By on August 26, 2011

Forecasting the success of game-changing technologies is like predicting the weather. Despite a mediocre success rate, it is done every day. Ask me what the weather will be in 2017, and if I want to be absolutely right, I will say: “During the summer months, we expect sun with occasional rain, whereas in the winter months, some snow can be expected.” This prediction would protect my career in any company, but it won’t get me any press.

If I want press, I need to say: “In 2017, fire and brimstone will rain from the skies, which will cause a great conflagration, because all rain will have stopped a year earlier.” These predictions can be made with little risk. Six years down the road, who will remember the nonsense I said today? That thought crosses my mind as I read studies that predict the adoption of electric vehicles. Today, we have two of those. They couldn’t be more apart. We commissioned a third one.

A new report from Pike Research says cumulative global sales of plug-in electric vehicles (both plug-in hybrids and pure EVs) will reach 5.2 million units by 2017. Also in 2017, Pike sees cumulative global sales of 8.7 million hybrids. I am not commenting on the first number. The last number sounds awfully low: In March 2011, Toyota alone had already sold more than 3 million hybrids. The global sales number of all hybrids was around a million last year.

The charitable thought that Pike has its “cumulative” messed up (it usually stands for “all cars sold up until that point”) is derailed by another prediction by Pike. Pike thinks that by 2017 plug-ins and hybrids will represent a global market share of about three percent. According to Pike,

“Adoption will be highest in North America, where electrified vehicles will capture 4.9 percent of the total light-duty vehicle market in that year.”

The other report was released a while ago by the Boston Consulting Group. Their report wisely predicts that “the electric car will face stiff competition from ICEs when competing solely on the basis of TCO economies and, hence, will not be the preferred option for most consumers.”

BCG hopes that “there is a distinct “green” consumer segment that will be willing to pay a significant premium for EVs even if the total cost is higher.”

And where will most these EVs be sold? The Boston Consulting Group has a different opinion than Pike:

“China and Europe – not the U.S., as many believe – will be the largest markets for EVs in 2020.

China is a major wildcard. Assuming that the government remains committed to EVs, BCG projects that these vehicles will represent 7 percent of the country’s new-car sales in 2020. Despite this moderate penetration, China will become the world’s largest market for EVs due to its overall market size.

Europe will become the second-largest market for EVs in 2020 with a projected 8 percent share of new-car sales, supported by consumers’ willingness to pay for green technologies, the region’s stringent emissions standards, and high gasoline and diesel taxes.”

BCG sees EVs and hybrids reach 15 percent of aggregate new-car sales in the four major markets (North America, Europe, China, and Japan) in 2020. They don’t give a global number, at least not in the free version of the study. But these markets represent the bulk of new car sales – at least today. China is indeed the wild card – for any type of car. My spreadsheet has total Chinese car sales at 60-70 million by 2020, with a – by world standards – still moderate car penetration of around 300 per 1000. Currently, the number is around 60 per 1000.

Last year, global production of all types of automobiles was 78 million, with China contributing 18 million. Add in India, and world car production can easily double by 2020. A 15 percent share would be 23 million EVs and hybrids in the year 2020 alone.

Pike and BCG clearly differ, both in numbers and main markets. So we asked our prediction champions at Edmunds what they think. John O’Dell, Senior Editor at Edmunds AutoObserver/Green sees it this way:

“EVs will have more traction in Europe and China because travel distances there for most drivers are relatively short – public transit is often used for longer trips – and because in Western Europe and China there are strong governmental programs aimed at promoting use of alternatives to gasoline and diesel, and electricity is one of the most readily available alternatives.

In the U.S., where driving distances typically are longer (even though most US drivers commute far less than 60 miles a day during the work week, longer trips on weekends are not uncommon) the range-extended plug-in hybrid and conventional hybrids are likely to far outsell all-electric (or battery-electric) vehicles for years to come.”

The problem with all these predictions is that they use logic. Gas and diesel easily cost double in Europe compared to the U.S. Logic dictates they all drive electric vehicles by now. They don’t. Even the adoption rate of hybrids is homeopathic. In 2010, the adoption rate for hybrids and EVs stood at 0.8 percent in Germany.

Logic is even more thrown off by the fact that fuel prices fluctuate wildly across Europe. Oddly enough, they are highest in Norway, the Saudi Arabia of Europe. How does $10/gal grab you? If you want to get gas “cheaply” (like $7 a gallon), you need to go to Latvia or Luxembourg. Nevertheless, the needle on the adoption-meter in Europe doesn’t even quiver. What moves is the mileage-meter. The average new car registered in 2001 in Germany used 8 liters of gasoline per 100 km and 6.4 liters of diesel. By 2010, this had dropped to 6.5 liters of gasoline per 100km and 5.8 liters of diesel – across all cars, from Mini to S-Class. 5.8 l/100km is 40mpg (non-EPA).

In China, the price of gasoline is higher than in the U.S. (between $4.75 and $5.30/gal, depending on grade and currency rate,) but it still is not as outrageous as in Europe. Sales of EVs and hybrids? The Guardian cites a report by IHS Global Insight that says that exactly one Prius was sold in China in 2010. The Guardian promptly found an anonymous industry observer who quipped that “it may be a domestic rival that bought the hybrid to strip it down and see how it works.” Chinese clichés are always fun, but at that take rate the Chinese won’t even bother taking a Prius apart.

I don’t see this situation to change quickly. Europeans may have outrageous gasoline prices, shorter driving distances and that fabled public transport. Nevertheless, purchasing decisions are usually driven by such illogical considerations as visiting the in-laws 300km away, and touring Tuscany next summer. As the stats above show, if they want to save gas, they drive diesel. European governments are very reluctant when it comes to EV subsidies, they need their money for other things. European drivers are very reluctant when it comes to changing habits at the pump, witness the recent buyer’s strike against ethanol.

The wild card in the EV game indeed is China. The wild card could be an 8, which stands for good luck, or a 4, which stands for death. We have chronicled China’s flirtations with electric vehicles extensively at TTAC, but currently, it is all talk and little action. Even generous subsidies can’t convince Chinese to drive electric. Even after subsidies, regular cars are cheaper. And most of all: No EVs to buy.

China has the power to force people to go electric. Any amount of Chinese coercion usually results in howls of protests from western media. Ordering Chinese to drive electric on the other hand results in applause. Even Gordon Chang, designated China-hitter on Fox and Forbes, demands more “policy support” – euphemism for raw force.  The problem is that it’s not working.

“Beijing has already begun restricting new licence registrations. Sales have flattened,” reports the Guardian.

“Restricting new license registrations?” If I want to buy a new car in Beijing, I have to enter a lottery for a license plate. Roulette has better odds.

“Flattened?” Cratered is the better word. China Daily reports that in the first half of 2011, only 154,200 automobiles were sold in Beijing, 59.2 percent below the same period in the previous year. What sells in Beijing is plywood to board-up car dealers.

Beijing, with a population similar to all of Australia, would be the ideal market for EVs. China Daily explains why, and why not:

To buy a conventional gasoline-driven car in Beijing, customers have to wait for months to obtain a registration plate through a lottery system because of the Chinese government’s tightened purchasing policies.

There is no such limitation on electric cars, however, as the government seeks to encourage sales of new-energy vehicles.

In addition to a zero-rate purchase tax, buyers of electric vehicles can enjoy the benefits of a total price reduction of 120,000 yuan ($18,600) for each car as a result of central and local government policies designed to stimulate purchases.

The Chinese capital is one of 25 pilot cities chosen for large-scale promotion of electric vehicles.

However, sales remain low. Few brands have started to sell their wares through dedicated dealers and only a very small number of charging stations have been established in the city. Those that have been set up are currently lying idle.

Apart from the lucrative stimulus packages, all the other requirements, including infrastructures, the markets and even the cars themselves, are not ready.”

It does not look like this will be changing anytime soon. Apart from great announcements, nobody seems to be in a great hurry to make product.

There is one company that has a proven, mass produced pure plug-in: It is Nissan and its Leaf.

Nissan has quietly advanced to the largest Japanese manufacturer in China. Nissan sold 1.3 million units in China in 2010 and wants to nearly double this by 2015. Nissan could sell Leafs in Beijing tomorrow to plateless and eager customers.

But Nissan won’t. Nissan will introduce a pure plug-in under the Chinese Venucia brand – by 2015. Nissan’s joint venture partner in China is state-owned Dongfeng. Carlos Ghosn could use the Chinese volume for his Leaf technology – but he is not stupid. Both Nissan and Dongfeng have their reasons for going slow.

The question “why not earlier than 2015?” gets you an inscrutable Chinese smile, or a Gallic shrug, depending on who you ask.

Both Pike and Boston Consulting will gladly sell you their studies and hope that you will hire them for ongoing consulting services. If you pay their fees, they will tell you what you want to hear. I am inclined to listen to the free advice by John O’Dell of Edmunds:

“I don’t believe that battery-electric vehicle (BEVs) will become the dominant type of personal vehicle in either Europe or China as automakers have billions invested in internal combustion engine technology and can still wring quite a bit more fuel economy out of that technology (some experts say it will be possible to boost average internal engine fuel efficiency by 30-35 percent over the next 25 years). The higher costs and range limitations of BEVS will keep them form being he primary vehicle in most garages.”

There is another thought that crosses my mind when I write about predictions. Before the IBM PC was launched in 1981, IBM had done extensive studies. The overall market for such a device was seen limited to 5,000. I kid you not. 5,000 pieces total. My agency had the European account for IBM, and I had their data.

We all know how that worked out.

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27 Comments on “The Future Of Electric Vehicles: Who? Where? When? How Much? How Many?...”

  • avatar

    I won’t predict the numbers of EVs, Range Extended EVs, Hybrids, and whatever other combinations of Dino Juice and Electrons manufacturers might come up with.

    I will predict that electric propulsion systems will be in every manufacturer’s bag of tricks.

    No one can really afford to be behind the curve if EVs catch on big, or even medium. If there is a significant market, producers will want to have something to offer in that market.

    Other unkowns may pop up. What if we had quiet zones where EVs could roam but ICEs were prohibited? -Hospitals, retirement communities, schools?

    What if it becomes less socially acceptable to wake up your neighbors cranking an engine at 5am? -You start off in EV mode, and when you reach the main drag, or the highway ramp, you can switch to ICE mode.

    What if we face the kind of shortages that we had in the ’70s where people can only buy gas every other day, depending on their license number (odds or evens)? -might be nice to know you can make it through tomorrow in pure EV mode.

  • avatar


    Anyone who can stick batteries in the trunk of an existing model.


    Dunno, Chinese labor is getting pretty darned expensive these days. How about Cambodia? Lao? Haiti?


    Not anytime soon.

    How Much?

    Too much, for the foreseeable future.

    How Many?

    Surprisingly few for the foreseeable future.

    Colonel Sandurz: Now. You’re looking at now, sir. Everything that happens now, is happening now.
    Dark Helmet: What happened to then?
    Colonel Sandurz: We passed then.
    Dark Helmet: When?
    Colonel Sandurz: Just now. We’re at now now.
    Dark Helmet: Go back to then.
    Colonel Sandurz: When?
    Dark Helmet: Now.
    Colonel Sandurz: Now?
    Dark Helmet: Now.
    Colonel Sandurz: I can’t.
    Dark Helmet: Why?
    Colonel Sandurz: We missed it.
    Dark Helmet: When?
    Colonel Sandurz: Just now.
    Dark Helmet: When will then be now?
    Colonel Sandurz: Soon.
    Dark Helmet: How soon?

  • avatar

    Perhaps the future will bring more people for whom the automobile is an appliance. Currently, cars are symbols of freedom, fun, wealth, status etc. They make a statement and people feel passionately about them, even non-ethusiasts. Where a Mazda 5 may suit your needs, an Escape signals that you’re more outdoorsy.

    Today, a Prius signals that you’re green, but that you’re also probably a bit dull. A Leaf…even more green and probably more dull. I think Honda’s CR-Z was targeted at removing the “dull” with “fun”. Green and fun can sell. They need to work on that.

    I don’t know if these dynamics hold in places like China, but to some degree they do in Europe (with different impressions than in the U.S.). If you don’t believe this, look at watches. With modern quartz movements, the $10 watch at Target is as accurate and effective as any watch out there. In fact, it’s doubtful that the expensive automatic Swiss watches do as good a job keeping time as a Casio or Timex quartz. Yet people will pay 100 times as much for one. Logic is often trumped by emotion.

  • avatar
    DC Bruce

    Not to engage in semantics, but regarding predictions of future take-rates, it’s important to distinguish between new products and new technologies applied to the same product.

    The PC was a new product. There was nothing like it that came before. So, naturally, predicting a take-rate based on the experience of the nearest similar product (what, a mini-computer from Wang Labs or Digital Equipment Co.?) is pretty dubious.

    Another equally good analogy is cellphone service. Prior to the introduction of cellphone service in the U.S., there was a simplex mobile phone product in the U.S. It was expensive, it didn’t work very well (because it relied on a single transmitting antenna to cover the region served) and it was clumsy (being simplex, both parties to the conversation could not talk at the same time and hear each other). Cellphone service, by contrast, is duplex (like landline service) and the use of cells meant not only that signal quality over the covered area could be more uniform but that the system was scalable to cover increasingly large geographic areas. So, no one (except the author of the old “Dick Tracy” comic strip, whose lead character had a two-way “wrist radio”) predicted the take rate on mobile phones.

    But electric cars are not a new product, like PCs or cell phones. They are an application of a new (actually old, in the case of true EVs) technology to an existing product. In the car business, there have been lots of successful applications of new technology: self-starters, automatic transmissions, power brakes . . . the list is very long. But what those applications have in common is that they either made the car easier to use (e.g. the self-starter), safer (ABS, power disc brakes) or cheaper to operate (ECM).

    In order to be widely adopted, it seems to me that EVs or hybrids must pass one of those tests, and the only test they seem likely to pass is the “cheaper to operate” test. Whether they pass that test depends very much on the relationship between the price of motor fuel and electricity (for EVs) or between the purchase price of a hybrid and an ICE and the cost savings resulting from the hybrid’s reduced fuel consumption. This assumes, of course, that the vehicles being compared have equal utility. Unfortunately, EVs, because of their range limitations have less utility than ICE-powered cars. That means their operating costs have to be substantially lower for buyers to prefer them, because no one is going to have an EV as his only car.

    If it is true that Europeans use their cars primarily for road tripping and less for commuting, then their preference for diesels makes sense. Diesels equal or exceed hybrids in highway fuel economy; they hybrid’s advantage is in stop and go slow speed traffic.

    And, right now, the car buying public’s experience with 10-year old hybrids is just about zero, unlike with 10 year old ICE-powered cars, both gasoline and diesel.

    • 0 avatar

      “The PC was a new product. There was nothing like it that came before. So, naturally, predicting a take-rate based on the experience of the nearest similar product (what, a mini-computer from Wang Labs or Digital Equipment Co.?) is pretty dubious.

      You are underestimating the intelligence of the IBM folks. They laughed at the PDP-8 and 11, and the “big Wang”. They were more worried about their own System/34, /36, /38 and unnecessarily hobbled the later AT to keep it from “cannibalizing” the midrange.

      The problem predicting the market was that IBM only saw the business market. “Home computer? Which home needs a computer?” In businesses, a lot of IBM products (typewriters, word processors, printers) covered all kinds of applications. IBM did not want them to be killed. Just like the telephone companies were threatened by the internet, of which they knew it would eventually kill their voice market, IBM was worried of the PC genie escaping the bottle.

      Predicting success of a technology 5 or 10 years down the road is a crap-shoot. Big successes usually are created by a confluence of unpredictable factors. Being at the right place at the right time often beats having a great idea before its time has come.

      • 0 avatar

        Bertel “Predicting success of a technology 5 or 10 years down the road is a crap-shoot. Big successes usually are created by a confluence of unpredictable factors. Being at the right place at the right time often beats having a great idea before its time has come.”

        Agreed! Of course it helps to have at least a little prescience (and some have more of it than others), but a lot of other factors have to come into play here as well. In olden times they use to call it “fortune,” but nowadays most people would just call it good luck.

      • 0 avatar

        Considering that materials for batteries are mined in Canada, then shipped to expensive Japan to be manufactured, then shipped back to the US to be sold, I’d say EVs won’t make a huge dent anytime soon. That’s my prediction. (Unless they make electric powered cargo ships, then you’ve got a temporal paradox.)

      • 0 avatar

        Uh, eldard, that’s nickel batteries, which are an increasingly smaller and more obsolete part of the market. Even normal hybrids are shying away from them; the last EV to use them was the GMEV1. Modern, high-density lithium-iron-phospate batteries are mostly manufactured in China; we lost that engineering expertise and manufacturing base (for any value of “we” that isn’t China, pretty much).

  • avatar

    Every automaker will produce EV’s. They’ll be wonderful for press conferences, and auto shows, and press releases, and even the occasional TV ad.

    But they won’t sell well for all of the same reasons that the EV lost its dominance over 100 years ago. None of those drawbacks have been addressed.

    I don’t have high expectations for hybrids to do well in those markets in which Toyota does not have a strong brand. For now, Toyota owns that space, and I would expect proliferation to be largely limited to where Toyota is a strong competitor. In other words: not many hybrids in Europe.

  • avatar

    What I find interesting is the different marketing strategies for EVs based on regions. As the point was brought up in this article, Europe and China are expected to become major EV markets.

    So rather the economical, rather then the ecological, may become major selling points for EVs in the future.

    As an example, Nissan’s Japanese marketing folks go to lengths promoting the fact that the Leaf cost 0.8yen/km(~1¢) to operate. Compared to the hugging polar bears advertisements of Nissan US.

    Japan has a current national gas average, as of this writing, of 145yen/liter for regular; still comparatively reasonable to the gas prices in Europe and China. Meaning that a Leaf costs 8,000yen to operate over 10,000kms in terms of gasoline costs, while something like a Corolla Axio would cost 70-90,000yen.

    Still, given the price premium of current EVs (Leaf costs double the Corolla Axio), its still very hard to justify merely from an economical perspective. But by 2020 that EV price premium we should expect to shrink and gas prices to rise. If near price parity can be reached in markets where gas prices are high, EVs may become an economical alternative.

    Given the fact that relative regional gas prices are factored into these analyses, the expectation is that EVs will compete based on more pragmatic economics rather then ecological idealism.

  • avatar
    Seminole 95

    If you could use your hybrid as a generator for your house in emergencies (see this weekend’s hurricane), then I would buy one. Use your sway to make it happen Bertel.

  • avatar

    The funny thing is that Bertel would have told Steve Jobs “forget about personal computers, it will never happen”… I don’t understand why he is so anti electric cars. Maybe once the germans produce some, he will change his mind.

    • 0 avatar

      Since electronic wizardry is not German forte, I highly doubt it.

    • 0 avatar

      My friend, do you know what an Altair was? I built one, in 1975, by hand. I was a contributor to “Dr. Dobbs – running light without overbyte” and the proud owner of a 5 Megabyte (no typo) 14 inch Corvus harddrive that set me back $6000 in 1981 dollars. This became an underground hit on the Internet — shortly after there was an Internet.

      • 0 avatar

        Sure, ten years from now, you will probably claim that you built the first electric car, and that you always believed in them…

      • 0 avatar

        A short “uncle” will suffice.

      • 0 avatar
        Felis Concolor

        Woo! I never built an Altair, but I did figure out a routine to keep the 8″ floppy disk from melting in an IMSAI pizza oven.

        My greatest regret from that wonderful era of fast-changing micros and old mainframes approaching obsolescence was not holding onto a platter from a disk stack used in the BCC-500 computer system our college was given to disassemble and examine. 39″ in diameter, with a massive and heavily machined stainless hub ring, I planned to turn it into a coffee table.

        The drum memory unit was scary. We quickly removed it from the building it was being displayed in when it became clear the floor it was placed on was slowly collapsing beneath its weight.

      • 0 avatar
        Robert Schwartz

        Dudes. Back off. Bertel is a total [email protected]@$$. His hobby:

        The only question is why he has not been profiled here.

  • avatar

    I just rode by (yes, on a bicycle) a Nissan Leaf demonstration display here in Chicago. It’s nighttime, and the demo was shut down, and about 10 Leaves were plugged in and charging for tomorrow. And how were they charging them? Yup, bit portable generator plugging away.

  • avatar

    Which country makes the batteries for electric cars? South Korea
    Which country is small without any road to leave the country? South Korea
    Which country has a big car industry? South Korea

    South Korea is IMHO the likely candidate for being the biggest market for electric cars.

  • avatar
    Robert Schwartz

    It won’t happen. The answers to Bertel’s questions are: nobody, nowhere, never, not applicable, and none.

    • 0 avatar
      Robert Schwartz

      “It’s Time to Kill the Electric Car, Drive a Stake Through its Heart and Burn the Corpse” by John Petersen

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