I like electric vehicles for several reasons. Large scale deployment of EVs is the inevitable technical solution for reducing oil dependence. I like the looks and performance. My neighbor has a sedan that I openly covet. Another friend has a hybrid SUV that I thoroughly enjoy riding in - quiet, quick, very little exhaust odor. Except for the price, what’s not to like? But even if Char and I were in the market to buy a new car we’d still hesitate to buy electric, mostly because of that darned, hefty price tag. I like 'em, but not that much.
Despite all the sound and fury, hybrid electric cars didn’t make much of a dent in the market when they were first introduced, and they still don’t. The market share of hybrids peaked at 2.8 percent of new vehicle sales in 2009. In 2010 the market share went down to 2.4 percent and this year it is expected to be even less.
Not that the manufacturers haven’t tried – the number of hybrid models offered went from 17 in 2009 to 30 in 2011. You wonder how long the trend for greater variety will continue since the Toyota Prius continues to capture half the hybrid market. GM plans to make the Chevrolet Volt available in all 50 states and still plans to sell 10,000 by the end of 2011. That goal seems odd because GM would have to sell the same number of Volts in November and December as it did in the first 10 months of the year! Guess we can expect to see even more gift-wrapped cars in the holiday TV ads.
The outlook for hybrid EV sales is dreary, but not only because of the high initial sales cost. Two other factors come into play – the first is the increasing fuel economy of conventional vehicles. A number of new conventional vehicles offer more than 40 mpg. Gasoline prices have to go up considerably for a hybrid to win on a cost basis.
The second and related factor (speaking of dreary) is the slipping global economy with resulting falling oil prices. There has been a bubble in spot crude oil prices, but that won’t last. Some analysts expect the growing European financial crisis to drop crude oil prices to $60/barrel or even lower. That will make electric vehicles even less cost competitive with conventional.
Of course, the European blow-back will continue to impact U.S. job growth and economic stability – not encouraging for sales in general and particularly not a good sign for high ticket items.
Some consumers will buy electric vehicles to help reduce their carbon footprint. But even there, the benefits are meager, depending on the local power grid (see Electric Vehicles: Cool Technology but Not So Good For a Warming Planet Earth?)
Okay, okay, but what about the ‘driveway prestige’ that comes with owning a slick new hybrid? Or what about those who buy the newest thing so that they can have, well…the newest thing? I think we’ve already seen many of those folks in the initial sales. That niche won’t open very far and may, in fact, already be closing.
With all the above in mind, I have to disagree with an article that was reported in Smart Energy Portal (see Utilities Hold the Key for Unlocking Electric Vehicle Adoption). Oh sure, utilities have a large part in providing the charging infrastructure. They’ll happily partner with communities participating in the $8.5 million stimulus provided through the DOE Clean Cities Initiative (who wouldn’t?). But unless electric vehicle sales go up, those charging stations could end up deserted and quiet, looking like a set from the old Twilight Zone.
Because of all these factors, the key to electric vehicle deployment is to greatly reduce the purchase cost to the consumer. That’s not happening. So at this point, it looks to me like U.S. hybrid electric vehicle sales will stall – at least until we get past this quasi-recession that’s infected the globe.
Their time has not quite come.