Don’t let the enthusiasm of the early adopters fool you: Electric vehicles have a long way to go before taking hold in the mainstream. That was a warning issued yesterday by Jason Wolf, VP of Business Development for electric vehicle infrastructure startup Better Place.
Speaking on a panel about vehicle-to-grid technology hosted by Agrion in Palo Alto, Calif., Wolf said, “Early adopters love where we are right now,” but the temptation to give too much heed to that vocal, supportive and influential — but small — sliver of the pie represents “the biggest problem for this industry right now.” If a large commercial player caters to what those influencers want, Wolf predicted, that company “will fail” to reach many mass market consumers. While sophisticated, complex systems for managing battery charging, for example, might appeal to early adopters, they could be overly intimidating for a more mainstream car buyer.
Part of the balancing act for automakers trying to help grow the still-nascent plug-in vehicle market is determining “how big a battery consumers will pay for,” explained researcher Brett Williams from the University of California, Berkeley’s Transportation Sustainability Research Center, following Wednesday’s panel. “Beyond $30,000, you lose a lot of buyers,” he explained. The early adopter niche might be more willing to pay a higher premium for a plug-in car.
The battery represents the most expensive part of electric vehicles, and smaller battery pack with fewer lithium-ion cells can bring the sticker price down, but mean a sacrifice in terms of electric range. Referring to General Motors’ upcoming Chevy Volt, an extended range electric vehicle with a small gas engine that will kick in when the battery’s depleted, and which is expected to cost about $40,000, Williams asked, “Is even the Volt battery too big for most consumers?” And “at what point is the battery too small?”
Wolf drew a distinction between early adopters — the 1-3 percent of consumers “that care about kilowatt-hours” (how much energy is used or stored in the battery) and the larger consumer market, where people “just want to buy mileage” at a lower cost.
AC Propulsion CEO Tom Gage argued that electric vehicles will see only single-digit penetration rates for some time to come — making up about 8 percent of the total fleet in 20 years. “The rise of hybrids is instructive,” Gage said. A decade after the Prius launched in the U.S., hybrids hold less than 3 percent the national light vehicle market. “There is not going to be an overnight change.”
General Motors, for one, anticipates a transition period — from early adopters in carefully selected markets to more widespread appeal — of at least two years. Britta Gross, who heads up the global energy systems and infrastructure commercialization efforts of the automaker, has told us that for an electric car, the “chances of success are much greater in markets with broad influence,” that extends “beyond just their geography.” That means targeting population centers and big media markets, she said. As Alan White, a VP at charge point developer Coulomb Technologies put it on Wednesday’s panel, “It’s a geographic smile of locations where automakers are marketing these cars,” in the states: along the West Coast, down into the Southwest, and over to the Northeast.
But maybe EVs don’t need to climb the same slope that hybrids have over the last decade. “When we’re looking at adoption curves, we can be mistaken by incremental adoption vs. disruptive adoption,” said Wolf. Better Place’s idea for disrupting the market involves selling “a cheaper mile,” through subscription plans that cover the cost of batteries over the life of the car. “The Prius is still more expensive,” compared to conventional vehicles, he said. “That’s not the case with electricity.”
As “>Marc Gunther has explained, Better Place’s scheme in theory could bring the cost of driving a mile in an electric car to about 10 cents, compared to 12-14 cents per mile for gas powered cars, if fuel costs about three bucks a gallon at the pump. Hybrid models like the Prius and Honda Insight can save car buyers money in the long term. But it can take years to recoup the cost premium on hybrids over comparable conventional models based on savings from better fuel efficiency. How long it takes depends on the price of gas and the number of miles driven each year, among other factors.
As Williams commented yesterday, however, a “typical consumer doesn’t know how much they spent on their last fill-up, let alone last month.” They’ll more likely compare their electricity bills (before and after bringing an electric vehicle into the mix), he said, than per-mile driving costs.