Will Electric Vehicles Win Mass Market?

Finally, after years of starts and stops, various types of electric vehicles are out in the market and have won early adopters. To convert this “trial” niche audience into a broader mass market, though, a number of other factors have to come into play in the next few years.

A big issue keeping would-be buyers on the sidelines is price. As I mentioned last week, EV prices range from $30,000 to $96,000. Those numbers are way out of line for consumers, who think the EV value-price tradeoff should be somewhere around $23,750, as John Gartner, research director at Pike Research, mentioned during a webinar.

Some of this sentiment was reflected in a recent Pike survey on consumer interest in EVs, particularly plug-in electric vehicles. The percentage of respondents saying they would be “extremely” or “very” interested in purchasing a PEV slipped from 48 percent in 2009 to 40 percent in 2011. Price is one of the major reasons for the decline. Gartner explained in a press release:

Price is the most significant barrier to consumer interest in electric vehicles. About two-thirds of our survey respondents who stated they would not be interested in purchasing a PEV said that they felt such a vehicle would be too expensive. Others said that they would want to wait a few years until the technology is more proven, and almost half said that a PEV would not have sufficient driving range for their needs. These are all key issues, both real and perceived, that automakers will need to address if PEVs are to move successfully out of the early adopter phase.

We know where some of this pricing conversation leads, right? Most definitely, it ties into the cost of the lithium-ion battery, a significant part of the EV's bill of materials.

Pike expects the worldwide Li-ion battery market to boom from $2 billion in 2011 to more than $14.6 billion by 2017. However, Gartner says a significant drop in battery costs is essential if the market is to undergo this kind of increase.

Battery prices — and thus car prices — are not likely to budge much this year, even though battery production is likely to outpace EV production. Nevertheless, “as manufacturing efficiencies improve and access to lithium expands, the cost of Li-ion batteries will fall by more than half by the end of the forecast period (2017),” according to Pike. And Gartner said during the webinar that consumers should start seeing the impact on list prices in 2013.

Despite uncertainty about where prices will go, manufacturers and suppliers aren't shying away from EVs' long-term potential. In fact, Gartner said many manufacturers are “beyond the point of no return” in terms of investment, because they view EVs as “critical to their future growth and development.”

You don't have to look far to see that's true. Fisker Karma showed off one of its snazzy electric cars at last week's Consumer Electronics Show in Las Vegas. This week, the Wall Street Journal reported that ABB Ltd. expects “exponential growth in demand for fast-charging technology for battery-powered vehicles in the next three years.”

If nothing else, it will be interesting to see whether these cars deliver on the promises being made.

36 comments on “Will Electric Vehicles Win Mass Market?

  1. Damilare
    January 17, 2012

    I think that EVs have come to stay this time around, it is important to understand that the factors that led to the EVs been non-commercially viable during the tim eof their disappearance in the 1920s are no longer in place. Energy prices have risen and will continue to rise, environmental responsibility is having serious effects on companies' images and by proxy their finances. Although recent surveys suggest that the high prices are the major barrier, the EV market will eventually follow the fundamental laws of demand and supply, leading to the prices becoming more affordable.






  2. JLS
    January 17, 2012

    I think the biggest problem EVs have is the battery that they are built around.  Assuming the batterys last 10 years, which may or may not be the case based on experience with other rechageable battery products, the EV is basically a throw away when the batteries are gone.  It would be hard to justify spending $10K for a new battery in a 10 year old car.  Most cars are pretty much thrashed at 10 years, and certainly not worth $10K unless it's a Mercedes or Ferrari.  So an older EV that may be only has a couple of years left isn't going to be worth anything;  there is no resale value after the first few years.  If someone can figure out a way around that little problem, they will certainly be wealthy!

  3. _hm
    January 17, 2012

    For faster growth of EV vehicles, we soon need to have IEEE or ANSI standard for EV Battery. With this, consumer will much more trust in the cost of vehicle and Electric cars. And cost of EV will come to 23K range.


  4. prabhakar_deosthali
    January 18, 2012

    In my opinion it is not the battery replacement cost but the payback period  -of the additional initial cost ( 30k – 23k ) by way of saving in the fuel cost – is the important factor.

    The ratio of battery recharge cost per mile vs fuel cost per mile should be such that the additional initial cost of EV is paid back in fuel cost savings in a period of three years.  If the battery life is assumed to be  10 years then the net saving of fuel cost over the remaining 7 years will be a signifant amount of money and that will pull the customers to buy EVs.

    So efficient battery managment systems is the key to the success of Evs


  5. Anand
    January 18, 2012

    Despite uncertainty about where prices will go, manufacturers and suppliers aren't shying away from EVs' long-term potential.

    @Jennifer,  I think rising oil prices will definitely help imprve EV sales. Its already been rumoured that oil might  cross its all time high of 150$ this year if things escalate in Iran. So rising oil price will make  expensive EV's look more reasonable.

  6. Anand
    January 18, 2012

    It would be hard to justify spending $10K for a new battery in a 10 year old car.

    @JLS, I agree with your observation. I think we should have system where instead of recharging the battery you replace it with a vendor who owns all those batteries. So car is owned by us and battery is owned that company. This will help reduce the initial cost and moreover company can benefit by renting those batteries.

  7. Jennifer Baljko
    January 18, 2012

    Damilare “The EV market will eventually follow the fundamental laws of demand and supply, leading to the prices becoming more affordable.”

    The supply-demand equation is always part of the balance. We'll see how soon the scales tip.

  8. Jennifer Baljko
    January 18, 2012

    JLS – Good point. The durability of these batteries probably will factor into at least some consumers' thought process. A car is a big investment, and it makes sense that folks will want to amortize the cost over at least 7-10 years. But even with “regular” cars, I don't most people are hanging on to them beyond 10 years.

  9. Jennifer Baljko
    January 18, 2012

    _hm – Ah, standards. Aren't they just wonderful things sometimes. Hope it does move in that direction. Would save lots of headaches down the road and speed up adoption.

  10. Jennifer Baljko
    January 18, 2012

    Prabhakar – A good point. It's not just about the upfront costs, but the cost savings you reap over the long-term. Rising price of oil may strengthen that case soon enough.

  11. Jennifer Baljko
    January 18, 2012

    anandvy – shocking isn't it, the constant rising price of oil and our ongoing dependency on it? There has to be a point at which people say “that's just not affordable any more, and I have to find an alternative.”

    Problem, though, is that the cost of electricity also rises every year (at least here in Europe…in Barcelona, we're still still digesting the pretty steep percentage increase for public transportation, natural gas, electricity). So, while I think it's still considerable less than filling up at a gas stations, the charging costs for EVs also has to be factored in.

  12. Jennifer Baljko
    January 18, 2012

    JLS, anandvy – interesting model proposals. Not clear to me, though, what happens to all these batteries when they outlive their usefulness. Any one know what sort of recycling efforts are being built around the EV-battery niche?

  13. Nemos
    January 18, 2012

    So true …. indeed I believe also that the key that will move people to buy EV cars is the price of the product (electric car) and the availability of the product. For example, the average income in the E.U is about 34.000 euros per annum so easily we can realize that car with price from 30.000 euros is difficult to be sold. The price must be as much as close to price of a regular car.

  14. Adeniji Kayode
    January 19, 2012

    anandvy  . You are right. infact the major catalyst that will speed up the sales of EV is definately increase in fuel price every where right now. And because of this , It is normal for people to start thinking on how to cut down expenses especially on anything that burn fuel.This move will then lead to decrease in price and use in the other types of vechicles and increase in Ev and decrease in the price.

  15. Adeniji Kayode
    January 19, 2012


    That is really a good idea but then

    1. who is going to be responsible for the maintanance.

    2. Who is going to be responsible for any malfunction during use .

    3. Will that really be cost effective for the company

    4. who is going to be responsible for the consequences of mis-handling on both side

    5. Do you think that the company will be able to handle the issue of warrenty effectively without losing so much money


  16. Adeniji Kayode
    January 19, 2012

    Good point Nemos,I feel adding “increase in fuel price” will make the equation a more balanced one.

    We can also add Advancement in technology

  17. Adeniji Kayode
    January 19, 2012

    @ Jennifer. You really shed light on another side to this article, but until we know how long it takes for Ev to charge and it cost on the electricity bill, this may remain a major question that must be answered before going for an Ev. 

    But for now, I think electricity is cheaper when compared to fuel

  18. Adeniji Kayode
    January 19, 2012

    @ Damilare, You are right, the points you made are one of the major reasons why even Government of nations will have to start to advocate for EVs

  19. Barbara Jorgensen
    January 19, 2012

    I love the idea of electric vehicles, but I know in terms of my tolerance for inconvenience, it'll be a long time before I put my money where my mouth is. I've done a really, really unscientific survey of charging stations within my area and there are none. I know a hybrid will solve that dilemma, but I know I'll end up using gas anyway. It's people like me that are holding the market back…sigh…

  20. Wale Bakare
    January 21, 2012

    @Barbara, am in the same boat with you. @Adeniji, I think major factor dragging EV market slow – infrastructure for charging vehicles. This hasnt been really addressed, especially at homes and perhaps working areas. Until all stakeholders hoping for EV market growth make adequate charging points/bays available if not at homes but within neighbourhood.

    I dont think cost of buying EV is the problem. What of charging points? If it takes 7 -8 hours for an EV battery to charge, how many miles/kilometers can fully charged battery takes a vehicle?

  21. Adeniji Kayode
    January 22, 2012

    @ Barbara, Well you may have a good reason for holding on now but i,m sure soon you will have a better reason to go for an EV  soon.

  22. Adeniji Kayode
    January 22, 2012


    That is one of the major questions that must be answered befor going for an Ev.

    If it takes 7 to 8hrs to charge the battery, what effect will that have on the power bill and as you rightly said, how far can i drive on a fully charged battery.I feel the best combination is still going to be solar energy + battery. Hope to see a project on that this year. 

  23. Cryptoman
    January 23, 2012


    Because charging the battery takes 7-8 hours, people automatically think of the  mileage they can get out of an electric car on a single charge and that is where the bottleneck is with the long journeys.

    How about the following alternative recharging model for electric cars? You go to a station with your electric car and rather than plugging your car into a charger and going off for a very long coffee break, the station hands a charged battery to you in exchange for your flat one. You pay for the energy you have bought plus a small amount for the depreciation of your old battery. That way you would plug in a fully charges battery under the hood and drive off before even getting a chance to order a coffee !!

    The stations would have a stock of charged batteries for the electric vehicle owners to buy during the day. They can leave all the flat batteries they collect during the business hours to charge them overnight.

    The above model will at least allow electric vehicle owners to drive for much longer distances without worrying about re-charging. Of course, it is very important to have many “battery exchange service stations” that provide such service in order to make this concept work.



  24. Clairvoyant
    January 23, 2012

    Cryptoman, this may be an option if battery technology improves to allow for smaller size batteries. The batteries in electric and hybrid vehicles are simply too large and heavy to be changing out all the time. If battery technology is to improve, to be able to hold more energy in a smaller package, then the driving distance of electric vehicles can also increase, therefore I never see the market for “battery exchange stations”.

  25. Cryptoman
    January 24, 2012

    You have a good point there indeed Clairvoyant. When it comes to batteries “size matters”. Given the current state of the art, the driver of an electric vehicle would probably need a few hands to perform the battery exchange I was hypothesising in my previous post.

    The most prominent battery technologies for automotive applications include lithium-nickel-cobalt-aliminium (sounds like the periodic table but this refers to one battery), lithium-nickel-manganese-cobalt (NMC), lithium-manganese-spinel (LMO), lithium-titanate (LTO) and lithium-phosphate (LFP). All of those batteries need careful handling and management due to their safety risks. Therefore, probably carrying a monster battery around at the station is not a very safe/practical thing today.

    However, there is hope for the future and here is why. According to the report published by BCG, when we look at patent filing related to “energy storage” between the years 1999 and 2008, we will see a 17% increase. This is twice as fast as the previous ten years. Furthermore, this growth is 10% larger than the overall patent growth during the same period. There are still fundamental compromises (related to safety, energy per kilo, power per kilo, life span, thermal management, cost etc.) to break in this technology but the effort and the motivation to do so is huge.

    Therefore, when we look ahead into the following 5-10 years (or even less), it is very likely that we are going to see a breakthrough in battery technology.

    When computers were first out, who would have believed in their power and the portability potential that we have today? However, this huge leap became a reality in relatively a short time.

  26. Jennifer Baljko
    January 24, 2012

    Barbara – funny that you mention this inconvenience thing. A few months back, I was wandering my neighborhood and stumbled upon (actually I almost walked into it because I wasn't paying attention) this thigh-high, narrow-width blue pole on a corner in front of a restaurant/cafe with outdoor seating, across the street from a magazine/newspaper kiosk (yes, we stll have those, too), and down the block from our solar-paneled-covered police headquarters (the entire southeastern facade of the building is covered with solar panels).

    After catching myself mid-step, I realized it was and EV charging station. I was surprised because I was expecting to see something bigger, or something better marked with neon-colored signage, or something other than what was there. Nope, it just blended into the scenery, which makes perfect sense. Hopefully soon it will just be another facet of life.

    At least in Barcelona it seems, they are addressing some of the inconvenience issue with these “right-sized” rather-discretely placed poles.And, to boot, you can file a police report for being pickpocketed downtown (sad, but possible), grab a newspaper (a real paper one, remember those?), and enjoy a 3-course “menu of the day” lunch while your car gets a jolt.

  27. Ariella
    January 24, 2012

    @Jennifer, very interesting. Do those discreet poles have a slot for credit cards? How does one pay for the electricity?

  28. Adeniji Kayode
    January 25, 2012

    The use of Ev may start to have more meaning than we expect. My country is importing 127 Ev for the police department for security reasons.

    While i,m not sure how far that will enhance the secuirty of the nation, other african countries may start to buy in to this.

  29. JADEN
    January 25, 2012

    The idea of electric vehicle is good but I don't see it winning in the market for now as a result of the charging issue.  Charging stations like we have gas stations all over seem like most sensible solution.  Also, If the cars and the batteries could be designed to make it easy to remove a flat battery and replace it with a charge one, that would've been a good idea too.  I think if the manufacturers of electric vehicle can meet a standard in battery design, along with a method of swapping the battery, instead of having to stop for hours to charge while traveling, one could just pulled into a service station and get the battery swapped and be on the road again.  We are already familiar with this model and would make the transition to electric vehicle much easier.

  30. JADEN
    January 25, 2012

    @ Barbara,

    One of the limitation of electric vehicles is the battery, not the cost to acquire one but the charging of the battery as you mentioned.

  31. Clairvoyant
    January 25, 2012

    Jaden, as I mentioned in a previous post, electric vehicle batteries are simply too large and heavy to be swapping out. By the time batteries advance to a state where they can be smaller and lighter, it would be more beneficial to just add more batteries to vehicles so they have longer range.

  32. Damilare
    January 25, 2012

    I think the rising cost of electricity is greatly influenced by the fact that most of this electricity is generated from petroleum considering that oil rise in oil price will directly influence electricity prices. I think key to the success of EV as the future of car transportation is the decarbonosation of electricity.

  33. Damilare
    January 25, 2012

    Jennifer, “The supply-demand equation is always part of the balance. We'll see how soon the scales tip” 

    The scales should in the favour of reduced EV prices, but also because other factors than influence demand and supply of goods weigh in…

  34. Adeniji Kayode
    January 25, 2012

    Good point Jaden, I,M not sure if my country is putting the charging stuff into consideration for now. I guess this may likely be one the challenges this cars will face.The Government is only seeing electronic aspect as the advantage for now which is really is but the charging aspect is yet to be looked into

  35. Adeniji Kayode
    January 25, 2012

    @ JADEN well, that is what it seems to be like right now but I think we will start to see more people changing their cars this year to EV. At the end of 2012, Let run a survey on how far the EV has gone.

  36. Ariella
    January 26, 2012

    @Damilare, true. I believe there are currently attempts to use solar power to charge car batteries. 

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