated, we expect strong growth as global PEV sales volumes will nearly triple between 2012 and 2014,” says research director John Gartner. “Automotive companies have made a strong commitment to electric vehicles, and their viability as a transportation platform is no longer in doubt.”
As the market for EVs matures, Gartner adds, significant regional differences in adoption patterns will emerge. For example, while plug-in hybrid electric vehicles (PHEVs) will outsell battery electric vehicles (BEVs) in North America, the converse is true in Europe and Asia. Meanwhile, auto manufacturer strategies continue to evolve – the lion's share of companies making PEVs are doing so at a very measured pace, carefully vetting new technologies and consumer preferences with a sharp focus on regional differences in demand. All are optimistic about the long-term prospects for the PEV sector, but the industry remains focused on growing cautiously to meet demand.
China's PEV Market
Pike Research estimates that by 2017 sales of plug-in and hybrid medium-/heavy-duty vehicles will gain increasing market shares in major world markets. (photo from Proterra LLC`s website)
On the other side of the Pacific Ocean, China, another major market with governmental policy support to promote PEV adoption, also faces challenges.
Production of PEVs in China will fall well short of Chinese government's ambitious goals of manufacturing 500,000 PEVs yearly by 2015, though the government has made vehicle electrification central to its aggressive plan for growing the automotive market both domestically and internationally, as well as having created many national, local incentives for PEV purchases, according to Pike Research.
The PEV market in China, the world's largest automotive market, is forecast by Pike Research to grow at a compound annual growth rate (CAGR) of 60% from 2012 to 2017, surpassing 152,000 units sold annually by 2017. However, that figure represents less than 1% of the total light duty vehicle market there.
“The Chinese government initially overestimated consumer demand for EVs, and has made adjustments to its incentive policies,” says Gartner. “Many members of the emerging middle and upper classes prefer imported American and German vehicles – especially larger sedans in which owners can enjoy chauffered service amid congested roads.”
Specifically, China is adjusting its program away from BEVs to include more hybrids and plug-in hybrids. Still, the government will find it difficult to implement policies, Gartner says. The country's fragmented regional governments and close relationships between local governments and vehicle manufacturers have created problems in implementation, especially for vehicle and technology standardization, he explains.
Competing interests as companies producing vehicles with proprietary technologies have already delayed release of China's Energy Saving and New Energy Vehicle Industry Development Plan (2011-2020), making it difficult for companies to plan investment in EV production and infrastructure. Nevertheless, China's EV ambitions will provide a huge boost to EV development worldwide in the long-run, Pike Research says.
Room for Bigger Ones
Electric and hybrid vehicles may be smaller but carry relatively higher prices, with shorter range being the major downside. Recent improvements have made such vehicles more appealing to individuals. Pike Research says its recent research shows over 17,000 PEVs were sold in the U.S. in 2011, mostly first-year Nissan Leafs and GM Volts.
Though lower than ambitious targets set by Nissan and GM, sales of both Leaf and Volt outpaced first-year sales of popular hybrids Toyota Prius and Honda Insight upon initial launch over a decade ago, Pike Research says. Furthermore, nearly every major auto manufacturer globally has revealed having some type of PEV models in the works. Despite such indicators, Pike Research estimates that the American market share for PEVs will not break 1% before 2017.
Countering the subcompact image of EVs, though, the research firm says, is a growing number of mid- to heavy-duty electric and hybrid vehicles that show significant promise in transport electrification.
While EVs are priced relatively higher, models are being developed, deployed for almost every transportation purpose, from garbage trucks to school buses. Cost reductions are greater and range concerns fewer for fleet managers deploying these vehicles than for individuals buying PPEVs.
According to Pike Research, PEVs can significantly reduce costs tied to vehicle maintenance and fuel consumption, an appealing element for fleet managers who have few conventional alternatives to cut operating costs. Fleet vehicles often run predictable routes and distances, hence minimizing “range anxiety” and logistic issues for fleet managers as compared to individual consumers.
The Electric Drive Transportation Association (EDTA) reports that fleet managers are willing to pay 10%-14% more for EVs based on operating cost reductions, and 73% of government fleet managers are willing to consider deployment of such vehicles.
Pike Research estimates that by 2017 sales of plug-in and hybrid mid/heavy-duty vehicles will gain increasing market shares in major world markets, from 6% in the U.S. to 22% in the U.K., indicative of the encouraging trend that, while sleek sports cars an subcompacts may still garner the most attention, the transition to electrified transportation will likely be exemplified by boxy delivery trucks.
(by Quincy Liang)