Positve Signs Amid Slow Sales of Alternative-fuel Vehicles

Light-duty hybrid and PEV sales to reach 6.6 M. units annually by 2020

With the global alternative-energy vehicle market still in its infancy, and in most nations sales of plug-in electric vehicles (PEVs)--including plug-in hybrid electric vehicles (PHEVs) and battery electric vehicles (BEVs)--have far lagged governments and vehicle makers' expectations for a couple of years, except in some Scandinavian nations in which sales of BEVs have already surpassed that of luxury cars.

The reality is that many consumers still are not eco-sensitive enough nor are convinced of the existence of well-rounded infrastructure and still inadequate cruise range of most alternative energy cars. However recent encouraging sales of the Tesla Model S is one inspirational sign, as well as others that may push the market forward.

One of the several positive signs is the forecast by the international market research and consultant Navigant Research that sales of  alternative-energy (including hybrid) vehicles is set to rise. Its recent report says that worldwide sales of light duty hybrid and PEVs will reach 6.6 million units annually by 2020, or almost 7% of the total light duty vehicle market. Major automakers as Honda, Volkswagen, Hyundai and others are joining the fray to launch PEVs in many countries over the next two years, expanding product range to  spark increased consumer interest and accelerate sales opportunities.

Falling prices also drive demand for EVs, with cost of battery packs making up as much as half of PEV costs. Batteries in hybrids and PHEVs are to see 10% and 26% decline in cost by 2020, respectively, while that of BEVs will likely remain flat but see improvements in cruise range and performance during the same period.

Demand from DefenseGovernment support, until now, is still pivotal in promoting demand for alternative-energy vehicles, with one of the best examples, in addition to civilian utility purchases, being the U.S. Department of Defense (DOD) to  acquire more than 92,000 EVs by 2020.

Aiming to capture the economic, environmental, and strategic benefits offered by non-petro-fueled vehicles, the U.S. military is investing heavily in EVs, including hybrid electric vehicles (HEVs) and PEVs.  Navigant Research recently pointed out that the DOD will acquire more than 92,400 EVs for non-tactical purposes from 2013 to 2020.

“In remote theaters of operations, the cost of moving fuels to forward military locations can be a multiple of the cost of the fuel itself,” says Scott Shepard, research analyst with Navigant Research. “The military's approach to reducing fossil fuel consumption from non-tactical operations includes acquiring increasing numbers of vehicles powered by ethanol blend and biodiesel blend fuels; but the majority of the investment will go toward HEVs and PEVs.”

V2GV2G technologies are a new hope, maybe not the main but an auxiliary pushing force for the increasing popularity of PEVs. Such technologies enable PEVs to participate in ancillary services for the power grid, have been in development since the beginning of the modern EV era, but they are only now beginning to emerge in revenue-generating applications. Today, this market is quite small; worldwide capacity additions from V2G systems will total less than 9 megawatts (MW) in 2013, Navigant Research's report shows.

However, the V2G market will grow steadily over the next 10 years. Worldwide revenue from V2G frequency regulation will grow from less than US$900,000 annually in 2013 to US$190.7 million by 2022, the research firm's study concludes.

“Business models for V2G technologies are starting to emerge in select markets around the world,” says Scott Shepard, research analyst with Navigant Research. “Large corporations and government agencies, such as the U.S. Department of Defense, are driving V2G development and laying the foundation for individually owned electric vehicles to participate in grid services in the second half of this decade.”

Alternative Hybrid: HydraulicAnother new driver for global alternative-drive vehicle market, though just a start, is the hybrid drive technology, which uses hydraulic pumps and motors to capture, store, and reuse the kinetic energy from a moving vehicle, is reaching a potential inflection point in 2013.

Demonstrations have proved that hydraulic hybrid systems work well for certain applications, and the automotive industry is waiting for the first commercial vehicle manufacturer to put them into volume production. According to a new research brief from Navigant Research, worldwide sales of hydraulic hybrid vehicles will reach 6,500 units by 2025. Under a more aggressive scenario, sales could surpass 64,000, the study concludes.

“While major suppliers such as Parker Hannifin, Bosch Rexroth, Eaton, and Dana continue to develop their heavy-duty hydraulic hybrid systems for large commercial vehicles, the possibility exists that the technology will remain on the shelf indefinitely, labeled as little more than an interesting experiment,” says David Alexander, senior research analyst with Navigant Research.

The development that could completely change the global outlook for hydraulic hybrid technology is the Bosch-PSA Peugeot Citroen project in Europe. Bosch is working to develop what is called the Hybrid Air drive for future small Peugeot and Citroen model vehicles, slated to go into production in 2016. While the basic principles are similar to the technology found in commercial vehicles, the hydraulic hybrid system for PSA Peugeot Citroen is a completely new development for passenger cars.

According to Peugeot Citroen, the Hybrid Air is a new type of full-hybrid powertrain that combines a petrol engine and compressed air for energy storage instead of a battery, offering an alternative to electric hybrid solutions.

Hybrid Air, the automaker claims, positions PSA Peugeot Citroen as the global leader in this technology, with an affordable core model offering that delivers lower fuel consumption and ease of use. The new technology offers multiple advantages for the customer: Affordability; Low fuel consumption and a significantly reduced environmental footprint (thanks to fuel savings of 45% in city driving that translate into a 90% increase in driving range compared with conventional engines with the same power rating); A spacious interior (allowing for modular passenger compartment design without surrendering trunk volume); Uncompromising driving comfort and road handling (Hybrid Air delivers perceptible driving sensations, such as nimble response with the boost effect, as well as first-class road handling thanks to an automatic transmission without torque interruption); and Worldwide viability (Hybrid Air technology is viable in all markets, making it possible to offer energy efficient automobiles in all types of climates and regardless of the extent of the maintenance network).