‘Dying’ EV Industry Set for Growth
Reuters posted an interesting "news" article on February 4th claiming that EVs face a dead end. This article was very selective in its reporting and missed an obvious fact: sales of plug-in vehicles in the U.S. more than tripled in 2012, and continue to outpace the growth of the supposedly more mainstream hybrids.
Despite the "public's lack of appetite for battery-powered cars," as Reuters put it, 54,000 plug-in hybrid and battery electric cars (known collectively as plug-in electric vehicles, or PEVs) were sold in 2012, up from more than 17,000 in 2011. As the chart below shows, PEV sales in their two full years on the market are well ahead of where hybrids were at this point in their lifecycle, and we forecast that they'll stay ahead of hybrids in the years to come.
U.S. HEV vs PEV Sales
(Source: Pike Research, HybridCars.com)
In 2014, when Cadillac, Honda, BMW and Audi will also be offering mainstream plug-in vehicles, nearly 100,000 PEVs will be sold. For a "dying" segment, that's pretty impressive; Detroit would be ecstatic if every automotive segment displayed growth like this.
It is true that Nissan's overly-optimistic plans for EV dominance with its Leaf have fallen well short of expectations, forcing the company to regroup. Despite falling short of its goals, however, the Nissan-Renault alliance increased sales in 2012 by 83 percent. Also, the all-electric Tesla Model S is off to a racing start, selling an estimated 1,500 units in December alone, while more than 23,000 Chevrolet Volts were sold in 2012. The Toyota Prius Plug-in and Ford C-Max Energi plug-ins are both well reviewed and are in demand from consumers. Consumer satisfaction ratings for EVs are through the roof, and car of the year awards for EVs have been piling up like a junkyard full of gas guzzlers.
While it is also true that PEVs sales won't be a double-digit percentage of the auto market anytime soon, the gradually rising cost of gasoline will prompt more consumers each year to test drive something with an electric motor. The pre-holidays drop in the price of gas abated quickly, as average gas prices jumped a whopping 18 cents during the last week, and many consumers and fleet owners would like to avoid such uncertainty in the transportation fuel costs.
While the payback period for some EVs today is too long, we are still in the early days of the industry. Improvements and cost reductions in EVs and their batteries will parallel the advances in recent years of smart phones, which were originally written off by many as too costly and insufficiently robust.
Reuters also referred to recent announcements about fuel cell vehicle partnerships as another indication that EVs are on the way out. However, Toyota (one of two companies that Reuters interviewed) has never had much enthusiasm for battery-powered vehicles. The fuel cell vehicle industry, which has been gestating for decades (see the rosy projections from 2003), would love to someday accomplish what this round of EVs has attained in only a few years.
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