EV Sales will exceed Expectations
Posted by butalidnl on 27 April 2010
Car makers seem to be wedded to the idea that Electric Vehicles(EVs) will suffer the same lack of public interest as hybrid cars have to date. GM was quoted as projecting the sales of EVs in 2020 at 3% of total car sales. Even Nissan (which is set to start with sales of the LEAF by the end of 2010) is estimating only 10% of total sales in 2010. Okay, 10% is still a lot – it will be about 2 million EVs sold in 2020 in the US; but I think this is a gross under-estimation of the impact of EVs in the world, or even in the US. Why do I say this?
Gasoline prices are set to go up very soon. In 2012, it will reach its previous highs of $150/gallon; and it will go even higher than that in later years. The supply of gasoline has not increased during the crisis, and the consumption of oil by China has continued rising at this time. When the US, Europe, and the rest of the world would have returned to its pre-recession level of production, the price of oil will go up accordingly. Thus, it is safe to assume that prices will reach 2007 levels or higher by 2012. Add to this the fact that world oil supplies are projected to reach its peak by 2012, and you have even more reason to think that prices will even exceed $150/barrel by 2012.
$150/barrel translates to about $5/gallon at the pump for US buyers. And it will stay at least at this level indefinitely, so US consumers will have to permanently adjust their auto riding/buying habits accordingly. In Europe, we already have the equivalent of $6/gallon prices, and sales of hybrid autos have increased significantly – to 4% of total autos sold in the Netherlands in 2009. Actually, it could have gone higher if not for the fact that auto imports did not keep pace with demand.
But US consumers go longer distances with their cars. Since they can’t change where they live in the short run, they will have to find a way to reduce gasoline costs. This they will do, initially, by buying smaller cars; but then they will go further, to buying hybrid cars and eventually Electric Vehicles.
The step from hybrid to electric is not too far. Once EVs become available in volume, they will be bought by many who now have hybrid cars. Especially for two-car families; a second car could very well be an EV.
The Nissan LEAF that is set to enter the market in 2010 is priced at $25280 (after tax). This compares favorably even with the Toyota Prius which costs $25990. By 2013 EVs will start to be available at prices that are even lower. This is because Chinese and even Indian car manufacturers are set to sell their EVs in the US market.
And take note that the market for EVs in Europe is going to be much bigger than that for the US. After all, at $80/barrel Europeans pay $7 or $8/gallon prices. When the price goes to $150/barrel, prices will surely go to the equivalent of between $10 -$12/gallon prices.
Thus, with a fast growing market in Europe, car makers will have a scale advantage early on, and this will surely mean that the average price of EVs will go down, expanding the market in its turn.
EVs have an added advantage – in that it does not cause pollution on site. Not only CO2, but also NOn, CO, benzene, fine particles, etc; and of course also noise. For cities, this is going to be an attractive thing about EVs – it will lessen noise levels and all kinds of pollution in their city centers. This will mean that cities will actively promote EVs in their city centers. London and Tokyo are actively promoting EVs (even though mass production is still to start) for this reason. And I think that many more cities will follow suit.
Of course there are “teething problems” with the introduction of EVs. How will recharging of cars be done – mainly at home? or at the work place? public places? Or what about the Lithium battery: will the supply for lithium be continuous or be subject to the whims of China and Bolivia? And there is also the question of having a standard plug, which will make it easier to have recharging stations in many places.
Well, all I can say to these kinds of problems is that they will be solved with time – and 10 years is time enough to solve them. I think a standard plug for recharging will come; in fact, the Netherlands has already decided which one it will be – and it seems that Germany and Belgium are also adopting the same standard. The question re Lithium is funny; since lithium is one of the more plentiful elements in this planet. Of course, the supply of lithium that is easily recoverable and cheap in these China and Bolivua, but if the price asked would be too high, we can always recover lithium from seawater. And if not, other kinds of batteries will be invented.
Of course, the sales of EVs will not fly right away – there are too many technical obstacles that face the first buyers. For example, public charging stations will not be that readily available; making it logical that the first EV buyers will install their own charging stations at home. And, people will want to be sure that technical support from garages will be available for their car. For these and other reasons, initial sales will not be high right away. But in a couple of years, the number of public charging stations will increase and familiarity with servicing EVs among auto mechanics will get widespread. And the EV market will take off.
So, what would be my prediction for EV sales in 2020? Well, I estimate it to take up 30% of European auto sales, and 20% of US ales by 2020.