Mary Ann Wright
Today’s guest post comes from three co-authors. Mary Ann Wright is vice president of technology and innovation for Johnson Controls Power Solutions, the largest maker of automotive batteries, including traditional lead acid batteries as well as advanced batteries for hybrid and electric vehicles. Evan Hirsh and Kasturi Rangan are a partner and principal, respectively, with Booz & Company, the big consulting firm.
It’s timely because Nissan has just introduced the all-electric Leaf to the U.S. market, and Chevrolet has introduced its Volt. On a personal note, I’ve been thinking about electric and hybrid-electric cars recently, too, because my beloved Honda Fit was totaled in an accident a couple of months ago. I was attracted to the idea of the Leaf or Volt but replaced my car with a lower-cost 2008 Honda Civic Hybrid–largely because I calculated that I’m unlikely to recoup the added costs of the battery, even if gas prices rise, because I drive so little (roughly 6,000 miles) a year.
This points to a problem with all-electric cars that the authors highlight below. (See Myth 3) The limited range of electric cars means that they will appeal to customers–city dwellers, those who live in close-in suburbs, people who commute using public transport or work-at-home types like me–who have not not have to drive much each day. But the higher upfront costs mean that the economics of electrics work better for people who drive a lot of miles.
Consumers want greener, more fuel-efficient vehicles for all the right reasons. Gasoline leaves a carbon footprint. It comes mostly from politically unstable regions, which puts our economic security at risk. Perhaps most of all, it’s become expensive over the last few years, and future prices are unpredictable.
Kasturi Rangan
But is the much-talked about all-electric vehicle (EV) the right alternative? Governments are providing incentives, carmakers are introducing new all-electric models, and the media has generated quite a bit of buzz, giving the impression that the widespread adoption of the EV is a done deal.
Much of the faith in a future of EVs, however, is based on five ideas that have more to do with myth than math. The facts point to a different outcome, especially in the U.S., over the next decade: that the winner of the alternative vehicle sweepstakes will be the gas-electric hybrid – not the all-electric car..
Myth 1 – The desire to go green will drive EV sales
Vehicle buyers want to be environmentally responsible, but they don’t want to pay a lot for it. It’s well documented that the vast majority of people are highly rational when they buy an automobile (typically their second largest purchase after a home). They are sensitive to sticker prices (including taxes, rebates and subsidies) and pay close attention to operating costs, such as fuel and maintenance. They make decisions based on the sum of all those parts – what experts call the Total Cost of Ownership.
In fact, pure electric vehicles, due to the expense of their large batteries, can cost more than twice as much as a comparable internal combustion engine vehicle. The initial price tag is a big deterrent, and the savings in operating costs aren’t enough make up the difference. Although environmental responsibility will drive some sales, mass adoption will come only if the total cost falls much further. [click to continue…]
