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Consumers Might Not Want Electric Cars All That Much

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News flash: Consumers won’t be so quick to embrace electric cars.

Does that surprise you? Perhaps not for those who’ve been following how hard it’s been — and will continue to be — to bring plug-in electric or hybrid cars to market. Despite a flurry of news reports, test drive videos, and TV ad spots to get the word out in recent years, car makers, the media and the government have yet to convince the masses that alternative-fuel cars are the more environmental-friendly choice.

That’s because those cars just cost a whole lot more, according to J.D. Power and Associates’ new report released Thursday. Another study, conducted by GfK Automotive, observeed the same sentiment. The costs involve both the premium paid to buy the cars off of the lot, as well as the costs of maintenance and repair (we’ve also heard that they can be cheaper in repair costs, too). When learning that they will have to spend, on average, an extra $5,000 for hybrid cars, the number of consumers who say they are interested falls by 50 percent, J.D. Power said.

Consumers have to weigh the decision to buy green cars against the long-term savings that can be had in fuel costs. But calculating those savings isn’t so easy. You’ll find it hard to squeeze any good numbers on savings from carmakers right now, partly because they don’t know either. How much you can save in fuel costs depends how much you spend normally on gas and the fuel economy of the car. And what car makers can claim on the fuel economy label is still being reviewed by the U.S. Environmental Protection Agency.

Back in August, the EPA and the U.S. Department of Transportation proposed two labels that would spell out fuel efficiencies and tailpipe emissions for all cars, not just the ones with electric motors. One proposal would give letter grades.  The second proposal would give the conventional miles-per-gallon metrics, or an equivalent for hybrid cars; for all-electric cars, the label also would show kilowatt-hours per 100 miles (here is the EPA website that shows all proposed labels).

The federal government plans to settle on a labeling system early next year. Cars such as the Chevy Volt and Nissan LEAF need special certification for their labels, because they’re hitting the market much sooner. Consumers can sort of do their own math to figure out roughly how much they might have to pay to buy and own both cars, since the carmakers have issued claims about the driving range of the batteries, but those numbers aren’t the same as the more sophisticated calculations by the government that look at city and highway driving and other factors.

The car makers are trying to address the cost issue, for now, by offering low-interest financing options. The Volt starts at $41,000, while the LEAF starts at $32,780.

Other issues that bug consumers about buying hybrid or all-electric cars include driving range, new technologies’ reliability, time needed to recharge batteries and the looks of the cars, according to J.D. Power. GM just launched a patriotic-themed ad that attempts to tout the Volt’s long driving range. It’s a tad cheesy, and the whole bit about how “America is the “home of the highway” is, really, nothing that we should to be so proud of.

Overall, J.D. Power expects to see 5.2 million hybrid and all-electric cars sold in 2020 worldwide, accounting for 7.3 percent of the total passenger car sales that year. For 2010, the hybrid/electric car sales should reach 954,000 vehicles, or 2.2 percent of the total pool.

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Photo courtesy of Stuartpilbrow

4 Responses to “Consumers Might Not Want Electric Cars All That Much”

  1. JD Power’s survey is in line with others. And most consumer purcahses are driving by price and value. Hybrids have the best chance to be competitive, and EV’s will be relegated to niche markets until the technology brings the cost down and the performance reasonable.

    And don’t expect the price of EV’s to drop much, since Litium Ion batteries’ raw materials like Nickel and Cobalt are expected to increase in price as the demand increases.

    The best hope for EV’s to break into the mainstream is a leap of technology that will both cost less to manufacture and triple the existing EV range, all within the price range of existing ICE vehicles.

  2. Any new technology costs more when it first comes out. Remember how much CD player’s, DVD players and Blue Ray players cost when they were first introduced. An entry level device cost well over $1000. Now you can buy them for under $100. Electric vehicles WILL come down in price, there will be more variety and people will buy then once they are available and they see how much cheaper it is to operate one compared to a gasoline vehicle. I would put very little stock in J.D. Powers predictions.

  3. This is a US-centric view. The move to electric vehicles is being led by Asia. The government in China has announced 0.5 million hybrid and fully electric vehicles by 2012 (and the government generally exceeds targets) and US$17 billion in funding. There are 93 fully electric models in China already and about 30 million electric bikes. Japan, Korea and Taiwan are also jumping on the trend.

    The US just doesn’t understand energy security and environmental issues yet. It will come in the US, but will take some form of crisis to see really significant impact.

  4. JD Power claim they can predict market share a decade ahead for products that’s so new to the market not a single consumer has a mass market version sitting in their driveway yet??? LOL Give me a break!

    Back in 2007 Apple made a bold ‘prediction’ they might sell 10M iPhones by the end of 2008. Turns out that was conservative, only 3 years later they’re selling almost 10M a quarter.

    Does anyone seriously believe some report from a publishing company could’ve accurately predicted that in 2006?