Oliver Hazimeh, head of the PRTM management consulting firm optimistically predicts, "It's not a matter of if - but how fast and to what extent - different electrified vehicles will be adopted as we approach an electrification tipping point. By 2020 PRTM estimates that EV's will have a four to five percent adoption rate, plug-in hybrid electric vehicles (PHEV's) will be at five to six percent, and hybrid electric vehicles (HEV's) will reach 20 percent."
However, a study released by J.D. Power and Associates suggests we may be waiting longer. In "Drive Green 2020: More Hope than Reality?" the research giant predicts that all forms of electrified vehicles will account for just 7.3 percent of worldwide new vehicle sales in 2020. This is less than a third of Hazimeh's estimate. Today, J.D. Power pegs the total worldwide 2010 sales of all electrified vehicles at just 2.2 percent (954,000) of the 44.7 million total.
The J.D. Power study frames a rather disturbing picture of the transportation business sector as the world's vehicular population hits 1 billion in 2015, double the 1995 total. Fast-paced growth in emerging markets such as India and China is already putting increased demand on fuel supplies and the raw materials needed to make new vehicles. Emissions are another genuine concern because third-world emissions standards lag far behind the U.S. and European Union.
Supporting his firm's position, Hazimeh says, "The cost of hybrid electric vehicles will come down significantly during the next 10 years, primarily by reducing the lithium-ion battery cost. Specifically, the commercial cost of lithium-ion batteries will see a 50 percent decline from today's $650 per kWh to about $300 per kWh by 2020. This will be achieved through a mix of scale, operational efficiencies, and technology advances. This price reduction, coupled with rising energy costs, will create the economic incentive to appeal to a broader consumer base. PRTM expects that HEV's, PHEV's and BEV's will reach total cost of ownership parity by 2010, 2016 and 2018 respectively."
Additionally, Hazimeh points to a recent announcement by GE regarding the purchase of 25,000 electric vehicles. "We believe that GE's action is a critical step in the role that fleets can play in utilizing more than 20 percent of the announced battery manufacturing capacity by 2015, thus helping accelerate the scale-driven cost reductions in advanced batteries," said Hazimeh.
The J.D. Power survey, however, damps the general EV enthusiasm by documenting the hurdles facing battery-based vehicles. Consumers, on one level or another, are concerned about the following:
• Range Anxiety: Battery electric vehicle (BEV) technologies have a significantly limited driving range compared to vehicles with traditional internal combustion engines (ICEs).
• Support Infrastructure: The current electric utility infrastructure to support battery charging is not sufficient to support rapid mass migration to battery-based technology.
• Power and Performance: Most hybrid-electric vehicles and BEVs cannot deliver the same level of power and performance as traditional vehicles with ICEs, including needs such as towing.
• Fuel Economy ($/mile): In terms of total dollars spent per mile driven, it is not yet clear whether an electric powertrain may be more efficient (long term) than an internal combustion engine (ICE).
• Limited Battery Life and Replacement Costs: Battery packs might need replacement during the vehicle's lifetime, at substantial
• Overall Cost of Ownership: It is unclear whether the overall cost of ownership would be lower for green technologies than for ICE-powered vehicles.
• Extensive Time Required to Recharge Battery Packs: Most BEV battery packs require long recharging times, compared with the few minutes it takes to refuel an ICE-powered vehicle.
While there are individual examples of hybrids or BEVs that answer one or more of the above concerns, electric vehicles are not widely perceived by consumers as being the equal to ICE-powered vehicles. Consumer acceptance must dramatically increase to cause a rapid mass migration to HEVs and BEVs.
A recent study by Maritz Automotive Research Group indicates that only 16 percent of consumers purport to be "very familiar" BEV's, while for HEV's the number is only slightly greater, at 22 percent. "Our research indicates that over time consumers see the adoption of electric-power and other alternative power-train vehicles as an imminent reality. Yet today, low consumer familiarity and understanding of alternative fuel vehicles -- including both electric only and gasoline-electric hybrids -- has a cooling effect on their purchase intent," said Dave Fish, Maritz Research vice president.
Two other major factors will also impact the transition to vehicles that employ some form of electric power: the global supply of oil and the regulatory policies of the world's leading automotive markets.
If the supply of oil remains steady, as is widely expected, the price of fossil fuels will remain attractive, supporting the sale of future vehicles with ICEs. Supply and demand dictates that low fuel costs do not support high demand for battery-based vehicle technologies. As is the case today, BEVs will likely continue to require either continued government subsidies or a major breakthrough in technology to make them affordable and appealing to consumers who are spending their own money.
Experts are quick to note that one significant semi-permanent disruption in crude oil production could dramatically increase the price of petroleum-based fuels, quickly evening the economic playing field for BEVs. It is not known, however, how OPEC (Organization of Petroleum Exporting Countries) might react to a dramatic decrease in demand for crude. It could respond by increasing production, thereby easing fuel costs, a move that favors ICEs.
In terms of government regulations, China may actually lead the world into electric vehicles. This market is large enough that if the communist government regulates the adoption of BEVs, the added demand could help speed development of more practical BEVs for the rest of the world.
China regulating the home-market adoption of BEVs would help solve the "chicken and egg" standoff that many believe is hampering the development of BEVs and other electrified vehicles. The argument goes like this: There is not a market for BEVs, so the technology doesn't exist to meet the need. The reverse is that BEV technology is not competitive enough to attract buyers, so there is not a market for BEVs. If the expanding Chinese market were to suddenly cause a huge demand for BEVs, there would be great financial gain to be earned by companies who provide the best performing technology at the most competitive price. Drivers all over the world would benefit from these gains as they became available elsewhere.
But be careful what you wish for. If China does move rapidly to BEVs, the environmental impact remains a major question mark. China has the world's largest reserves of coal, which means it has the ability to produce electricity from this coal. Unfortunately, China's record of mandating low emissions from their coal plants is not good.
The survey from J.D. Power and Associates highlights the challenges facing the adoption of electric vehicles and answers the questions many environmentalists continually ask, "Why aren't we there yet?" The reality is that modern internal combustion engines are increasingly efficient and affordable, while electrified vehicles have huge hurdles to jump through in order displace conventional vehicles.
Read more from our partner Motor Trend: Comparison: 2011 Ford Focus Electric vs. 2011 Nissan Leaf.