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

Approximately 8 percent fewer consumers are 'extremely' or 'very' interested in buying a plug-in car, and high price tags are the main culprit.
Written by Heather Clancy, Contributor

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.

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