Plotting The Electrified Future: BCG Downgrades EV Penetration, Pacific Crest Offers Bear And Bull Cases

plotting the electrified future bcg downgrades ev penetration pacific crest offers

Reuters reports that Boston Consulting Group has revised its projections for EV market penetration downwards, concluding that plug-in electric vehicles (including EREV and PHEV models) will make up no more than five percent of the US market by 2020. And ironically, the recent increases in gas prices have actually driven the estimate downwards, as Xavier Mosquet, the global head of the group’s autos practice, tells The WSJ [sub]

Electric cars will undoubtedly play an increasingly large role in many countries’ plans in the decades ahead as energy independence and environmental concerns intensify, but they will gain only modest ground to 2020. Gas- and diesel-powered vehicles are improving faster than expected and will continue to dominate the global landscape.

We don’t have a copy of the report, but Reuters helps explain the situation by breaking down the costs:

Direct injection, turbo-charging and electric power steering are among the improvements in combustion engine that BCG expects to be mainstream in passenger cars worldwide.

Those changes can cut emissions of carbon dioxide, a greenhouse gas that contributes to global warming, by as much as 40 percent, BCG said. For every percentage point cut, consumers will have to pay between $50 and $60 more for the car — about half the group’s estimate of $100 three years ago.

“It’s only $2,000 to get 40 percent improvement with ICE technology,” Mosquet said. In 2009, “what we saw was the $3,000-$4,000 range, which obviously makes it more difficult for consumers. It’s achievable and it’s cheaper than expected.”

And, adds Mosquet, the $2,000 in additional ICE efficiency-boosting costs should be good for the next ten years or so of government emissions standards… only after 2020 or so will EVs become critical to complying with government standards (providing California is talked out of big ZEV mandate increases).

The BCG study’s key conclusion auto makers can hit most of the future fuel-efficiency and emissions-reduction targets that governments are imposing on the industry in the next 10 years, and do it by introducing or improving known automotive technologies. “I’m not saying it’s easy, but it’s feasible,” Mr. Mosquet said.

BCG estimated fuel-saving improvements such as electronic power-steering systems, light-weight materials and more efficient transmissions would add about $2,000 to the price of vehicles.

The need for car makers to pursue electric vehicles in the near-term is “minimal,” the study said. However, auto maker must continue to develop electric vehicles since they will “undoubtedly” play a major role in meeting 2035 to 2050 emissions, it added.

This revision puts BCG right in the middle of what appears to be an emerging consensus on EV and hybrid penetration, which puts US-market plug-in penetration at between 2.5% and a little over 5% by 2020. My favorite reference point for mapping out the hybrid and EV future: the chart at the top of this post, which maps out bear, bull and baseline cases for different electrified drivetrain concepts (courtesy: Pacific Crest). In addition to the points BCG makes about improving ICE technology, the Pacific Crest analysis shows how important stop-start (aka microhybrid) technology will become, which will also keep ICE technology efficient enough to prevent plug-ins from taking over.

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  • Mazder3 Mazder3 on Jun 15, 2011

    Are there any vehicles left, besides strippo economy cars and heavy duty trucks, that still run hydrolic power steering? I thought most vehicles had EPS. My four year old Mazda has EPS. I must be tired. All I could understand in the title was penetration and be(e)r cases....

  • Type57SC Type57SC on Jun 15, 2011

    So BCG's estimate of the costs dropped by 1/3 to 1/2 for the same time period? That level of accuracy is CARB-worthy and doesn't give me much faith in the prediction.

  • Snickel Fritz I just bought a '97 JX 4WD 4AT, and though it's not quite roadworthy yet I am already in awe of it's simplicity and apparent ruggedness. What I am equally in awe of, is the scarcity of not only parts but correct information regarding anything on this platform. I'm going to do my best to get this little donkey back on it's feet, but I wouldn't suggest this as a project vehicle for anyone who doesn't already have several... and a big impressive shop with a full suite of fabrication/machining/welding equipment, and friends with complimentary skillsets, and extra money, and... you get the idea. If you don't, I urge you to read up on the options for replacing anything on these rigs. I didn't read enough before buying, and I have zero of the above suggested prerequisites... so I'm an idiot, don't listen to me. Go buy all of 'em!
  • Bryan Raab Davis I actually did use the P of D trope, but it was only gentle chiding, for I love old British cars of every sort.
  • ScarecrowRepair The 1907 Panic had several causes of increased demand for money:[list][*]The semi-annual shift of money between farms and cities (to buy for planting and selling harvests)[/*][*]Britain and Germany borrowing for their naval arms race[/*][*]San Francisco reconstruction borrowing after the 1906 earthquake and fire[/*][/list]Two things made it worse:[list][*]Idiotic bans on branch banking, which prevented urban, rural, and other state branches from shifting funds to match demands. This same problem made the Great Depression far worse. Canada, which allowed branch banking, had no bank failures; the US had 9000 failures.[/*][*]Idiotic reserve requirements left over from the Civil War which prevented banks from loaning money; they eventually started honoring IOUs illegally and started the recovery.[/*][/list]Been a while since I read up on it, so I may have some of the details wrong. But it was an amazing clusterfart which could have been avoided or at least tamed sooner if states and the feds hadn't been so ham handed.
  • FreedMike Maybe this explains all the “Idiots wrecking exotic cars” YouTube videos.
  • FreedMike Good article! And I salute the author for not using the classic “Lucas - prince of darkness” trope, well earned as it may be. We all know the rap on BL cars, but on the flip side, they’re apparently pretty easy to work on (at least that’s the impression I’ve picked up). On the other hand, check the panel fits on the driver’s and passenger’s doors. Clearly, BL wasn’t much concerned with things like structural integrity when it chopped the roof off a car designed as a coupe.