Electrified-Vehicle Volume Hinges on Affordability, Experts Say

NOVI, MI – The U.S. electrified-vehicle market is poised for a volume explosion, according to a new study, but what has to happen to realize such growth and which obstacles must be overcome depends on whom you ask.

The study, conducted by Boulder, CO-based Pike Research, predicts there will a combined 667,000 plug-in-hybrid and electric vehicles on U.S. roads by 2015, reaching 1 million units the following year. Most will be PHEVs.

GM hopes satisfied Chevy Volt owners will inspire friends and family.

About 43% of consumers queried have an interest in PHEVs, the study finds.

Eight of 10 consumers view fuel efficiency an important part of the purchase decision. David Hurst, senior analyst-Pike Research, says at The Battery Show conference here. “And trends show about a 5% increase in fuel prices a year, which means the average price of fuel will be $4.81 (a gallon) by 2017.”

PHEVs likely will garner more interest because they have an internal-combustion engine that complements the electric motor, thus avoiding range anxiety. Consumers also are less likely to buy all-electric vehicles because of the premium price.

But Hurst believes piquing interest in electrified cars is a matter of education. Range is not a big issue, he claims, because most motorists drive less than 100 miles (161 km) a day. That is the typical distance current EVs, or those set to launch in the market, can travel on a single charge.

Consumers “have to get used to this style of vehicle,” he says.

If Pike Research’s volume predications are to be realized, new PHEVs and EVs will have to carry the ball because such vehicles so far have been met with lackluster market reception.

Nissan Leaf EV sales through September reached just 7,199 units, WardsAuto data shows, while the Chevrolet Volt extended-range electric vehicle saw just 3,895 deliveries.

Some auto makers about to launch electrified vehicles are taking a tempered approach to volume expectations.

Ford, which is launching its Focus EV later this year in select markets, doesn’t reveal its sales target. But V. Anand Sankaran, Ford’s executive technical-Energy Storage & High Voltage Electrical Systems, says the car will see a “modest launch.”

The auto maker expects most of its electrified vehicle sales will come from traditional hybrids, he says, noting EVs have to present a value equation to customers before they become mainstream. “If there is value, the customer will buy it.”

Ford also will launch its C-Max plug-in next year. And while it is not revealing prices for either new electrified vehicle just yet, the auto maker says it is trying to keep costs down by using a common platform.

Hurst says Ford is taking the right approach, predicting the C-Max will sell better than the Chevy Volt.

“(The) Volt is probably not going to meet (General Motors’) volume projections,” he says, noting at nearly $40,000, the Volt is a tough sell. “We think the Focus EV, C-Max and (Toyota) Prius are going to have greater volumes.”

If GM is disappointed in the Volt, it doesn’t show. Cristi Landy, Chevrolet Volt product marketing manager, says initial feedback among buyers has been overwhelmingly positive.

“Early on in Volt development, we knew (customers) would be classified as early adopters,” she says. “A lot of them say people come to them for advice about new technologies.”

GM anticipates that the early Volt buyers will pass on their positive experiences to friends and families, helping to propel sales, Landy says. “Going forward, we’re going to have fast followers. That’s how to get more of a mass market.”

Coda, a startup EV manufacturer based in California, will launch its electric sedan in December. Nate Hendrie, manager-marketing business development, doesn’t disclose sales expectations but says the company’s forecast is not as “bearish” as that of Pike Research’s.

EVs are a niche now, “but going to grow,” he says, noting as more and more electric vehicles enter the market, economies of scale will lower prices and boost sales. The Coda sedan will cost $44,900, a price Hendrie admits is not affordable to the average consumer.

Nevertheless, he expects the Coda to be more attractive to EV buyers because of its 110-150 mile (177-241 km) range. “We feel there’s a market for people who need more than the typical range.”

In the end, most agree the success of electrified vehicles will come down to price. Although a $7500 federal incentive remains in place for those who purchase an EV, many state incentives are drying up amid budget crises.

Most experts here agree the success of electrified vehicles will come down to price. Although a $7,500 federal incentive remain in place for buyers, many state tax breaks are drying up amid budget crises.

And even those who qualify for the federal incentive, which can be claimed on their income-tax return, still will have to finance the full sticker price of the vehicle.

Efforts are under way in Washington to change that condition, says Brian Wynne, president of the Electric Drive Transportation Assn. “We’ve been working to monetize (the federal incentive) at the point of sale, but that’s difficult. Right now in Washington, anything with a dollar sign is problematic.”

Wynne says his group also is lobbying to get federal incentives for electrified heavy-duty trucks in an effort to further grow the U.S. EV fleet.

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