Electric Vehicles

After the EuroCar Seminar on 20 January 2010, we posted the top ten questions asked by OEM and OES delegates in attendance. Today I will be answering questions pertaining to hybrids. If you missed Norm Marks answers to the Marketing questions, you can find them here. Tanja Linken will be answering questions aboout Network Planning in the next blog entry.

With regard to CO2 emissions, hybrids and zero emission vehicles, do you have any insight into vehicle whole life costs?

This question targets the cost of vehicle construction, battery cost including disposal and the vehicle running costs. The variety of calculations regarding life costs is still quite large. While it is not yet clear whether the retail prices for hybrid vehicles allow for a financial break-even to occur, in some premium models the hybrid drive is extremely expensive which can prevent a break-even from happening. The highest costs in car driving appear to be the loss in value on the one hand and the running costs (mainly fuel). So very much depends on the residual values for alternative cars and their general acceptance and the price relationship between the different fuel types in the future. The term "zero emission vehicles" is also a bit misleading as EVs (electric vehicles) do not emit while driving, but they still need energy for battery recharging. Dependent on the energy mix used in the production process, EVs might emit more CO2 than small diesel or petrol engines.

Is the development of fuel efficient vehicles dependent on the oil price going to $600 a barrel?

There are different scenarios regarding the future oil price development. Polk expects a price of ~$130 towards 2020, others expect $300 or even $600 per barrel. During 2008, oil became quite expensive with almost $150/barrel by the middle of that year. The pressure to develop alternative drives for cars increased. New regulations (e.g., those related to fleet consumption and CO2 emissions) force the public to reduce the fuel consumption of their vehicles. We expect to see both an improvement in conventional combustion technology by engine downsizing, optimized engines, start-stop systems, etc., as well as an expanded model offer in advanced technologies like hybrid or EV. With higher oil prices, there will be higher pressure to develop new technologies as well as pressure to reach financial break-even points for alternative energies.

What is the difference between plug-in hybrids, pure full hybrids and mild hybrids?

A plug-in hybrid vehicle is similar to a conventional full hybrid vehicle—both use a combustion engine as well as an electric motor. However, a plug-in hybrid uses larger battery packs that can be recharged by connecting to common household electricity. In full hybrid vehicles, the electric motor and the internal combustion engine are installed so that they can both individually or jointly power the vehicle. For shorter distances the vehicle can be propelled in its EV mode solely, which eliminates emissions. Mild hybrids use a generally compact electric motor to give extra output during the acceleration, and to generate on the deceleration phase. With mild hybrids, the vehicle cannot be powered by the electric motor exclusively.

Do you have any evidence that customers are driving shorter distances as a result of economic conditions?

At the moment we don't have any evidence for this development. The tightening of economic conditions has affected all kinds of industries dealing with transportation. Nevertheless private mobility is of common interest. With the overall trend of rising costs of ownership, the private driving behaviour might change and result in decreasing mileage, but this depends on the development of the costs of alternative means of transportation.

Thank you for taking the time to read my blog entry. If I left anything out that you would like answered, please submit a comment and I will be happy to address it!

Posted by Thomas Mawick, Manager, Automotive Studies, Europe, Polk (02.08.10)

I'm at the Detroit Auto Show today and there are hybrids and electric vehicles galore. I came to the show with an interest in super small cars and wanted to see and touch the cars I wrote about in my Will Super Small Cars Generate Super Big Sales analysis. I had the opportunity to see the Chevy Spark (I was sorry to see the clam shell doors were replaced by a traditional rear passenger door), the Fiat 500 and the Toyota FT-EVII concept that sits four, but not much more. 

I also had the opportunity to test drive a super small eZone from CT&T. CT&T is a Korean OEM with a fleet of electric vehicles that they are introducing to the U.S. market. This was my first test drive of an electric vehicle other than a golf cart. When I sat in the car I was surprised that I didn't feel cramped, but there wasn't room for my big auto show bag so the CT&T co-pilot held it at his feet. I sat down, was told to go slow and then reached for the gear shifter, but all I found was a button with D and R. I pushed the D for drive, stepped on the petal and away I silently went. You couldn't really tell the acceleration of the car in the basement of the Expo hall, but I don't think you'd win any races. It could be an ideal car for the urban commuter that has the opportunity to plug in or the golf cart community member looking for something different. What do you think? Is there a market for these super small electric vehicles in the U.S.?
 


Posted by Margaret Zewatsky, Global Market Analyst, Polk (1.12.2010)

I'm listening to the speakers at the SAA Outlook conference and one of the speakers, John Casesa, from Casesa Shapiro Group mentioned that there is research to support the demand for "clean cars" which is fueling new technologies such as those seen in Electric Vehicles (EVs). But the sales trend for EVs is predicted to be less than 1 percent of the market in the near term. With an anticipated price of $40K, the Chevy Volt's price may decrease the number of potential buyers. Meanwhile, the lack of supporting infrastructure for EVs may also scare off potential buyers.

This year's Detroit Auto Show is said to be all about electric vehicles, and EVs represent an exciting revolutionary way to create clean cars, but is there volume to support the new EV technology expenses? Bob Lutz (a speaker at tonight's SAA conference) said the Volt has future sales potential of 50-60,000 units a year, and serves as a symbol of the new GM. The Volt technology will work its way into future GM models, but will the volume of these and other OEM vehicles be enough to push EV sales past 1 percent?

Posted by Margaret Zewatsky, Global Market Analyst, Polk (01.10.2010)

Look out E85 owners – you may have a vintage model in your driveway. At the 2009 SAA Strategic Planning Summit last week, two presenters spoke about regulatory issues that are being addressed by decision-makers in D.C. right now that will affect upcoming industry trends. The California Air Resource Board (CARB) approved the Low Carbon Fuel Standard earlier this year which forces fuel producers to lower their product's "carbon intensity" by 10 percent by 2020. This approval comes after a University of Minnesota ethanol research study that suggested corn-based ethanol, which much of the U.S. ethanol production is dependent upon, may be more harmful to the environment than gasoline. CARB is encouraging cleaner energy options such as cellulosic ethanol, electricity and hydrogen. This attention is at a national level and I think it is going to impact automakers and their decisions to produce certain types of alternatively fueled models.

In 1998 Congress passed the Alternative Motor Fuels Act providing OEMs with credits toward the Corporate Average Fuel Economy (CAFE) standards. This essentially kept automaker's fleet fuel economy within federal standards while still producing the big gas-guzzlers America loved. How big is this market segment? Flex fuel vehicles represent 7% of retail sales between January and July of this year. This is a 2% increase from 2008. GM has made the commitment to have one-half of its annual U.S. vehicle production be E85 or biodiesel capable by 2012. GM leads the pack with 18 flex fuel vehicles along with seven other OEMs currently offering flex fuel models. Despite all of this OEM activity around flex fuel offerings, there are still less than 2000 fueling stations across the U.S. That's a problem if an OEM wants to build natural (or "national") demand for these types of vehicles.

If corn-based ethanol as we know it today will not be supported, where does this leave the E85 investment the OEMs and fueling stations have made to date? Is E85 being scrapped for greener energy sources like electric vehicles? (For more on electric vehicles, see our latest Polk View, "Who Will Buy Tomorrow’s Electric Vehicles?") If you are an E85 owner today, where does that leave you and how will you be able to reap the rewards of having this type of flex fuel vehicle?

Posted by Margaret Zewatsky, Global Market Analyst, Polk (09.11.09)