EV and hybrid vehicles

Market development, market outlook and issues associated with their adoption
AutomotiveWorld.com has published a new piece of research entitled ‘The Electric and Plug-in Hybrid Light Passenger Vehicles Report’.

A summary of some of the developments in the market, including research and electric vehicle (EV) trial outcomes, is provided below.

One of the key features of the EV and plug-in hybrid (PHEVs) market at the moment is the range of interrelated forecasts for expansion of recharging infrastructure, sales of new vehicles and reductions in the cost of battery technology. One difficulty in developing these forecasts is weighting the importance of supporting economic assumptions such as long-term changes in fuel prices or increases in vehicle range.

Overall, a variety of government incentives and early adoption by some large corporates seems to have seeded the market for the existing range of EVS and PHEVs that are currently available but a convergence of different market forces may be needed to launch the market and gain more widespread acceptance.

The trial experience gained over the last 12 months serves to remind prospective owners and fleet managers to avoid the hype and recognise the importance of behavioural change required to operate EVs and PHEVs. A better appreciation of the limitations of new vehicle technology should help in achieving optimal design and operation of vehicles in coming years. If not, unexpected change could cause resistance to technology and make fleets and private buyers more reluctant to adopt.

Expected market growth

• In March 2011, Pike Research forecast that global sales of EVs and PHEVs could exceed one million by 2015, with EVs expected to be more popular than PHEVs in Europe, and expected to account for half the market in Asia Pacific, but perhaps be less popular in North America because of a preference there for extended range capability.
• While government incentives are expected to support new EV and PHEV sales, the California Air Resources Board has also proposed to increase its Zero Emissions Vehicle (ZEV) mandate to require 5.5% of all new vehicles or 80,000 cars to be ZEV by 2018.

Analysis undertaken by Rare Consulting suggests that the growth of local EV sales is likely to be constrained by the limited availability of vehicles before 2015. Assuming that Australia’s share of global sales remains similar to sales of conventional vehicles it is expected that only a few thousand EVs may be in operation by 2015 with the majority being purchased by large corporates and local government. For example, GE has indicated that it will buy at least 1000 EVs in Australia as part of its plan to purchase 25,000 EVs globally by 2015.

In Australia, the preference of PHEVs over EV sales may not necessarily follow the US. While driving patterns and distances are closer to the US than Europe, the rapid ‘dieselisation’ of the Australian passenger car fleet and acceptance of LPG could undermine the case for an extended-range PHEV. In some ways, the slower technology uptake could mean that Australian motorists can leapfrog into EVs with longer range more suitable for the 90% of the population that lives in urban areas.

Electricity requirements

• Better Place claims that the electricity supply in almost all countries is already adequate to supply a major shift to EVs and PHEVs. In particular, most of the United States’ 200 million vehicles could be electric without the need for any additional generation if intelligent charging systems utilise off-peak periods.

In Australia, the impact of vehicle recharging on the operation of electricity networks is likely to be different to the US but still able to be managed over the next 10 years if relatively small volumes occur outside peak periods of electricity demand. However, further growth in electricity demand from EVs in Australia could exacerbate current network pressures.

Battery costs

• Ford – current range of US$500/kWh to US$700/kWh, but US$350/kWh is achievable.
• Nissan – 24 kWh Nissan Leaf battery costs US$9,000, or US$375/kWh but this price includes savings from reuse and recycling.
• Tesla – achieves savings by using laptop batteries, with new model battery cost expected to be as little as US$200/kWh.

Canberra is one of a handful of global locations that will see the early emergence of battery swap technology developed by Better Place Australia. The key benefit of the operating model of Better Place is the ability to spread the high battery cost over the life of the vehicle. The service is expected to begin by 2012.

Technology cost premium

• Chevrolet Volt – US$39,995 compared to Chevrolet Cruze at US$16,525.
• Nissan Leaf – US$32,780 compared to Nissan Tiida at US$13,520.
• Several OEMs have stated that they do not expect EVs to be profitable during the first production cycle.
• In April 2011, Fiat announced that it would lose more than US$10,000 per Fiat 500 EV even though the car will retail at around three times the conventional Fiat 500 cost.
• On the other hand, GM and Nissan have claimed that there is a small profit margin in the Volt and Leaf but it is suspected that this is only due to government incentives.

In Australia, the Mitsubishi i-MiEV will become the first electric car on sale in Australia next month at $48,800 (plus on-road cost). The previous model was only available on a two-year lease plan at over $60,000.

Recharging time

• A 2010 survey conducted by Accenture in Canada, France, Germany, Italy and the US, found that better fuel economy was not a decisive factor on its own and around two-thirds of respondents wanted the recharging time of an EV to be less than 20 minutes.
• Mitsubishi claims that the i-MiEV can be recharged to 80% capacity in 30 minutes but some OEMs have argued that most consumers will never use a fast-charge system and therefore do not need the on-board facility and its extra cost. For example, PSA Peugeot Citroën found that while 95% of its EV customers chose to include the fast-charge system, only 1% ever used it.

User perspectives

• A six-month EV trial conducted by Cenex in the UK found that average journeys were less than three miles (5 km) and the maximum was 11 miles (18 km) before recharging, even with a range of 62 miles (100 km), due to ‘range anxiety’, meaning that 93% of users did not even let the battery run below half charge and would not set out on a journey at that level of charge.
• In July 2011, the 12-month CABLED trial of 25 Mitsubishi i-MiEVs and 20 smart fortwo EVs (in the West Midlands, UK) found that 77% of journeys lasted less than 20 minutes and that only 2% used more than 50% of battery capacity. The data also showed a trend towards drivers making longer journeys as the program progressed and that they typically recharged the batteries only every two to three days.

In Australia, EV operation is likely to be geographically constrained to the inner city regions of Australia’s capital cities in the first instance. This conclusion is principally derived from observations about the likely consumer profile of early market adopters and the limited range of EV’s given recharging infrastructure limitations. The findings of a recent Australian EV consumer survey: ‘Gaining traction: Will consumers ride the electric vehicle wave?’ undertaken by Deloitte indicates the vast majority of respondents have requirements that are not currently met by EVs currently available in the market. These requirements include more range, reduced recharging time and a lower price premium over the cost of a comparable vehicle.