A Dangerously Dispassionate Look At The EV Market

Edward Niedermeyer
by Edward Niedermeyer
a dangerously dispassionate look at the ev market

One of the toughest challenges facing industry analysts right now involves determining what the market for electric vehicles actually looks like, what kind of volumes it will support and for how long. It’s a problem that I’ve hashed over at length with an old college buddy who now works at a cleantech investment firm, and let me be the first to say that it’s not an easy problem to pick apart. The number of unknown quantities and moving parts explains why opinions among money managers can vary so wildly even about relatively marginal firms like Tesla.

Luckily, Thilo Koslowski of Gartner Research [and celebrated coiner of the term “the trough of disappointment”] has dedicated himself more thoroughly to the problem, and has some startling findings to report. For example, despite the relentless pro-EV hype present in all levels of the media, Koslowski’s research shows that more consumers are actually considering buying a natural gas-powered vehicle. Looks like Edmunds’ Jeremy Anwyl was on to something when he called for an end to EV tax credits in favor of greater support for natural gas cars.

But even those raw consideration numbers don’t tell the whole story. Koslowski notes

EVs primarily face a market adoption problem, not an infrastructure challenge, to move from early adopters to mainstream buyers. The ideal EV does not exist yet in today’s automotive market and will likely require another technology generation before it arrives. Consumer sentiment regarding EVs is still positive, but is beginning to show areas of concerns for automotive manufacturers when compared to 2010. EVs must provide better cost-value ratios and convince consumers that no significant behavioral changes are needed before becoming a large-scale, consumer alternative for traditional internal-combustion engine (ICE) and hybrid powertrain technologies.

This is sobering news for even the “end-to-end” EV business model, as championed by Project Better Place. The infrastructure-based approach to EV marketing may help eliminate range and depreciation issues (which addresses the behavioral change issue), but the cost-value ratio that Koslowski highlights is still an issue for concern, thanks to high upfront costs. Not that Koslowski writes off infrastructure completely, saying

Infrastructure and service providers are likely the primary beneficiaries of the current EV evolution. Utility companies, in particular, have the opportunity to play a more dominant role in the emerging e-mobility future, because U.S. consumers prefer to have their utilities address their potential EV infrastructure needs.

But the research shows, the nascent EV market is extremely price sensitive. Though 21 percent of consumers say they are considering an EV (more than are considering a new diesel car), Koslowski’s data shows that

nearly one-third of U.S. drivers interested in EVs are not willing to pay a premium price for an electric car, and only 5 percent are willing to pay $10,000 more.

You hearing this Chrysler? As a result of this study,

Gartner maintains its 2009 prediction that in industrialized automotive markets, the number of battery-powered vehicles (plug-in full-electric and plug-in hybrid EVs) as a percentage of all vehicles sold using various types of propulsion technologies will range from 5 percent to 8 percent of all vehicle sales by 2020, and from 15 percent to 20 percent of all vehicle sales by 2030.

Which leads back to the lesson that we seem to be learning over and over again, namely that, a Koslowski puts it

EVs will become one of the design elements in addressing our future transportation needs. Future mobility concepts will consist of diverse powertrain choices and business models that will leverage technology to satisfy consumers’ transportation needs while challenging traditional car ownership


Governments will need to increase funding of consumer purchase programs in order to achieve substantial EV sales in the short term. If the goal is to reduce dependency on oil and address environmental issues, then governments must broaden their policies and funding to include other powertrain technologies that offer reduced energy consumption or consider encouraging the use of public transportation and alternative mobility solutions, such as car sharing.

In short, EVs are not a silver bullet. Koslowski seems to imply (though doesn’t explicitly say) that government investments in infrastructure could help in the long term, but he definitely seems to think Vs will need consumer-end subsidies in the short term. And this need for subsidies coming and going makes alternatives like hybrids and natural gas vehicles (not to mention public transportation and car sharing) more attractive.

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  • Zeus01 Zeus01 on Apr 03, 2011
    So what would you say to an environmentalist who drives a turbodiesel. “Die, Lefty, ’cause you’re not just like me!” What a lonely world you must live in, or aspire to. Oh, and I dislike electric cars, too. Some of us think for ourselves, dittoheads. Try it, you might like it. You didn't indicate who this rebuttal was directed at, but I can only assume it was me and my anti-socialist rant. So I'll try to answer your very polite and courteous questions/ jabs as best I can: If you're an environmentalist who respects the rights of others to not follow your example (ie: if you're not an enviro-NAZI) and you drive a turbodiesel, all the power to you. Especially if you've paid for it yourself with money you earned in an honest and ethical fashion. That's what free enterprise is all about. But if you ARE the proverbial enviro-nazi who's hell-bent on forcing others to "go green", and your turbo-diesel gets less than 25 miles per gallon, you would then fall into the category of dictatorial hypocrate. I'm sure this is not you though, right? Uh... right? As for your next point, Lonely? Moi?? Let's see now: I'm middle-aged, not rich, not tall, not particularly attractive (in spite of my wife's opinion) and vote (gasp!) conservative. (And I drive a lowly Honda Fit, albeit a new one that I paid cash for). You've seen pics of Elizabeth Hurley, right? British supermodel, brunette, piercing blue eyes and beautiful beyond comprehension? Well, she's almost as gorgeous as my wife, who is an ultra-monogamous nymphomaniac insomniac who detests enviro-nazis even more than I do. Gobs of wisdom, common sense and IQ as well. So no, lonely would not apply here, so don't worry about me. Thanks for asking though. Your next point: We'll just have to agree to disagree on the electric car issue. I like them, but I'd like to see the range increase and infrastructure to support them in place before buying one. That's me, just thinking for myself as usual. My above-mentioned bride would never have married an idiot. Finally: "dittoheads"?? Oh, come ON! I'm SO disappointed in you! Surely a well-spoken soul like you can come up with something a little more... cerebral than that. Sounds like a seventh-grade euphism. Thanks for coming out though. Cheers.

    • Wheatridger Wheatridger on Apr 03, 2011

      My TDI has averaged 40 mpg so far this year, so yes, I walk my talk. And I'm not interested in forcing you to do anything, but I'd love to see you and others pay closer to a fair market rate for oil and its products, making sure the myriad external costs (military, environmental, political) are factored in. Absent true-cost oil prices, I'd like to see high-MPG cars incentivized with tax breaks to equal the huge Hummer subsidy given during the Bush years. Vehicles above 6000 pounds were granted full first-yerar depreciation, laying a huge wad of cash on those useless dinosaurs. We'll never agree on politics, but I may surprise you when I declare that government regulations have gone too far down the wrong path in the auto business. Safety and MPG regs are shaping auto design past the point of reasonable streamlining, giving us a fleet of workaday sedans with race-car-poor visibility. I'd rather gain economy by adding lightness and using smaller, smarter engines, but that doesn't sell cars as well as boy-racer profiles. Meanwhile new rear-impact standards have pushed new cars' headrests ever forward, to the point that I can't find a comfortable driving position without hunching into a fetal position. At the new car show yesterday, I found only three models I could get comfortable in, and I already own two of them! That's my rant, join in if you want.

  • Zeus01 Zeus01 on Apr 03, 2011
    "We’ll never agree on politics..." Maybe not as far as the socialism vs. Capitalism ideology is concerned. But (surpisingly) there is much to agree with in your latest post. And here in Canada we are paying closer to market value for our auto fuel: about $1.26 per liter (around $5 per U.S gallon) for our gasoline, around a third of which is tax. Diesel is now actually a few cents MORE per liter, even though it costs much less to produce than gasoline. This has had an effect on the sales of gas guzzlers here in the last four years and as for me, I've mostly over the last 30 years owned economy cars--- not because I couldn't afford to put gas in an SUV but rather, by choice. They're more fun to drive, available with a manual transmission and more maneuverable. On those rare ocasions that I need a truck I rent one for the day. I too would like to see viable incentives to buying economy cars, hybrids and (eventually) electrics. Building them lighter and less powerful (to end up with acceptable performance via better power-to-weight ratio rather than simply adding more horses) would be a much more effective way of reducing our dependence on oil. But to a degree this is already being done as best as technology can accomplish while still keeping cars affordable to the average Joe. And as for those too-far-forward "active" head rests? I hate 'em too. In an accident they may reduce injuries. But my chiropractor would probably tell you that the forward posture of the human neck would ultimately cause chronic back spasms, long-term damage and loss of both productivity and enjoyment of life.

    • Wheatridger Wheatridger on Apr 03, 2011

      That's the darkest secret of most modern cars, IMHO-- headrests that may work with crash dummies, but don't respect regular human postures. Yesterday I test-sat a couple dozen cars at the Denver auto show, and I'd have to alter almost every headrest to achieve a comfortable driving stance. That can usually be done by removing the upholstery and carving the foam with a hot knife. Risky? Maybe, but not as daft as the advice of a VW salesman to simply turn the headrests around backwards. That would give about five inches of space behind the head, far too much for protection against whiplash. And the shape of the backwards headrests would be like a wood-splitting wedge aimed at my neck, if the worst were to happen. I have my own survival stash of old, pre-'08 VW headrests put away for future use. Do you? Fortunately, the implementation of these regs seems inconsistent. The best seat & headrest combo at the show was in the Subaru Forester, but one of the very the worst was in the Outback-- go figure!

  • ToolGuy CXXVIII comments?!?
  • ToolGuy I did truck things with my truck this past week, twenty-odd miles from home (farther than usual). Recall that the interior bed space of my (modified) truck is 98" x 74". On the ride home yesterday the bed carried a 20 foot extension ladder (10 feet long, flagged 14 inches past the rear bumper), two other ladders, a smallish air compressor, a largish shop vac, three large bins, some materials, some scrap, and a slew of tool cases/bags. It was pretty full, is what I'm saying.The range of the Cybertruck would have been just fine. Nothing I carried had any substantial weight to it, in truck terms. The frunk would have been extremely useful (lock the tool cases there, out of the way of the Bed Stuff, away from prying eyes and grasping fingers -- you say I can charge my cordless tools there? bonus). Stainless steel plus no paint is a plus.Apparently the Cybertruck bed will be 78" long (but over 96" with the tailgate folded down) and 60-65" wide. And then Tesla promises "100 cubic feet of exterior, lockable storage — including the under-bed, frunk and sail pillars." Underbed storage requires the bed to be clear of other stuff, but bottom line everything would have fit, especially when we consider the second row of seats (tools and some materials out of the weather).Some days I was hauling mostly air on one leg of the trip. There were several store runs involved, some for 8-foot stock. One day I bummed a ride in a Roush Mustang. Three separate times other drivers tried to run into my truck (stainless steel panels, yes please). The fuel savings would be large enough for me to notice and to care.TL;DR: This truck would work for me, as a truck. Sample size = 1.
  • Art Vandelay Dodge should bring this back. They could sell it as the classic classic classic model
  • Surferjoe Still have a 2013 RDX, naturally aspirated V6, just can't get behind a 4 banger turbo.Also gloriously absent, ESS, lane departure warnings, etc.
  • ToolGuy Is it a genuine Top Hand? Oh, I forgot, I don't care. 🙂