2012 will be a make-or-brake year for electric vehicles

2012 will be a make-or-brake year for electric vehicles

Summary: Approximately 8 percent fewer consumers are 'extremely' or 'very' interested in buying a plug-in car, and high price tags are the main culprit.

TOPICS: Collaboration

Consumer acceptance for plug-in electric vehicles like the Ford Focus Electric will be critical for the industry's future.

Consumer acceptance for plug-in electric vehicles like the Ford Focus Electric will be critical for the industry

Updated Jan. 9 to clarify Toyota Prius release information.

Before I receive all sorts of e-mails complaining about the spelling of the word "break" in the headline, let me state that it was an intentional choice. That is because it is clear that there are a number of factors putting the brakes on electric vehicles sales right now, including nagging safety concerns, but most of all price.

The signs of the electric vehicle conundrum became more obvious last week, with the revelation that the best-selling electric vehicle in the United States -- Nissan Leaf -- is represented by just 10,000 cars on the road in that country. (There are approximately 22,000 on the road globally.) Then came the news that General Motors is planning to modify the battery housing design for its Chevrolet Volt in order to address safety concerns raised by the National Highway Traffic Safety Administration. A positive move, certainly, but one that casts doubts about whether electric vehicles are really ready for their close-up with the American public.

Another new set of research from cleantech market analysis firm Pike Research ("Electric Vehicle Consumer survey") suggests that 2012 will be the make-or-brake year that I suggest in the headline. The main finding of concern in the study is that only 40 percent of 1,051 consumers surveyed in the United States in late 2011 said they would be either "extremely" or "very" interested in buying a plug-in electric vehicle. On the face of it, that's not such a bad number, except when you consider that 44 percent said the same thing in the 2010 version of the survey, and 48 percent picked that response when surveyed during 2009.

The numbers are very obviously traveling in the wrong direction, and there is one major reason -- the sticker on these vehicles in dealer showrooms.

"Price is the most significant barrier to consumer interest in electric vehicles," said Pike Research director John Gartner. "About two-thirds of our survey respondents who stated they would not be interested in purchasing a [plug-in electric vehicle] said that they felt such a vehicle would be too expensive. Other said they would want to wait a few years until the technology is more proven, and almost half said that a PEV would not have sufficient driving range for their needs."

This is clearly a case of a technology where real-world experiences of people's friends, neighbors and coworkers will be important for winning over skeptics. Plus, to be frank, there really weren't that many mainstream choices for plug-in electric vehicles during 2011. That will change this year, which is why the next 12 months will be extremely important for this entire industry.

The Toyota Prius electric edition will emerge in March 2012, although the 2012 release will be limited to 14 states, and the car really won't be commercially available on a widespread basis until 2013. The Ford Focus Electric, available in limited supplies this year, will be another important model for the industry. Both the Focus and the Prius are among the most anticipated vehicles in this category. In Pike's survey, 51 percent of the respondents said they would be most likely to select a Toyota plug-in model when buying an electric vehicle, while 46 percent said they would consider a Ford version. What is especially notable about that result is that neither automaker had a plug-in car available when the survey was conducted, although details about both the Focus Electric and Prius Electric were available.

As already mentioned, sticker prices will be key. Pike Research said that while consumer intellectually understand that they might pay a premium for electric vehicle technology, that premium is limited to about 18.75 percent over the price of a "traditional" gasoline-powered model. The optimal price of the residential charging equipment appears to be about $500.

The other unknown, of course, is the future for incentives that encourage people to buy electric. On its Web site, Ford trumpets the fact that consumers might be eligible for a $7,500 federal tax credit, although the future of incentives such as they are very much in question as Washington lawmakers look for every way conceivable to cut the enormous U.S. federal deficit.

Consumer acceptance during the next 12 months will signal to automakers whether or not they should step on the accelerator when it comes to programs and strategies to make plug-in electric vehicles a more mainstream part of their vehicle portfolios. Otherwise, we very well may see some of them put the brakes on their investments in electric vehicle technologies.

Related stories:

  • 7 trends driving electric vehicles in 2012
  • Topic: Collaboration

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    • If that is true .... then it is a "brake" year for them

      Not a single one is worth the money you spend on them. On top of that, the more EVs the higher the cost of electricity will be for everybody else (because it will put an additional demand on the already aging grid).
      • RE: 2012 will be a make-or-brake year for electric vehicles

        @wackoae The Grid has survived the introduction of Air Conditioners, refrigerators, computers, idle DVR's. The list goes on.

        The daily draw of an EV lies between the Refrigerator and the HVAC system. Modern EV's are all programmable to charge at night when demands are small.

        Higher price electric is coming, but that's not because of increased demand. It's due to the EPA regs making generation more costly. Many EV owners have already invested or plan to invest in PV solar to insulate themselves from this potential outcome.
        • Drive a Tesla and then talk

          Thats an amazing vehicle.<br><br>If you have the money, there are very few compromises. Its just great!<br><br>With a 250miles range and at 129mpg you cant go wrong. 3.5hrs to fully recharge (long trips maybe an issue, though would force you to take break and avoid driver fatigue!)<br><br>After TopGear's review, I was not expecting what this puppy can do. If you have the money, you would be pleasantly surprised.<br><br>Now .. if they could just make it affordable, then we would have something to talk about.
      • RE: 2012 will be a make-or-brake year for electric vehicles

        Not to mention the fact that electric vehicles don't really prevent environmental damage, they just shift it to another sector. Copper mines (for just one example) are environmental disasters all by themselves.

        I think the effort is worthwhile, but it needs a lot more development before it's ready. I don't remember how much the price of electric vehicles is government-subsidized, but even with those subsidies the ROI is minimal.
        • Totally agree

          @clfitz<br><br>100% with you there clfitz. Compared the 1.6 trillion america spends defending oil supply lines. The ROI of a few billion to kick start an industry almost independent of oil is foolish.
    • RE: 2012 will be a make-or-brake year for electric vehicles

      The high price of EV's will hopefully come down overtime. In the interim incentives should encourage the scale of production necessary to realize the pricing benefits.

      The problem with the current incentives that the only people that can take advantage of the tax credit are

      1. Those who want to lease.
      2. Those with $7,500 or more in Tax liability. Even those with more than this liability need to be able to float that amount of money until tax season rolls around.

      What is needed is point-of-sale credits that make the benefit available for anyone regardless of their income, tax liability or savings. If your article is to be believed the credit may need to be considerably more than $7,500.
    • Total bust!

      It's been a total bust year for EV producers. They've only made 1.1 billion USD in revenue. Total failure. On top of that they've only outsold the first year sales of the Prius and Honda hybrids by 2. Utterly abyssmal! And to top everything off, they catch on fire, a whole 2 of them, compared to the 10's of thousands of combustion cars that burst into flames in the US every year. Outrageous!
    • RE: 2012 will be a make-or-brake year for electric vehicles

      They are in the wrong market. Plug in electric vehicles should be in the SUV and luxury car market. Larger vehicles can pack more energy in (giving longer range), and their increase in fuel efficiency _will_ make an environmental impact. In the luxury market, the price of the batteries can be better hidden in higher profit these car command.

      Stuffing big, heavy batteries in little, tiny cars is just plain stupid. It the lack of cooling space that make Li Ion batteries runaway thermally.

      The ideal plug in electric car would be the size of a GMC Yukon or Ford Expedition.
    • Terraced houses, and high-rise housing make it a limited market.

      On a world-wide view, I wonder what percentage of householders are even able to have their own charging point. I suspect its probably only about 30%.
    • RE: 2012 will be a make-or-brake year for electric vehicles

      I was interested in a Volt 2010, but while waiting for them to become generally/widely available in 2011, I purchased another vehicle because I couln't wait any longer. So if polled now, I would probably say not interested right now. If GM is smart, they will be in this for the long haul (unlike their last EV effort a number of years ago). It will take time and getting some of the "Correct People" buying EVs so there is some cache to doing so. The battery problems in the Volt sound VERY MUCH like nothing significant either (although moving forward with fixes is a great idea that should help avoid a negative stigma). For now, the infrastructure is still being built. GM would be smart to make some deals with Municipalities to buy other GM vehicles and get a Volt thrown in for free. The municipality can then put in a Public Charging station a central location and have their employees use it as well as the public (small fee to use it). This will lend itself to public employees who might be leaning toward a vehicle, but worrying about charging station availability having one less reason to purchase. Things will grow from there (maybe slower than GM would like, but still in the right direction).